Q1 Create statements of cash flows for both companies for the past two years. Make the following assumptions:

a. For both companies, all depreciation and amortization relate to net property and equipment.

b. For both companies, other assets relate to cash from investing activities.

c. For both companies, other long-term liabilities relate to cash from financing activities.

d. the capital expenditure amounts for the current year and the prior year are ($5,426) and ($8,629), respectively for Casa Grande, and ($3,071) and ($7,242), respectively for Domingo.

e. the sale of equipment amounts for the current year and the prior year are $19,386 and $0, respectively for Casa Grande. There was no sale of equipment for Domingo.

Question1 use 5.png as template

Q2 For both firms, create three years of common-size income statements down to operating income before impairment charges.

Question2 use 6.png as template

Q3 For both firms, calculate the ratios as shown in the template:

Question3 use 7.png as template

In a WORD document, answer the following:

Q4 Compare the trend of Casa Grande's operating income before unusual charges with that of Domingo Grill. What leads to the similarity / difference between the two trends?

Q5 Compare the liquidity and solvency ratios for the two firms.

Q6 Compare the cash flow from operating activities and financing activities for the two firms. What key differences do you observe?

EXHIBIT 1: INCOME STATEMENT FOR CASA GRANDE BRANDS INC. (US$ THOUSANDS) Current year Prior year Two years prior Total revenue S 441.588 $ 589,379 S 650.261 Store operating expenses Food & beverage 125,190 168,222 189.363 Labour & benefits 149,140 191,034 207,091 Occupancy & other 118,281 156,517 162,433 Total 392,611 515,773 558.887 Other operating expenses Depreciation and amortization 14,861 19,639 23,140 General & administrative 26,580 31,011 36,976 Asset impairment 45,994 49,110 58,485 Operating income (loss) (38,458) (26,154) (27,227) Interest expense 31,050 35,305 38,262 Other losses and charges 26,458 22,651 23,773 Gain on debt extinguishment (32,912) Loss before income taxes (63,054) (84,110) (89,262) Income tax expense (benefit) 375 11.150 (23,528) Net loss (63,429) $ (95,260) $ (65,734)EXHIBIT 2: BALANCE SHEET FOR CASA GRANDE BRANDS INC. (US$ THOUSANDS) Current year Prior year Two years prior Three years prior Assets Cash and cash equivalents 636 $ 10,537 $ 402 Accounts receivable 5,087 10,723 7,621 Inventories 5,283 5,870 9.418 9,097 Prepaid expenses and other 2,129 2.928 3.535 Total current assets 13,135 39,795 20,976 Premises and equipment, net 252,870 292,765 315,793 Goodwill, net 34,920 72,012 Deferred income tax benefit 11,620 11,620 18,900 Other assets 28,670 29,193 44,000 Total assets S 306.295 S 398.556 S 471,681 $ 656.596 Liabilities and shareholders' equity Current liabilities: Accounts payable S 11,509 $ 15,766 16,568 Accrued liabilities 54,292 64,265 64,567 Income taxes payable 35,038 33,773 30,164 Total current liabilities 100,839 113,804 111,299 Long-term debt 199,869 215,828 194,541 Other long-term liabilities 2,143 3,111 5,024 Total liabilities 302,851 332,743 310,864 Shareholders' equity (deficit): Common stock 405 405 405 Additional paid-in capital 154,637 146,139 147,809 Retained earnings (accumulated deficit) (58,118) 5,311 100,571 Treasury stock at cost (93,480) (86,042) (87,968) Total shareholders' equity (deficit) 3.444 65,813 160,817 Total liabilities & shareholders' equity (deficit) S 306.295 S 398,556 S 471,681EXHIBIT 3: INCOME STATEMENT FOR DOMINGO GRILL BRANDS INC. (US$ THOUSANDS) Current year Prior year Two years prior Total revenues $ 140,924 $ 158,982 $ 168,055 Store operating expenses Food & beverage 47.439 55.066 59.112 Labour & benefits 47.860 51,817 54.059 Occupancy & other 34.691 38.057 41.750 Total 129.990 144.940 154.921 Other operating expenses Depreciation & amortization 7,460 8,991 10.297 General & administrative 6,956 9,106 11,754 Asset impairment 6.713 13.529 3.066 Operating income (loss) (10,195) (17,584) (11,983) Interest expense 2.289 3.810 3.655 Loss before income tax (12,484) (21,394) (15,638) Income tax (benefit) (1,241) 49 1.818 Net loss S (11,243) S (21,443) $ (17,456)EXHIBIT 4: BALANCE SHEET FOR DOMINGO GRILL BRANDS INC. (US$ THOUSANDS) Current year Prior year Two years prior Three years prior Assets Current assets Cash & cash equivalents $ 2,956 $ 3,193 $ 1,592 Accounts receivable 337 475 1,512 Income tax receivable 741 17 2,253 Inventory 1,163 1,305 1,462 1,622 Prepaid expenses 2,196 2,628 2,080 Total current assets 7,393 7,618 8,899 Net property, plant & equipment 60.824 71,926 87.204 Intangible assets 1,890 1,935 2,105 Other assets 1,197 1,875 2,120 Total assets S 71,304 S 83,354 S 100,328 S 105,312 Liabilities & shareholders' equity Current liabilities: Accounts payable $ 3,630 $ 1,603 $ 741 Accrued expenses 8.893 9.285 8,818 Total current liabilities 12,523 10,888 9,559 Long-term debt 47,996 56.938 53,798 Total liabilities 60,519 67,826 63,357 Shareholders' equity Common stock 877 291 291 Additional paid-in capital 55,953 50,039 50,039 Retained deficit (46,045) (34,802) (13,359) Total shareholders' equity 10.785 15,528 36,971 Total liabilities & shareholders' equity S 71,304 S 83,354 S 100,328Casa Grande Domingo current year prior year current year prior year Cash Flow from Operating Activities: Cash Flow from Operating Activities: Cash Flow from Investing Activities: Total Cash Flows from operations Cash Flow from Investing Activities: Total Cash Flows from investing Cash Flow from Financing Activities: Total Cash Flows from investing Cash Flow from Financing Activities: Total Cash Flows from Financing Total Cash Flows from FinancingCasa Grande current year prior year Domingo current year prior year Total revenue 100.00% 100.00% Total revenue 100.00% 100.00% Store operating expenses Store operating expenses Food and Beverage Food and Beverage Labor & benefits Labor & benefits Occupancy & Other Occupancy & Other Total Total Other Operating Expenses Other Operating Expenses Depreciation and Amortization Depreciation and Amortization General and Administrative General and Administrative Operating income before unusual changes Operating income before unusual changes Asset impairment Asset impairment Operating income (loss) Operating income (loss) Interest expense Interest expense Other losses and charges loss before income tax Gain on debt extinguishment income tax expense (benefit) loss before income tax Net loss income tax expense (benefit) Net lossCasa Domingo Industry average current year prior year current year prior year Tumover Inventory tumover 21.3 AR tumover Fixed asset tumover Total asset tumover 1.7 Credit risk ratios Liquidity ratios Current ratio 1.1 Quick ratio 0.7 CFO/current liabilities Coverage EBITDA/interest expense CFO/debt Interest expense/sales Capital structure Debt/capitalization Debt/assets Shareholders' Equity/assets 60.0%