Page 24 - Online Notes 2017 Flipbook_Neat
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Ratios
Each quarter your pub will receive a number of key ratios (also known as key performance indicators). These take
figures from your accounts and compare them to other figures in the accounts. It is the ratios that allow accountants
and analysts to get ‘under the skin’ of a set of financial statements and to work out what is going right and what is
going wrong in the business.
In the simulation, there are two useful comparisons that you can make:
This quarter’s performance to the previous quarter’s performance,
Your pub’s performance to the average score across the eight pubs of Little Chadwick.
Margins & Overheads
Gross Margin %
Gross Profit (P&L) = %
Sales (P&L)
What proportion of the sales revenue is left after paying for the stock? Remember,
the Gross Profit (or Gross Margin) is the difference between the Sales and the Cost of
Sales on the P&L.
Although important at a total level, you should also monitor your gross margins for your
separate revenue streams – drink and food (the hotel gross margin is always 100%
because there is no cost of sale).
Your total gross profit margin will depend on four factors:
1) your ‘baseline’ margin, i.e. the theoretical margin that you enter for drink and for food
sales
2) the extent of your price promotions. The bigger the promotion, the greater the dilution
of your margin.
3) stock losses - the greater your stockholding, the more stock will be wasted.
4) the mix between your revenue streams, i.e. the proportion of your total sales each revenue
stream accounts for (assuming they have different gross margin %s)
Overheads %
Overheads (P&L) = %
Sales (P&L)
What proportion of the sales revenue is taken up by the overheads? Or, for every pound of
sales, how many pence go on the overheads?
This is then broken down further:
Labour (P&L) Entertainment (P&L)
Sales (P&L) Sales (P&L)
For every pound of sales, how many pence go on labour? Or on entertainment? Or on
marketing, administration…..
.
© Virtual Village Pub Limited 2016 22
