Hello, I am having a really difficult time with this final. I was pretty much lost as we got to the Income Statement Chapter in the class and everything has gone downhill from there. Can someone give me some guidance on this?

Moores Familay Restaurant Financial Data Budget Worksgheet Sales Cost of Product Labor Benefits Utilities Loan Principle Repayments Insurance & Property Taxes Services (accounting, trash, cleaning, etc.) Other: SG&A, advertising, promostions Total Costs Earnings Before Interest, Income Taxes, & Depreciation (EBITD) Interest on loan Income Taxes Depreciation on values Earnings After Interest, Income Taxes, & Drpreciation Meals Sold 2011 $1,552,574 $543,401 $363,552 $79,872 $54,340 $20,000 $110,000 $41,051 $77,629 $1,289,845 $262,729 $5,000 $76,364 $41,176 $140,189 233392 2012 Percent of Amount Changes $1,795,411 $676,440 $481,730 $114,519 $50,644 $20,000 $100,000 $43,908 $84,771 $1,572,012 $223,399 $4,500 $88,592 $41,777 $88,530 232328 2013 Budget Forecast Answer to number 10 Answer to number 11 Answer to number 12 Answer to number 13 $11,529 $69,173 $20,000 $110,000 Answer to number 14 -10% $76,294 Answer to number 15 ANswer to number 16 $3,000 $41,777 $41,177 11617 246267.68 Moores Familay Restaurant Financial Data Income & Expense Statement Sales Cost of Product Labor Benefits Utilities Loan Principle Repayments Insurance Property Taxes Services (accounting, trash, cleaning, etc.) Other: SG&A, advertising, promostions Total Costs Earnings Before Interest, Income Taxes, & Depreciation (EBITD) Interest on loan Income Taxes Depreciation on values Earnings After Interest, Income Taxes, & Drpreciation Meals Sold Average Meal Value Historic Performance (Old Business Model) % Change 2007 2008 2009 2010 2007-2010 $1,170,000 $1,198,080 $1,166,880 $1,281,712 -9.55% $585,000 $614,250 $644,963 $677,211 -15.76% $298,600 $294,856 $292,516 $288,772 3.29% $46,269 $48,651 $48,265 $47,647 -2.98% $58,500 $61,425 $58,047 $67,721 -15.76% n/a $35,000 $65,000 $100,000 $115,000 -228.57% $7,560 $8,505 $8,505 $9,072 -20.00% $20,000 $21,000 $21,000 $26,000 -30.00% $6,800 $13,600 $27,200 $35,360 -420.00% $1,060,729 $1,127,287 $1,200,495 $1,266,783 -19.43% $109,271 $70,793 -$33,615 $14,929 86.34% n/a $30,596 $19,822 $4,800 $2,687 91.22% n/a $78,675 $50,971 -$38,415 $12,241 84.44% 312,000.00 299,520.00 291,720.00 279,240.00 10.50% 3.75 4.00 4.00 4.59 -22.40% 2007-2010 Moore's Family Restaurant Assets & Liabilities projected to 12/31/12 ASSETS Cash $489,118.00 Accounts Receivable $47,095.00 Prepaid Expenses $10,000.00 Total Current Assets $546,213.00 LIABILITIES Accounts Payable $105,566.00 Wages and Benefits Due $19,543.00 Estimated Taxes and Fees $7,013.00 Total Current Liabilities $132,122.00 Building Equipment Fixtures Long Term Loan $60,000.00 Total Long-Term Liabilities $60,000.00 Total Fixed Assets Total Assets $750,000.00 $15,000.00 $35,000.00 $800,000.00 $1,346,213.00 Owner Equity $1,154,091.00 Total Liabilities and Owner Equity $1,346,213.00 BFM 300 Final: Moore's Family Restaurant Case Study Note: All financial data in this case is found in the excel spreadsheet that goes along with this case study. A. Past & Current Operations \"Moore's Family Restaurant\" is a restaurant on the edge of the downtown area in a medium-size, eastern city. It is on one corner of a major federal highway and a busy cross-town state highway with easy access to the interstate. The restaurant has a reputation for good \"home cookin'\" at reasonable prices. It provides an ample but simple \"1920's/1930's\" sit-down area for eating. Many of its customers have been coming here for years although most of them have moved to the suburbs so fewer stop in as much anymore. The restaurant was founded in 1916 by Sam Moore who ran it until his son George took over in 1945. George Moore turned the business over to his son, George, Jr. in 1975. For the next 20 years or so George Moore, Jr. ran the business with his brothers and a sister until they lost interest in the business. The last of Mr. Moore's siblings relinquished any ownership in the business to Mr. Moore in 1997. The restaurant has always served meals prepared from fresh, home-made and local products obtained from farms, provision houses and local merchants. The restaurant has an active alcohol beverage license, but no longer uses it. The restaurant stopped serving alcohol in the '70's when the neighborhood began to change. Furniture, fixtures and equipment are old, but fully serviceable and reasonably efficient for the business volume. Despite its age and use many customers comment on the \"charm\" of the dcor and how the \"place never changes.\" The restaurant has had no difficulty with health authorities, customers or neighbors. Since the restaurant was founded the downtown area has changed from one thronged with neighborhood residents, shoppers, factory and warehouse workers to one with a dwindling number of office workers, government workers and transient motorists. During this same period the number of family-owned and -operated restaurants has declined steadily, being replaced by chain restaurants and up-scale \"white table cloth establishments.