Can you please comment on the industry ratios and financial status for this restaurant? Given these ratios, do you think the restaurant can sustain business?

Please provide through and detailed responses and refer to the documents provided.

INCOME STATEMENT for the period ending October 1, 1997 and 1998 REVENUE 1998 1997 Food Beverage Total Revenue $124,961 165,748 43% 57% 100% $129,547 157,455 45% 55% 100% $290,709 $287,002 60,658 67,984 Cost of Goods Sold Food Beverage Total Cost of Goods Sold Gross Profit 21% 23% 44% 67,503 62,810 24% 22% 45% $128,642 $130,313 $162,067 56% $156,689 55% $ 6,767 377 7,711 74,661 4,150 2,458 267 1,856 2.33% 0.13% 2.65% 25.68% 1.43% 0.85% 0.09% 0.64% $ 6,389 377 9,294 82,733 4,124 2,079 2.23% 0.13% 3.24% 28.83% 1.44% 0.72% 0.00% 1.49% 4,266 3,651 3,440 Expenses Depreciation Amortization Restaurant Supplies Payroll Advertising Bank Charges Charge Card Discounts Entertainment TV, Cable, etc. Insurance Interest-LTD Licences Miscellaneous Office Supplies Rent Repairs & Maintenance Road Sign Telephone Travel Vehicle Utilities Total Expenses Net Income 3,068 1,525 34,580 12,091 1.26% 1.18% 0.00% 1.06% 0.52% 11.90% 4.16% 3,206 1,202 790 4,262 1,404 28,817 14,491 1.12% 0.42% 0.28% 1.49% 0.49% 10.04% 5.05% 2,070 956 0.71% 0.33% 0.00% 1.66% 4.26% $176,854 60.84% $(14,787) -5.09% 2,070 966 410 5,177 10,314 4,832 12,394 0.72% 0.34% 0.14% 1.80% 3.59% 64% -9% $182,371 $(25,682) BALANCE SHEET as of October 31, 1997 and 1998 1998 1997 ASSETS $ Current Assets: Cash Inventory Total Current Assets 511 2,000 $ 4,227 2,000 $ 2,511 $ 6,227 $ 39,145 $ 39,145 Fixed Assets: Restaurant Equipment Accumulated Depreciation - Restaurant Equipment (10 years, 0 salvage value) (8,258) $ 30,998 (4,129) $ 35,016 $ 3,151 $ 3,151 Sign Accum. Depreciation Sign (10 years, 0 salvage value) (630) 2,521 (315) 2,836 $ $ $ 7,780 $ 7,780 Vehicle Accum. Depreciation Vehicle (8 years, double-declining balance) (3,404) $ 4,376 (1,945) $ 5,835 $ 2,160 $ Computer Accum. Depreciation - Computer (5 years, double-declining balance) 1,296 (864) $ 1,296 Total Fixed Assets $ 39,080 $ 43,687 817 Other Assets: Incorporation (net) (40 years) Goodwill (40 years) Total Other Assets $ 13,495 $ 839 13,850 $ 14,312 $ 14,689 Total Assets $ 55,903 $ 64,603 1998 1997 LIABILITIES & OWNER'S EQUITY $ 6,526 Liabilities Current Liabilities: Accounts Payable Bank Overdraft' Taxes Payable (includes GST & PST)2 Salaries Payable Total Current Liabilities $ 5,892 2,849 13,013 882 $ 22,636 6,366 929 $ 13,821 Long-term Liabilities: OPMG Loan Bank Loan Total Long-term Liabilities $ 30,754 42.982 $ 73,736 $ 33,482 42,982 $ 76,464 Total Liabilities $ 96,372 $ 90,285 Owner's Equity Opening Balance, Retained Earnings $(25,682) Net Income (14,787) Total Retained Earnings $(40,469) Total Equity $ 0 (25,682) $ (25,682) _(40,469) (25,682) Total Liabilities & Owner's Equity $ 55,903 $ 64,603 RESTAURANT INDUSTRY RATIOS FIRMS UNDER $500,000 FOLEY'S END PROFITABILITY 1997 1998 1997 Return on Equity Profit Margin (Net Income Over Sales) 22.6 - 0.7 N/A 5.1% N/A - 9.0% STABILITY Debt to Equity Net Worth to Total Assets Total Debt to Total Assets 3.903 0.174 83% N/A - 0.724 172% N/A 0.397 