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Finance Unit

Finance

Unit

A.Balance Sheet

i.Debt/equity position

Adebt/equity position is expressed as a ratio and shows a company’sfinancial leverage.

Debt-equityratio = (total liabilities)/ equity

=15884/57,039= 0.28

28%

B.Accounting

i.Books maintained by?

Notindicated but is usually it is the accountant

ii.Audited by? How often?

Notclearly indicated. However, there can be internal and externalauditors.

iii.Tax deposits and reconciliation by?

Notindicated by usually carried out by the chief accountant

C.Working Capital?

i.Maintained in what form

Currentassets and current liabilities. For the year 2016, the largestcomponent of current assets is cash on hand and restricted cash. Thelargest component of current liabilities is accounts payable andaccrued payroll and labor expenses.

D.Cash Flow

i.Seasonality

Theincome statement does not provide monthly figures to understandbetter the seasonality of the financial performance of the business.However, based on the annual data provided, it is clear that thebusiness has been on a steady decline with total revenue droppingfrom high of $106,584 in 2013 to $49,906 in 2016.

ii.Short term borrowing? Cost/Rate/Terms/Renewals

Thereare no indicated short term loans

E.Fiscal Performance

i.Past?

Therestaurant recorded impressive profit of $28,471 which was anincredible jump from the $7,535 mad in 2013. However, in 2015,profits dropped to $4,845. All these periods did not recordpre-opening expenses.

ii.Current?

Inthe current year, the firm recorded a profit of $6,636 which waseroded by high pre-opening expenses in form of repairs forcing thenet amount to drop to just $874.

iii.Future?

Inthe immediate future, profits are likely to drop to negative figuresbased on declining sales revenue and the planned replacement of majoritems that have recorded high repair bills such as the dishmachine heat booster. However, in the medium future, profits willincrease based on reduced operating experiences in form of repairs.There is a need to increase the budget for marketing in order toboost sales.

F.P&ampL Analysis

i.How often?

Annually.Some companies may opt to report quarterly, which is the most commonamong publicly listed companies.

ii.Uniform system?

Thereporting system is uniform over the year. The law such as SarbanesOxley act stipulate on acceptable reporting systems.

iii.Formal analysis

Basicformat of income system.

  1. Breakeven

Nobreakeven analysis. Normally, it examines the total sales revenueneed to cover fixed costs.

  1. Variance

Noindication of budget. Variances are the difference between budgetedamounts and actual income or expenses.

  1. National comparison

None

4.Numerics

a.Gross sales

$49,906

b.Sales mix food vs. beverage – Sales mix meals.

Lunchfood and beverages- $27,605

Cateringand banquets (outside lunch)-$22,249

c.Sales mix food items

d.Sales mix beverage items

e.Check average (by meal)

i.Gross

Lunch- $20 per guest with each guest having an average of $1.2 incomplementaries.

Cateringand banquets- $16

Totalgross spending per guest- $36

ii.Food

N/A(beverages and foods are bundled together)

iii.Beverage

N/A

f.Food cost

Totalcost food and beverages $29,352

g.Labor cost

i.Management

N/A

ii.Staff

N/A

Staffand management labor are bundled together

Grosslabor cost= $10,087

iii.By Meal/Daypart/Department

  1. Net profit—Not for profit

  1. Productivity

Manhours not indicated

  1. Calculated?

Calculatedby dividing gross sales by total man hours

ii.Used?

j.Budget/pro forma

N/A

  1. By who?

N/A

  1. How?

N/A

iii.Used?

N/A