Please, could assist in solving this case? Cases C12-1 Cedar Appliance Sales and Service Ltd. Cedar Appliance Sales and Service Ltd. owns several retail and service centres in northern British Columbia. Financial ratios for the company for the years ended December 31, 2024 and 2023, are provided below. For comparative purposes, industry averages have also been provided. Ratio 2024 2023 Industry Average Current ratio 1.6:1 1.7:1 2:1 Quick ratio 0.75:1 0.80:1 1:1 Accounts receivable turnover 8 times 7.75 times 12 times Inventory turnover 4.0 times 3.8 times 7.0 times The company is in the process of opening two new retail outlets and will need to obtain a line of credit to finance receivables and inventory. To receive a competitive interest rate on its line of credit, it needs to ensure that its liquidity ratios are close to the average for the industry. In particular, the company would like to see the current ratio at 2:1. The company has hired you, an independent consultant, to suggest how it might improve its liquidity ratios. In preparing your report, you have gathered the following additional information: The companys credit terms to its customers are net 45 days; no discounts are provided for early payment. The company policy is to pay accounts payable every 45 days regardless of the credit terms. Many supplier invoices offer discounts for payments within 30 days. Cedars policy is to keep high amounts of inventory on hand to ensure that customers will have maximum selection. Required Propose several steps that Cedar Appliance Sales and Service Ltd. might take to improve its liquidity. All suggestions must be ethical. C12-2 Christines Yogourt Venture Christine Wilde is considering opening a frozen yogourt store. One option is to purchase an existing independent store that is available for sale. The seller, Mark Preradovic, has operated the store for three years and has assured Christine that his location, although smaller than the average store, is an above-average performer for the industry. Mark has provided the financial data shown below for his store. MARKS YOGOURT PLUS STORE Selected Financial Results Year 1 Year 2 Year 3 Store size: 1,200 square feet (110 square metres) Sales $240,000 $280,000 $330,000 Gross margin 168,000 196,000 231,000 Other expenses 160,000 180,000 200,000 Net income $ 8,000 $ 16,000 $ 31,000 Christine has approached you to help her decide. You find the following information on the website of Yogourt Yogourt, a franchisor of similar outlets: The average store is 1,500 square feet (140 square metres) and contains six yogourt machines, a topping bar, and seating for 20. Sales average $400,000 for stores in their first year and $650,000 for a mature store. It usually takes three years for a store to mature. Gross margins on start-up average 70% and normally increase to 75% for established locations. Operating costs start at 50% and drop to 43% of sales for mature stores as the fixed costs are spread out. The initial investment for a 1,500-square-foot (140-square-metre) store is $350,000 for machines, franchise fees, and other capital costs, plus $50,000 for liquid assets including inventory. Franchisees are expected to invest two-thirds of the required investment in equity and arrange to borrow the remaining one-third. You recall that in retail a key statistic is sales per square foot, and you make a note to yourself to factor the different store sizes into your analysis. Mark is asking $400,000 for his store and explained to Christine: I am offering you a great deal by just asking for the carrying value of the total assets. I just want to recoup my initial investment plus a little bit more for the time and sweat equity I have put in. I have done all the hard work getting the store established; it should be easy for you now. Required Use financial statement analysis to evaluate the performance of Marks store compared with the average Yogourt Yogourt franchise. Based on Marks most recent financial results and Christines investment, if she pays Marks asking price, what would be her ROA and ROE compared with a start-up franchise? What other factors would you want to consider before buying the store? Do you recommend that Christine purchase Marks store? Why or why not