Balance Sheet 2. 3. 4. 5. Quality Indicator Checklist Does company collect? Are Days Receivable nearly equal to Payment Terms? Does Company pay? Are Days Payable about equal to Payment Terms? Are Payables Inventory? Are Days Accrual about equal to the payroll cycle? Are taxes current? Does Company control its inventory? Are Days Inventory nearly equal to the Inventory cycle? Are Officers Committed? Are there notes receivable? Are there notes payable or subordinated officer debt? (Officer debt is a good indicator is truly subordinated) Does the Company have a profitable operating history? Are retained earnings positive? Yes/No/Neutral Profit & Loss Statement 2. 3. 4. 5. Is Company Growing? Are Sales Rising? Does Company Maintain Margins? Is COGS/Sales stable? Does company control overhead? Is SGA/Sales stable or falling? Is company profitable? Is Operating Profit/Sales stable or rising? Is EBT/Sales stable or rising? Is there any hidden cash flow? Are there any discretionary expenses available to repay debt? RESTAURANT CO. PROFIT & LOSS STATEMENT Year 1 Year 2 Year 3 39 SALES 950 1100 1250 40-COGS 380 440 500 41 GROSS PROFIT 570 660 750 42-SGA 315 425 465 43 OPERATING PROFIT 255 235 285 44-OWNERS SALARY 120 100 140 45-DEPR & AMORT EXP 30 30 30 46-INTEREST EXP 47-RENT 85 90 95 48 +/- OTHER INC/EXP 49 EBT 20 15 21 50-INCOME TAXES 4 3 4 51 PAT (Profit After Tax) 16 12 17 ASSETS 1 Cash & Mktable Securities 2 Accounts Receivable 3 Inventory 4 Prepaid Expenses 5 6 Year 1 Year 2 Year 3 40 0502 10 30 0202 9 20 2392 7 8 CURRENT ASSETS 57 43 34 9 Net Fixed 130 120 110 10 Notes Receivable 11 Investment in Subsidiaries 12 Intangibles 10 13 Other 48 11 10 10 69 89 14 15 TOTAL ASSETS 245 242 243 16 Note Payable - Bank 17 Note Payable - Other 18 Accounts Payable 20 19 Accruals 20 Income Tax Payable 21 Current Portion LTD 20 232 20 35 40 22 2 20 20 45 20 22 23 24 LIABILITIES & NET WORTH 25 CURRENT LIABILITIES 75 80 85 26 Long Term Debt 120 100 27 Subordinated Officer Debt 80 80 28 29 30 TOTAL LIABILITIES 195 180 165 31 Common Stock 40 40 40 32 Cap. Surplus & Paid in Cap. 33 Retained Earnings 10 22 22 38 34 (Less) Treasury Stock 35 TOTAL NET WORTH 50 62 78 36 TOTAL LIABILITIES & NW 245 242 243 37