Flow-Through

The Flow-Through calculator computes the Flow-Through associated with a business' ability to cause more revenue to equate to more operating profits.

INSTRUCTIONS: Choose currency and enter the following:

• (GOP_T)  Gross Operating Profits from This Year.
• (GOP_L)  Gross Operating Profits from Last Year.
• (TR_T)  Total Revenue from This Year.
• (TR_L)  Total Revenue from Last Year.

Flow-Through (FT): The calculator returns the Flow-Through as a percentage.  However, this can be automatically converted to a real number via the pull-down menu.

The Math / Science

The Flow-Through formula is: 

   FT = (GOP_T-GOP_L)/(TR_T-TR_L)

where:

• FT = Flow-Through
• GOP_T = Gross Operating Profits from this year
• GOP_L = Gross Operating Profits from last year
• TR_T = Total Revenue from this year
• TR_L = Total Revenue from last year

A legal business entity that passes income on to the owners and/or investors. Flow-through entities are a common device used to limit taxation by avoiding double taxation. Only the investors/owners are taxed on revenues, not the entity itself.

Resource:

• Dopson, Lea R., and David K. Hayes. Managerial Accounting for the Hospitality Industry. Hoboken, NJ: Wiley, 2009. Print.
• "Flow-Through Entity Definition | Investopedia." Investopedia. N.p., 25 Nov. 2009. Web. 07 Aug. 2015.