1. A bank wants to estimate the value of inventories or fixed assets pledged by a borrower as collateral in the event of default on a loan. Discuss why the value of this collateral is affected by the likely reasons that a borrower might default on its loan. In particular, compare the value of the collateral in the event of bankruptcy for a firm where the most likely reason for bankruptcy is due to risky investments in derivative securities to a more typical firm where failure of the firms core business is the main source of bankruptcy risk.

2. For each of the following examine whether it provides evidence the Brinker is trying to conserve cash: advertising spending, capital expenditures, dividends, and share repurchases. Provide the numbers that led you to your conclusions.

3. Calculate the following ratios for Brinker International. Use the cash flow statement and the other financial statements included with the third homework.

a) cash flow from operations to average total liabilities ratio b) net working capital to total assets ratio c) interest coverage ratio

4. Calculate the number of days in the cash business cycle for Brinker International. Food and beverage costs should be used as the cost of goods sold.

Brinker 2021 financial statements