Reading a balance sheet, for hotel managers

Most hotel managers can read a guest in seconds. Far fewer can read a balance sheet.

That gap costs money, and it usually shows up quietly.

I've put together a short deck for department heads who manage budgets but never trained in finance. Here's what it covers.

The P&L tells you if you made money over a month or a year. Revenue minus costs.

The balance sheet is a photograph taken on one day. What the business owns, and what it owes. Assets always equal liabilities plus equity.

The cash flow statement shows where the cash actually went. Profit and cash aren't the same thing. A hotel can post a good month and still struggle to pay suppliers if corporate accounts are slow to settle.

The three are linked. Net profit starts the cash flow statement. Closing cash lands on the balance sheet. Once you see that loop, the rest gets easier.

You don't need every ratio. A few questions do most of the work.

How fast do we collect? If MICE and corporate receivables sit at 75 days, you're financing your clients.

How fast does stock move? A cellar that turns twice a year is cash sitting in bottles.

Can we pay what's due this month? Check the current and quick ratios.

How much debt is the asset carrying? Lenders watch interest cover closely. So should the GM.

Is the capital earning its keep? ROIC only signals value when it beats the cost of that capital.

The deck is attached. Happy to share the template with anyone who'd find it useful.