9. You decided to pay yourself as the Restaurant Manager $2,500/mth until business grew. 10. Sales began slowly as can be expected in January, but picked up after March. The average sell- ing price per meal was $12. For the year, sales averaged $30,000 per month. 11. The cost of the goods sold was not very high, averaging 20% of sales. 12. Utility costs were as follows: Electricity $250/mth; Gas $300/mth; Water $200/mth; Telephone and Internet $300/mth. 13. Property and Liability Insurance: $1,800/yr. 14. Your vehicle expenses for gas, maintenance and car insurance totalled $4,000 for 2021. 15. As a small business, your Federal Tax rate is 9% and your Provincial Tax rate is 3%. 16. As of December 31 2021, you had no accounts receivable from your customers, but you owed your food and beverage suppliers $3,500. All other expenses were fully paid up. Your inventory of food and beverage ingredients amounted to $2,500. Income Statement Sales Less COGS Gross Profit Less Expenses (List) Total Expenses Net Profit Before Tax Taxes $$ Balance Sheet $$ Current Assets (List) Fixed Assets (List) Less Depreciation Total Assets the following sin Current Liabilities (List) Long Term Liabilities (List) Owners Equity Retained Earnings Net Profit After Tax Total Liabilities and Equity Managing Strategically Capstone - BMGT 265 Financial Analysis SANTONIA, Claire Name: Student #: No1580040 Objectives: Being able to read and analyze financial statements is an important skill for managers and investors. The objectives of this assignment are therefore to: 1. To assess your understanding of financial statements 2. To use financial statements to calculate financial ratios 3. To refresh calculation of breakeven analysis 4. To understand the different methods of valuing a business 1. Use the information below to create an Income Statement and Balance Sheet at the end of the first year of your new business You have just completed your first year in your own business. You have used all your experience work- ing at McDonald's and Tim Horton's to fulfil your dream of having open your own restaurant. All your friends and family said you won't be able to compete against the big chains, but you managed to survive your first year of business. But you do not really know if you made money or not, or how best to finance future expansion. So you thought it would be best to draft an income statement and balance sheet using the principles you learnt in your accounting and finance courses at Humber College. Use the information below to draft your fist year income statement and balance sheet for January 1 to December 31, 2021. On your Income Statement, be sure to detail your sales, COGS, Gross Profit, Expenses, Net Profit before tax, Net profit after tax. On your Balance Sheet, be sure to detail your Fixed Assets, Current Assets, Liabilities, Retained Earnings and Equity. Your first year of business went like this: 1. You decided to use your savings of $20,000 to start your new restaurant. 2. You registered your business as a Corporation, with 20,000 nominal shares of $1 each. 3. You went to your bank with your business plan to request a loan. They rejected your request as you did not have enough capital, collateral or credit history with the bank. 4. Your family gave you $30,000 to start your business. They did not expect any interest, but ex- pected to be paid back over the next 5 years. 5. You found a great location in Toronto to rent for $4,000 per month. You purchased the following: a. Stoves, fridges, freezers and other kitchen equipment for $15,000 to be depreciated at 20% per year. b. Tables, chairs and other furniture for $10,000, to be depreciated at 10% per year. c. Signage and fixtures for $5,000, to be depreciated at 10% per year. d. Cutlery, utensils, wares, pots, pans, menu's etc. for $5,000. These are expensed in the first year. e. You used your own car for your business which was valued at $5,000, and is to be depre- ciated at 20% per year. 6. You opened your restaurant on January 1, 2021 7. You launched your website and started advertising your opening specials on Social Media and your local community newspapers. Your spent $5,000 in marketing expenses in 2021. 8. You hired two employees, one for the kitchen and another to serve customers. You would fill in as required. You paid your employees $15 an hour. They worked 10 hours/day from 11 am - 9pm 6 days a week. 2 Use the financial statements above to calculate the following measures: Measure 1. Current Ratio 2. Debt to Equity Ratio 3. Gross Margin 4. Return on Sales (ROS) 5. Return on Equity (ROE) 6. Earnings per Share (EPS) 7. Price Earnings Ratio (PE) Formula Current assets / current liabilities Total debt/total equity Gross profit/ sales Net profit/ sales Net profit/total equity Net profit/ shares outstanding Share Price/EPS Value 3. The general formula for calculating break-even units is Break-Even Units = Total Fixed Costs / (Unit Selling Price Unit Variable Cost). Considering the variable costs, fixed costs and average monthly sales, how much sales are required monthly to break even? Show your working. State your assump- tions. - 4. Calculate the value of this business using the following simplified (rule of thumb) measures: Measure 1. Cash Flow 2. Earnings Multiplier Formula 3 x (Net Profit + Depreciation + Bank Interest) 5x EPS x Shares Outstanding Value 3. Market Value 4. Book Value Share price x Shares Outstanding Assets Liabilities