Prime Restaurants Inc. (PRI) is a Canadian public company that operates casual dining restaurants, including East Side Mario's and Casey's, in addition to restaurants, pubs, and Belgian-style brasseries called Bier Markt.
Service Inspired Restaurants (SIR Corp.) is a privately held Canadian company that owns and operates full-service restaurants, including Alice Fazooli's, Jack Astor's, and Loose Moose Tap & Grill.
Instructions
(a) Although the companies are similar, PRI has chosen to be a public company while SIR Corp. is privately held. Why do you think the two companies chose different types of ownership structure?
(b) When PRI or SIR purchases new restaurants, part of the payment may be in shares of PRI or SIR. How would PRI determine the fair value of its shares for this purpose? How would SRI Corp. determine the fair value of its shares? Which fair value measure would be the more reliable?
(c) Since PRI is a public company, it uses IFRS and is required to disclose earnings per share. SIR uses ASPE and is not required to report earnings per share. Why do you think the standard setters do not require private companies to disclose their earnings per share?
(d) For public companies, earnings per share is one of the key performance measures used by investors to evaluate their investment. What types of performance measures would SIR Corp.'s investors use to evaluate their investment?