8-2. If you were to open a clothing store, what do you think would be reasonable operating ratio for the rent, and why? 8-3. Which items in your business would you depreciate, and why? 8.4. Using Exhibit 8-12, the balance sheet of Angelina's Jewelry Com- pany at the end of July, which follows, calculate all four financial ratios (quick, current, debt, and debt-to-equity) for the business. 8.5. Write a memo analyzing the financial strengths and weaknesses of Angelina's venture. Use the common-size statement information shown in Exhibit 8-13. Would you invest in her business? Why or why not? 8-6. Using The Greasy Spoon Diner balance sheet in Exhibits 8-7 and 8-8. answer the following: a. What are the debt-to-equity ratios at the beginning and end of the 2014 fiscal (business) year? Has it improved? If so, by how much? b. The restaurant has less cash at the end of the year than it had at the beginning. Is this a bad thing or not? Explain. c. Does the restaurant have enough cash to pay its expenses going into 2015? Why or why not? d. If the restaurant grew its owner's equity by 31 percent during the 2014 fiscal year, at that rate, how much will the business have in owner's equity after one more year (on December 31, 2015)? e. The restaurant added some capital equipment during the year. Did it take out another loan for that equipment, or did it pay cash? Explain your thinking. 8-2. If you were to open a clothing store, what do you think would be reasonable operating ratio for the rent, and why? 8-3. Which items in your business would you depreciate, and why? 8.4. Using Exhibit 8-12, the balance sheet of Angelina's Jewelry Com- pany at the end of July, which follows, calculate all four financial ratios (quick, current, debt, and debt-to-equity) for the business. 8.5. Write a memo analyzing the financial strengths and weaknesses of Angelina's venture. Use the common-size statement information shown in Exhibit 8-13. Would you invest in her business? Why or why not? 8-6. Using The Greasy Spoon Diner balance sheet in Exhibits 8-7 and 8-8. answer the following: a. What are the debt-to-equity ratios at the beginning and end of the 2014 fiscal (business) year? Has it improved? If so, by how much? b. The restaurant has less cash at the end of the year than it had at the beginning. Is this a bad thing or not? Explain. c. Does the restaurant have enough cash to pay its expenses going into 2015? Why or why not? d. If the restaurant grew its owner's equity by 31 percent during the 2014 fiscal year, at that rate, how much will the business have in owner's equity after one more year (on December 31, 2015)? e. The restaurant added some capital equipment during the year. Did it take out another loan for that equipment, or did it pay cash? Explain your thinking
