Question

# 1.      The double occupancy percentage of XYZ Hotel was 40%, and 1,400 guests stayed in the...

1.      The double occupancy percentage of XYZ Hotel was 40%, and 1,400 guests stayed in the hotel. Assume two guests stayed in each double and one guest in each single. How many rooms were sold?

a.     600

b.     800

c.     1,000

d.     1,400

e.     none of the above

2.      Which of the following would generally prefer the lowest current ratio?

a.     owners

b.     management

c.     creditors – suppliers

d.     creditors – long-term

e.     the IRS

3.      Once ratios are computed, they generally are best compared to:

a.     industry averages

b.     the prior year’s ratios

c.     ratios per the budget

d.     a close competitor’s ratios

4.      A hotel has a current ratio of 1.5, an acid test ratio of 1.2, and total current assets of \$120,000. Its total quick assets equal:

a.     \$80,000

b.     \$96,000

c.     \$100,000

d.     \$120,000

5.      The Wheeler Motel had a food inventory turnover of 24 times when its average food inventory is \$4,000 and the cost of employee meals was \$1,000. If cost of food sales % was 30%, what were total food sales?

a.     \$316,667

b.     \$320,000

c.     \$323,333

d.     none of the above

Solution 1:

Lets nos of rooms sold = X

Nos of double occupancy room sold = X * 40% = 0.40X

Nos of single occupancy room sold = 0.60X

Now

2*0.40X + 0.60X= 1400

X = 1000 rooms

Hence option c is correct.

Solution 2:

Owners generally prefer the lower current ratio. hence option a is correct.

Solution 3:

Once ratios are computed, they generally are best compared with industry averages.

Hence option a is correct.

Solution 4:

Current ratio = 1.5

Current assets = \$120,000

Current liabilities = \$120,000 / 1.50 = \$80,000

Quick assets = \$80,000*1.20 = \$96,000

Hence option b is correct.

Solution 5:

Cost of goods sold = Average inventory * Inventory turnover = \$4,000 * 24 = \$96,000

Cost of goods sold percentage = 30%

Foods sales = \$96,000 / 30% = \$320,000

Hence option b is correct.

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