We apply add-backs or add-ons to all our Profit & Loss financial analysis statements.
This is done to create a level playing field so you can compare one motel's financials with another when similar add-back amounts apply to each statement.
For example we apply $3000.00 per annum for the running of a motor vehicle in a motel. So, if $7000. 00 was stated as a running cost an add-back of $4000.00 would apply. If an amount is less than the applied avarage amount the entry would be an add-on.
Listed below are averages we apply to our reports.
- Advertising Allowance 2.5% of Turnover
- Credit card Allowance 1% of Turnover
- Depreciation - see note below
- Management - when the motel is under a management structure
- Owners drawings, wages and superannuation
- Relief Manager Allowance $5600.00 - 28 days @ $200.00 per day
- Non reoccurring one-off expenses
Depreciation including Repairs & Maintenance.
This area attracts a great deal of controversy. We apply the following logic by classifying the motel at three levels of a 10 year maintenance/refurbishment cycle.
- High Maintenance - Older motel which has not been kept up to date.
- Medium Maintenance - Older motel which has been kept up to date, however the bedrooms & bathrooms are not of modern size.
- Low Maintenance - Modern design motel which has been kept up to date.
Depreciation is deducted from the Balance Sheet and Repairs & Maintenance is deducted from the Profit & Loss with the following percentages applied to our Profit & Loss analysis reports.
The following overall percentages are applied to the joint Depreciation, Repairs & Maintenance, being up to 11% of annual turnover for High Maintenance and as low as 5% for Low Maintenance motels. These percentages exclude the Turnover and Expenditure of a motel restaurant.