\" From being the only restaurant in the neighborhood Moore's Family Restaurant now has competition: Wendy's, KFC, and Taco Bell are on the other 3 corners of the intersection at which it's located. As a result of these changes, changes in consumer preference and other reasons, business and profits declined for several years. In 2010 Mr. Moore asked his son, Tom, who is an executive with a local company and a Wilmington University MBA, for a \"strategic plan\" for the restaurant. Tom, in turn, asked some friends of his, a team of consultants with whom he worked, to \"come in and take a look at the business in order to help out my dad.\" The consulting team recommended that Mr. Moore take advantage of the \"old fashioned\" dcor and Moore Family Restaurant's reputation to convert it into an upscale \"theme\" restaurant. They also made these recommendations: Re-appraise the value of the land, building and fixtures to reflect current values (increases in the 30+ years since the values on the balance sheet were set). Apply for an \"Inner City Renovation Grant\" for preferential loan and tax rates for renovated property in the city's core. Activate the liquor license, refurbish the restaurant, put in a 1920's \"speakeasy\" bar, but don't change the \"antique\" appearance. Take out a revolving line of credit (which it could draw upon if needed) of up to $100,000 against the re-appraised value of land and buildings to pay for the improvements. Change the source (but not the nature or quality) of food, supplies and services to reduce costs; upgrade and professionalize the labor (cooks and servers); revise pricing and the \"business model\". Continue to accept credit cards (Master Card, Visa, American Express & Discover) for 50% of meals are charge sales. Use 365 as the number of \"selling days\" per year to coincide with bank practice and calculations. Mr. Moore followed all the recommendations, which resulted in the financial statements in the excel spreadsheet that accompanies this exam. Use the data in the excel document accompanying this exam to compute these ratios for 2012 in the Final Exam Test (next item on the Blackboard site). You may find this worksheet helpful to make your calculations and review them before submitting them to the actual test in Blackboard. B. Potential Retirement Through good years and not so good, Mr. Moore maintained that he enjoyed the business and wanted to stay in business as long as possible, particularly in order to participate in the current economic boom. But, Mr. Moore is in his 60's. He is concerned about the business' future as well as his own. On the one hand he says he would like to \"run the business as always, for as long as I'm able\"; on the other hand he has been heard to say \"it gets harder all the time. Maybe I should just pack it in.\" At the end of 2011 Mr. Moore asked if he would be able to retire at that time. The consulting team evaluated selling the business for its book value (Owner Equity). The team would use the Owner Equity in the business realized from a sale in order to buy an investment that would pay Mr. Moore 6% per year (paid annually in one payment). At the end of 2009 Mr. Moore was 61 years old. It was suggested that he plan to live until he is 100 to make sure his money lasts, thus the money would be invested for 39 years. Mr. Moore said he'd consider retiring if the investment could produce $100,000 per year for his retirement so he can indulge in his passions - badminton, bocce and butterflies. C. Ongoing Operations Use data below for questions 10-16 in this section and the data in the MS Excel attachment to calculate a budget for 2013. Hint: You may find it helpful to create a \"standard\" P&L which states all data as a percent of sales. Some \"planning\" questions will provide all needed data in the questions themselves. Mr. Moore believes that roughly 6% more meals can be served in 2013 so he plans to serve 246,268 meals in 2013. He also plans to adjust prices so an average meal will be $7.35 per meal. Hint: \"Sales\" have been calculated as number of meals served x average price per meal. The consulting team believes that the cost of product (calculated as a percent of sales) can be 30% of sales in 2013. Mr. Moore agrees and wants to budget that reduction in the cost of product. Mr. Moore wants to keep the good staff he hires and so is planning to give \"cost of living raises\" of 4% over 2012 in the next year. Benefits will remain at the current 35% of the labor cost next year. The utility companies have advised all business customers that rates will increase by 20% next year. According to the loan agreement, repayment of principle on the long term loan will remain at $20,000 per year but the interest amount on the outstanding balance will decline to $3,000 in 2010.* Because of agreements with the city and the insurance company (from whom he received his loan) taxes and insurance will remain the same in 2013.* Likewise depreciation expense will remain the same as in 2012.