Look at attached files and answer questions:

1. How likely does it seem that MCRI will have difficulty paying its bills in the next year? What evidence supports your conclusion?

2. Has MCRI become a more or less risky firm in which to invest during the years for which financials are provided? What evidence supports your conclusion?

3. In your judgment, how important was it to MCRI that it had strongly positive cash flows from operations (20 to 30 million dollars per year) during the years for which financials are provided? What evidence supports your conclusions?

4. How successful has MCRI been at fixing whatever problems with competitiveness or operations you noted as observable in their financials? Provide evidence to support your conclusions.

5. How well managed is MCRI, overall? Provide evidence to support your conclusions.

Monarch Casino & Resort, Inc Figures in US $1000, except share and per share data Income Statements 2009 2008 2007 133,732 61,689 72,042 141,369 65,631 75,738 159,856 68,054 93,802 selling general and administrative 50,399 51,160 49,977 other expenses 12,501 9,892 8,138 9,142 14,686 35,688 125 9,267 2,104 7,163 2,322 371 15,056 539 14,518 4,977 1,926 37,616 152 37,464 12,984 4,841 9,541 24,480 Total revenue cost of revenue gross profit operating income or loss total other income / expenses net earnings before interest and taxes interest expense income before tax income tax net income ------------------------------------------ ---------------- ---------------- ---------------- ---------------- Balance sheets current assets cash and cash equivalents 14,420 11757 38,836 net receivables inventory other current assets total current assets 3,385 1,707 2,624 22,136 3,774 1,564 2,852 19,947 6,217 1,496 3,144 49,693 long term investments property plant and equipment other assets total long term assets total assets 163,081 570 163,651 185,787 159,757 2,798 162,555 182,501 101,775 2,818 104,593 154,286 20,087 1,000 24,792 2,500 22,041 0 liabilities current liabilities accounts payable short/current long term debt - year on year declines total current liabilities 21,087 27,292 22,401 47,500 4,696 52,196 73,282 47,500 2,115 49,615 76,907 0 2,825 2,825 24,867 191 131,137 (48,865) 30,041 112,504 191 126,296 (48,943) 28,051 105,594 191 116,755 (13,269) 25,742 129,419 4,841 9,541 24,480 operating activities, cash flows provided by or used in depreciation adjustments to net income changes in accounts receivable changes in liabilities changes in inventories changes in other operating activities total cash flow from operating activities 12,767 5,025 (71) 699 (143) 2,964 26,063 9,912 3,445 563 (683) (68) 293 23,002 8,287 1,277 (2,413) 1,584 (24) (3,047) 30,139 investing activities, cash flows provided by or used in capital expenditures other cash flows from investing activities total cash flows from investing activities (15,845) (5,321) (21,166) (67,882) 3,476 (64,406) (17,287) 1,978 (15,309) financing activities, cash flows provided by or used in sale purchase of stock net borrowings other cash flows from financing activities total cash flows from financing activities 13 (1,500) 0 (2,253) (35,674) 50,000 0 (14,326) (13,271) 0 293 (12,979) 2,663 (27,079) 1,851 long term debt deferred long term liability charges total long term liabilities total liabilities stockholder's equity common stock retained earnings treasury stock capital surplus total stockholder's equity Cash Flow Net income Change in cash and cash equivalents 2009 Short term solvency ratios current ratio 1.05 2008 0.73 2007 2.22 Long Term solvency ratios total debt ratio equity multiplier times interest earned cash coverage 0.39 1.65 4.40 10.47 0.42 1.73 27.93 46.32 0.16 1.19 247.47 301.99 Asset utilization ratios inventory turnover days sales in inventory receivables turnover days sales in receivables total asset turnover capital intensity 36.14 10.10 39.51 9.24 0.72 1.39 41.96 8.70 37.46 9.74 0.77 1.29 45.49 8.02 25.71 14.20 1.04 0.97 Profitability ratios profit margin return on assets return on equity 0.04 0.03 0.04 0.07 0.05 0.09 0.15 0.16 0.19 Financials, as a percentage of Annual Revenues, or Assets (Get in the habit of doing this!!) Income Statements 2009 Total revenue cost of revenue gross profit 2008 2007 100.0% 46.1% 53.9% 100.0% 46.4% 53.6% 37.7% 36.2% other expenses 9.3% 7.0% 5.1% operating income or loss 6.8% 10.4% 22.3% total other income / expenses net earnings before interest and taxes interest expense income before tax income tax 0.1% 6.9% 1.6% 5.4% 1.7% 0.3% 10.7% 0.4% 10.3% 3.5% 1.2% 23.5% 0.1% 23.4% 8.1% net income 3.6% 6.7% 15.3% selling general and administrative 100.0% 42.6% - margin squeeze 58.7% 31.3% - a mix of declining reve - year on year declines current assets / current liabilities (total assets - total equity) / total assets total assets / total equity earnings before income taxes (EBIT) / interest expense (EBIT + depreciation) / interest expense cost of goods sold / average inventory 365 days / inventory turnover sales / accounts receivable 365 days / receivables turnover sales / total assets total assets / sales net income / sales net income / total assets net income / total equity - margin squeeze - a mix of declining revenues and relatively stable SGA expenses