What Is the Formula Managers Use to Calculate a Foodservice

question 15

Multiple Choice

What is the formula managers use to calculate a foodservice operation's profits?

• A) Revenue - Expense = Profits
• B) Revenue + Expenses = Profits
• C) Sales + Food cost - Labor cost = Profits
• D) Sales + Food cost + Labor cost = Profits

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Definitions:

Cash Flow on Total Assets

A measure of the efficiency with which a company generates cash from its assets, calculated as cash flow from operations divided by total assets.

Ability to Meet Obligations

A financial assessment of whether a company or individual has the resources necessary to pay off their debts as they come due.

Return on Assets

A profitability ratio that measures how efficiently a company is using its assets to generate earnings.

Direct Method

In cash flow reporting, a method that shows the specific sources and uses of cash, categorizing cash flows into operating, investing, and financing activities.