140% LIQUIDITY Current Ratio Acid Test Working Capital 0.978 0.8325 $ (13,228) 0.113 0.023 $ (20,125) 0.451 0.306 $ (7,594) INCOME STATEMENT for the period ending October 1, 1997 and 1998 REVENUE 1998 1997 Food Beverage Total Revenue $124,961 165,748 43% 57% 100% $129,547 157,455 45% 55% 100% $290,709 $287,002 60,658 67,984 Cost of Goods Sold Food Beverage Total Cost of Goods Sold Gross Profit 21% 23% 44% 67,503 62,810 24% 22% 45% $128,642 $130,313 $162,067 56% $156,689 55% $ 6,767 377 7,711 74,661 4,150 2,458 267 1,856 2.33% 0.13% 2.65% 25.68% 1.43% 0.85% 0.09% 0.64% $ 6,389 377 9,294 82,733 4,124 2,079 2.23% 0.13% 3.24% 28.83% 1.44% 0.72% 0.00% 1.49% 4,266 3,651 3,440 Expenses Depreciation Amortization Restaurant Supplies Payroll Advertising Bank Charges Charge Card Discounts Entertainment TV, Cable, etc. Insurance Interest-LTD Licences Miscellaneous Office Supplies Rent Repairs & Maintenance Road Sign Telephone Travel Vehicle Utilities Total Expenses Net Income 3,068 1,525 34,580 12,091 1.26% 1.18% 0.00% 1.06% 0.52% 11.90% 4.16% 3,206 1,202 790 4,262 1,404 28,817 14,491 1.12% 0.42% 0.28% 1.49% 0.49% 10.04% 5.05% 2,070 956 0.71% 0.33% 0.00% 1.66% 4.26% $176,854 60.84% $(14,787) -5.09% 2,070 966 410 5,177 10,314 4,832 12,394 0.72% 0.34% 0.14% 1.80% 3.59% 64% -9% $182,371 $(25,682) BALANCE SHEET as of October 31, 1997 and 1998 1998 1997 ASSETS $ Current Assets: Cash Inventory Total Current Assets 511 2,000 $ 4,227 2,000 $ 2,511 $ 6,227 $ 39,145 $ 39,145 Fixed Assets: Restaurant Equipment Accumulated Depreciation - Restaurant Equipment (10 years, 0 salvage value) (8,258) $ 30,998 (4,129) $ 35,016 $ 3,151 $ 3,151 Sign Accum. Depreciation Sign (10 years, 0 salvage value) (630) 2,521 (315) 2,836 $ $ $ 7,780 $ 7,780 Vehicle Accum. Depreciation Vehicle (8 years, double-declining balance) (3,404) $ 4,376 (1,945) $ 5,835 $ 2,160 $ Computer Accum. Depreciation - Computer (5 years, double-declining balance) 1,296 (864) $ 1,296 Total Fixed Assets $ 39,080 $ 43,687 817 Other Assets: Incorporation (net) (40 years) Goodwill (40 years) Total Other Assets $ 13,495 $ 839 13,850 $ 14,312 $ 14,689 Total Assets $ 55,903 $ 64,603 1998 1997 LIABILITIES & OWNER'S EQUITY $ 6,526 Liabilities Current Liabilities: Accounts Payable Bank Overdraft' Taxes Payable (includes GST & PST)2 Salaries Payable Total Current Liabilities $ 5,892 2,849 13,013 882 $ 22,636 6,366 929 $ 13,821 Long-term Liabilities: OPMG Loan Bank Loan Total Long-term Liabilities $ 30,754 42.982 $ 73,736 $ 33,482 42,982 $ 76,464 Total Liabilities $ 96,372 $ 90,285 Owner's Equity Opening Balance, Retained Earnings $(25,682) Net Income (14,787) Total Retained Earnings $(40,469) Total Equity $ 0 (25,682) $ (25,682) _(40,469) (25,682) Total Liabilities & Owner's Equity $ 55,903 $ 64,603 RESTAURANT INDUSTRY RATIOS FIRMS UNDER $500,000 FOLEY'S END PROFITABILITY 1997 1998 1997 Return on Equity Profit Margin (Net Income Over Sales) 22.6 - 0.7 N/A 5.1% N/A - 9.0% STABILITY Debt to Equity Net Worth to Total Assets Total Debt to Total Assets 3.903 0.174 83% N/A - 0.724 172% N/A 0.397 140% LIQUIDITY Current Ratio Acid Test Working Capital 0.978 0.8325 $ (13,228) 0.113 0.023 $ (20,125) 0.451 0.306 $ (7,594)