P12-8 (Static) Analyzing Financial Statements by Using Appropriate Ratios LO12-7, 12-8, 12-9, 12-10, 12-11 MTY Food Group Inc. is a Canadian franchisor and operator of numerous quick service restaurants operating under 75 brand names such as Thai Express, Mucho Burrito, Sushi Go, Jugo Juice, Tutti Frutti, and Manchu Wok. Its annual report for 2021 included the following statements: MTY FOOD GROUP INC. Consolidated Statements of Income (loss) Years Ended November 30, 2021 and 2020 (in thousands of Canadian dollars, except per-share amounts) Revenue Expenses Operating expenses 2021 $551,903 2020 $511,117 382,572 373,806 Depreciation-property, plant and equipment, and right-of- use assets Amortization-intangible assets Interest on long-term debt Net interest expense on leases Impairment charges-right-of-use assets Net impairment charge-property, plant and equipment, intangible assets and goodwill 16,174 16,998 28,442 30,876 10,111 16,756 2,295 2,481 1,550 4,291 5,903 122,826 447,047 568,034 Share of net (loss) profit of a joint venture accounted for using the equity method (709) 508 Other (expenses) income Unrealized and realized foreign exchange (loss) gain Interest income (300) 3,230 198 408 Gain on de-recognition/lease modification of lease liabilities 1,319 2,890 Gain (loss) on disposal of property, plant and equipment, and assets held for sale 3,549 (466) Revaluation of financial liabilities recorded at fair value 3,159 (1,602) 7,925 4,460 Income (loss) before taxes 112,072 (51,949) Income tax expense (recovery) Current Deferred Net income (loss) Income (loss) per share Basie Diluted 21,036 8,360 5,093 (23,414) 26,129 (15,054) $ 85,943 $(36,895) 3.47 (1.50) 3.49 (1.50) Assets Current assets MTY FOOD GROUP INC. Consolidated Statement of Financial Position As at November 30, 2021 and 2020 (in thousands of Canadian dollars) 2021 2020 Cash 61,231 44,302 Accounts receivable 57,459 55,886 Inventories 10,707 9,415 Current portion of loans and other receivables 1,189 1,527 Current portion of finance lease receivables 89,046 90,303 Income taxes receivable 3,712 420 Other assets 2,403 2,792 Prepaid expenses and deposits 7,721 6,750 233,468 211,395 Loans and other receivables 3,049 3,233 Finance lease receivables 310,223 377,824 Contract cost asset 5,631 5,171 Deferred income taxes 185 207 Investment in a joint venture 25,911 26,612 Property, plant and equipment 17,526 16,551 Right-of-use assets 59,937 69,223 Intangible assets Goodwill 820,274 864,029 428,390 439,452 $1,904,594 $2,013,697 Liabilities and shareholders' equity Liabilities Current liabilities Accounts payable and accrued liabilities Provisions $ 119,462 $ 111,372 1,692 3,065 Gift card and loyalty program liabilities 101,889 95,233 Income taxes payable 4,256 18,335 Current portion of deferred revenue and deposits 16,100 13,747 Current portion of long-term debt 13,116 12,888 Current portion of lease liabilities 101,973 114,915 358,488 369,555 Long-term debt Lease liabilities Deferred revenue and deposits Deferred income taxes 347,612 447,654 371,575 443,834 44,339 41,367 132,653 128,773 Other liabilities 1,029 1,255,696 1,431,183 Shareholders' equity Equity attributable to owners Capital stock 305,961 306,415 Reserves (18,315) (11,185) Retained earnings 359,993 286,525 647,639 581,755 Equity attributable to non-controlling interests 1,259 759 648,898 582,514 $1,904,594 $2,013,697 Source: MTY Food Group Inc., Annual Report 2021. Additional information related to 2019 at year-end is as follows: Shareholders' equity Total assets Property, plant and equipment Accounts receivable Inventories Accounts payable and accrued liabilities $ 665,480 1,648,801 21,363 65,129 7,531 100,762 The company's market price per share was $54.71 at November 30, 2021 and $51.65 at November 30, 2020. Required: 1. For MTY Food Group Inc.'s past two years, compute the ratios given below. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Ratio 2021 2020 Profitability ratios Return on equity 13.96 % (5.91) % Return on assets 4.39% (2.00) % Gross profit margin Net profit margin Earnings per share Quality of earnings Asset turnover ratios % % % % per share per share Total asset turnover 0.28 Fixed asset turnover Receivables turnover Inventory turnover Liquidity ratios Current ratio Quick ratio Cash ratio Solvency ratios Times interest earned Cash coverage Debt-to-equity Market ratios: Price/earnings ratio Dividend yield 0.28 0.65 0.57 0.17 0.12