P13-9 (Algo) Computing and Analyzing Ratios LO 13-4, 13-5, 13-6, 13-7, 13-8 Kansas Pizza Pantry opened its first restaurant in Lawrence, Kansas in 1985. Almost immediately after the first location opened, it expanded from Kansas Pizza Pantry to more than 250 locations in more than 30 states and 11 countries. Kansas Pizza Pantry completed an initial public offering in August 2000. Several years ago, Silver Capital completed the acquisition of Kansas Pizza Pantry and, as a result of the acquisition, the company's common stock is no longer publicly traded. KANSAS PIZZA PANTRY, INC., AND SUBSIDIARIES Consolidated Statements of Operations (amounts in thousands, except for per share data) Year 3 Year 2 Year 1 Revenues: Restaurant sales $628,807 $653,085 $666,516 Royalties from licensing agreement 7,202 8,639 6,850 Domestic franchise revenues 5,080 3,134 3,207 International franchise revenues 3,753 2,258 3,021 Total revenues 644,842 667,116 679,594 Costs and expenses: Food, beverage and paper supplies 150,532 155,981 165,976 Labor 237,583 248,250 247,726 Direct operating and occupancy 143,320 142,873 140,817 Cost of sales 531,435 547,104 554,519 General and administrative 50,911 48,136 52,092 Depreciation and amortization 37,276 40,451 40,749 Pre-opening costs 3,449 1,933 4,928 Loss on impairment of property and 19,152 23,841 equipment 13,786 Store closure costs 1,798 584 1,483 Litigation, settlement and other costs 9,029 1,699 1,186 Total costs and expenses 653,050 663,748 668,743 Operating (loss)/income (8,208) 3,368 12,831 Interest expense, net (34) (779) (1,594 (Loss)/income before income tax (benefit)/provision (8,242) 2,589 11,237 Income tax (benefit)/provision (4,759) (2,181) 2,845 Net (loss)/income $ (3,483) $ 4,770 $ 8,392 Net (loss)/income per common share: Basic $ (0.11) Diluted $ (0.11) $ 0.19 $ 0.34 $ 0.19 $ 0.34 Weighted average shares used in calculating net (loss)/income per common share: Basic Diluted 24,938 24,964 25,643 24,938 24,593 25,661 Assets KANSAS PIZZA PANTRY, INC., AND SUBSIDIARIES Consolidated Balance Sheets (in thousands, except for share data) Year 3 Year 2 Current assets: Cash and cash equivalents Other receivables Inventories Current deferred tax asset, net Prepaid rent $ 7,776 $ 25,564 13,844 13,441 6,907 7,357 9,035 7,976 366 6,757 Other prepaid expenses 3,058 2,481 Total current assets 40,986 63,576 Property and equipment, net 243,246 257,216 Noncurrent deferred tax asset, net 23,001 25,911 Goodwill 4,802 5,072 Other intangibles, net 5,287 5,164 9,213 7,809 $326,535 $364,748 Other assets Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable Accrued compensation and benefits Accrued rent Deferred rent credits Other accrued liabilities Gift card liability Store closure reserve $ 18,155 $ 12,163 24,443 24,101 21,774 21,087 4,598 4,645 14,590 12,715 15,117 21,540 99 371 Total current liabilities 98,776 96,622 Long-term debt 23,200 Other liabilities 10,066 9,528 Deferred rent credits, net of current portion 34,077 33,378 Income taxes payable, net of current portion Commitments and contingencies 337 10,925 Stockholders' equity: Common stock-$0.01 par value, 80,090,000 shares authorized, 29,100,000 and 28,700,000 shares issued and outstanding at end of Year 3, and Year 2, respectively 291 287 Additional paid-in capital 170,563 174,900 Retained earnings 12,425 15,908 Total stockholders' equity 183,279 191,095 Total liabilities and stockholders' equity $326,535 $364,748 Required: 1. Compute the following ratios for Year 3 using information from the company annual report that was issued before Kansas Pizza Pantry was acquired. Assume a market price per share of $1.32. (Round your answers to 2 decimal places. Enter percentage answers rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34). Negative amounts should be indicated by a minus sign.) a. Return on equity b. Net profit margin C. Inventory turnover d. Current ratio e. Quick ratio f. Debt-to-equity ratio g. Price/earnings ratio % % di di