Greasy Spoon Restaurant Balance Sheet

ASSETS

2017 2016

Cash $12,000 $31,000 Marketable Securities 66,000 82,000 Accts. Rec. 152,000 104,000 Inventories 191,000 145,000 Total Current Assets $421.000 $362,000

Gross Fixed Assets $195,000 $180,000 Less: Accumulated Depreciation 63,000 52,000 Net Fixed Assets $132,000 $128,000

Total Assets $553,000 $490,000

Liabilities and Equity

A/P $136,000 $126,000 Notes Payable 200,000 190,000 Accruals 27,000 25,000 Total Current Liabilities $363,000 $341,000

Long Term debt 38,000 40,000

Total Liabilities $401,000 $381,000 Equity Common Stock (100,000 shares $.20 par) $ 20,000 $ 20,000 Paid in capital in excess of par 30,000 30,000 Retained earnings 102,000 59,000 Total Equity $152,000 $109,000

Total Liabilities and Equity $553,000 $490,000

Greasy Spoon Income Statement 2017

Revenue $1,550,000 Less: Cost of goods sold 1,030,000 Gross Profit $ 520,000 Less: Operating Expenses Selling Expense $150,000 G and A Expense 270,000 Depreciation Exp 11,000 Total Operating expenses 431,000 Operating Profits $ 89,000 Less: Interest expense 29,000

Profit before tax $ 60,000 Less: taxes (20%) 12,000

Net Profit After taxes $ 48,000

Greasy Spoon Statement of Retained earnings 2017

Retained earnings balance (1/1/2017) $ 59,000 Plus: Net income 48,000 Less: Dividends 5,000 Retained earnings (12/31/17) $ 102,000

Greasy Spoon Restaurant

Table 1

Profits, dividends, and retained earnings, 2011-2017

Year Net Profit Dividends Paid Contribution to retained earnings

2011 ($50,000) $ 0 ($50,000)

2012 ( 20,000) 0 ( 20,000)

2013 15,000 0 15,000

2014 35,000 0 35,000

2015 40,000 1,000 39,000

2016 43,000 3,000 40,000

2017 48,000 5,000 43,000

2016 Additional Information needed to calculate the ratios

Revenue $1,400,000 Cost of goods sold 1,000,000

Questions

1. Prepare a cash flow statement for 2017.

2. Calculate the following ratios for 2016 and 2017:

Current ratio, ROA and ROE using the DuPont models, inventory turnover, and earnings per share.

3. Compare the results in a narrative simply state whether the company is doing better or worse in these areas and describe why that is the case.