Pure Eating Ltd. is a small restaurant and culinary business started four years ago by Anna Hannah. Initially the companys operations consisted of a small diner. In 2023, the company added online culinary lessons to expand sales. The online culinary events are sold to corporations that provide the lessons as performance incentives to their employees. As the culinary lessons side of the business grew in 2024, the company purchased a used vehicle to deliver meal kits to be used for the lessons. All sales in the diner are cash, debit, or credit card, but culinary lessons, which are sold to corporations, are invoiced after the event with payment due in 30 days. Most of the companys suppliers offer terms of 15 days. Selected financial information for Pure Eating Ltd. follows

1.Assume the growth in sales in 2024 is primarily from the online lessons. Calculate the gross margins and the profit margins and comment on whether you think the company should be focusing on the culinary lessons or the diner. 2.Calculate the companys current ratio and quick ratio for both years and comment on the companys liquidity. Do you think the company is more liquid or less liquid in 2024? What items on the statement of financial position support your position? 3. Calculate the companys accounts receivable turnover ratio for 2024. How quickly is the company collecting its receivables? Do you think it is doing a good job of managing its receivables? 4. Assume that 50% of the sales come from the online culinary lessons business and recalculate the accounts receivable turnover for 2024. How does that affect your assessment of how receivables are being managed? 5. Calculate the companys inventory turnover ratio for 2024. Comment on the result. 6. Calculate the companys accounts payable turnover ratio for 2024. Are suppliers being paid on time? 7. Using your analysis of the companys receivables and payables, what would you recommend be done to improve the management of those accounts? 8. Prepare a brief memo to Anna outlining why it may be useful to break out the companys financial results by segment (diner and culinary online lessons).

\begin{tabular}{lrrr} & \multicolumn{2}{r}{2024} & 2023 \\ \cline { 2 - 2 } Assets & & \\ Cash & $10,000 & & $,500 \\ Accounts receivable & 20,500 & & 13,500 \\ Inventory & 12,900 & & 7,000 \\ Land & 17,540 & & 17,540 \\ Building and equipment & 40,000 & & 35,000 \\ Total assets & $100,940 & & $79,540 \\ Liabilities and equity & & & \\ Accounts payable & $8,000 & & $,500 \\ Short-term note payable & 2,400 & & 2,000 \\ Mortgage payable, current & 4,500 & & 4,500 \\ Mortgage payable & 30,000 & & 34,500 \\ Share capital & 15,000 & & 15,000 \\ Retained earnings & 41,040 & & 16,040 \\ Total liabilities and equity & \( \underline{\hline 100,940} \) & & $79,540 \\ Other information & & & \\ Sales & $210,000 & $170,000 \\ Cost of goods sold & 85,000 & 80,000 \\ Net income & 25,000 & 11,000 \end{tabular} \begin{tabular}{lrrr} & \multicolumn{2}{r}{2024} & 2023 \\ \cline { 2 - 2 } Assets & & \\ Cash & $10,000 & & $,500 \\ Accounts receivable & 20,500 & & 13,500 \\ Inventory & 12,900 & & 7,000 \\ Land & 17,540 & & 17,540 \\ Building and equipment & 40,000 & & 35,000 \\ Total assets & $100,940 & & $79,540 \\ Liabilities and equity & & & \\ Accounts payable & $8,000 & & $,500 \\ Short-term note payable & 2,400 & & 2,000 \\ Mortgage payable, current & 4,500 & & 4,500 \\ Mortgage payable & 30,000 & & 34,500 \\ Share capital & 15,000 & & 15,000 \\ Retained earnings & 41,040 & & 16,040 \\ Total liabilities and equity & \( \underline{\hline 100,940} \) & & $79,540 \\ Other information & & & \\ Sales & $210,000 & $170,000 \\ Cost of goods sold & 85,000 & 80,000 \\ Net income & 25,000 & 11,000 \end{tabular}