* These values have been entered on the worksheet; there is no need to calculate these amounts. Calculate and enter only those amounts on the exam with question numbers' shown. * Services are expected to grow by 7% next year plus an added $40,000 is to be budgeted for extra accounting services. Other Expenses (GSA, advertising and promotion and other) are expected to decline by 10% from 2012. The heavy advertising of the new restaurant should not be necessary and there's been time to plan for some other efficiencies. The income tax rate is expected to be 28% of EBITD which is reduced for interest and depreciation, the same percent of EBITD as in 2012. D. Retirement Revisited (Questions 17 and 18) Assume Mr. Moore operates the \"Reengineered Business\" until the end of your budget period (2013). At that time he would sell the business for its book value (Owner Equity). It is estimated that the Owners Equity would grow to at least $1,650,000. Mr. Moore would use this amount to buy an investment that would pay him 4% per year (paid annually in one payment). At the end of 2013 Mr. Moore will be eligible for Social Security payment of $13,500 per year at that time. It was suggested that he plan to live until he is 100 to make sure his money lasts, thus the money would be invested for 35 years. Mr. Moore said he'd consider retiring if the investment and Social Security produced a total of $100,000 per year for his retirement. BFM 300 - FINAL EXAM QUESTIONS You will find the excel worksheet that goes along with this final essential to make your calculations. Please use the numbers off that spreadseheet and review your calculations for accuracy before submitting your answers to Blackboard. Ignore categories or calculations not mentioned in this case or for which there are no questions on the exam. Exam Questions: 1. What is the profit margin on sales for 2012? Round the answer to the nearest whole percentage and show the percent (%) sign. 2. What is the current ratio for 2012? 3. What is the average collection period for 2012? Assume there are 365 \"selling days\" in the year. Show the answer rounded to the nearest whole number. 4. What is the fixed asset turnover for 2012? 5. The balance sheet as of 12/31/11 shows that Owner Equity was $698,918. If this amount were invested at 6% paid out annually for 39 years, what annual income would the investment produce? (Tip: His investment would be a \"payment\"). 6. The following are options for increasing the return on Mr. Moore's retirement income (as calculated in number 5 ): Work a little longer, invest at a higher rate of return, sell the business for more (that is, increase \"PV\"), increase the number of years for which the money is invested, wait to become eligible for social security payments T/F 7. What is the Return on Equity for 2012? 8. What is the Return on Total Assets for 2012? 9. In your opinion is this a \"viable business\" that Mr. Moore can operate for \"as long as he wants to\"? 10. What is to be the Sales budget for 2013? 11. What is to be the Cost of Product for 2013? 12. What is to be the Labor budget for 2013? 13. What is to be the Benefits budget for 2013? 14. What is to be the Cost of Services for 2013? 15. What are Total Costs to be budgeted for 2013? 16. What are Earnings before Interest, Taxes and Depreciation (EBITD) to be for 2013? 17. Mr. Moore is considering selling the business at the end of 2013 for his Owners Equity (projected to be at least $1,650,000) and using that amount to buy an investment that would pay him 4% per year (paid annually in one payment) for 35 years. What would the annual payment from such an investment be? 18. Will the combination of investment return and Social Security payments described in the text of the case meet Mr. Moore's minimum retirement goals? 1) No 2) Yes, it exceeds his goal by just under $2,000. 3) Not enough information to tell 4) Yes. It exceeds his goal by well over $20,000. 19. When he was 30 years old, about the time he took over the restaurant from his father, Mr. Moore bought an unusual insurance policy: it was in the form of a \"zero coupon\" bond. The bond paid 7% per year and guaranteed him $375,000 when it matured in 40 years from the time he bought it (when he reached his age 70). He paid a single premium amount and no further payments were necessary. What did Mr. Moore pay for the policy when he bought it? Hint: This is a problem in PV (present value). 20. To facilitate getting supplies and to test the idea of going into the catering business for parties, company affairs, etc. Mr. Moore bought a small SUV as a delivery truck for $55,000. He financed it for 5 years at 7.00% and will make equal payments each month for the 5 years. What will the monthly payments be? 21. About the SUV that Mr. Moore bought for $55,000.00 and financed at 7.00% for 5 years: When the vehicle is paid off, how much will have been paid for the truck? 22. When shopping to buy the SUV for a delivery truck, a dealer offered you this choice on the purchase price of $50,000: Cash Back Option - $8000 \"Cash Back\" and the balance paid in yearly installments at 5% (compound interest) per year for 3 years (to be applied as a downpayment to reduce the price) Full Price Option - full price ($50,000) paid at no interest over 3 years. Under which option will the truck cost the LEAST? Hint: Don't forget to take \"cash back\" into account. 1) Can't tell. Need more information about alternative investment and finance rates. 2) The \"Cash Back\" option 3) The \"Full Price\" option 4) Either option. They both produce the same result. 23. Mr. Moore plans on replacing and/or upgrading the furniture, fixtures and machinery (stoves, refrigerators, AC, etc) in 10 years when it's expected to wear out. The estimated replacement cost is $200,000. How much must the company save each year at 5% to accumulate enough to replace the machine? (Hint: Switch \"mental gears\" to TVM?) Again, please refer to the excel spreadsheet that comes with this exam for data needed to answer the problems. In that sheet is located current and historical P&L information along with balance sheet information. This information is critical to your being able to answer the questions