A restaurant has the following statistical information calculated from its financial statements for the past three years:

Using this information, answer each of the following questions and explain your answer. A simple yes, no, more, less, or maybe won’t do! A comment is required in each case.

a. Are current assets in relation to current liabilities increasing or decreasing?

b. Is the restaurant becoming more or less efficient in the collection of its credit card receivables?

c. Is the restaurant becoming more or less efficient in the collection of its accounts receivable?

d. Over the three-year period, has more or less money been tied up in food inventory?

e. With the stockholders’ viewpoint in mind, is profitability improving or not improving?

f. If the restaurant needed to borrow capital through long-term debt, would it be easier to find a lender now than three years ago?
g. Has the restaurant been using leverage to the advantage of the stockholders over the three-year period?LO1

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Year 0006 Year 0007 Year 0008 Current ratio 1.24:1 1.18:1 1.05:1 Credit card turnover ratio Accounts receivable turnover 91 times 93 times 98 times 14 times 24 times 31 times Food inventory turnover ratio 38 times 44 times 48 times Total liabilities to total equity 1.94:1 2.52:1 2.95:1 Return on stockholders' equity Annual sales revenue 7.7% 9.6% $880,000 $882,500 9.9% $872,300