The following information relates to three of Montreal's Top and Exclusive private training fitness studios in Downtown. Salim's Fitness, Kardiac and Golden gym For each Fitness Studio calculate the following ratios: PART A Debt ratio Equity ratio Pledged assets to secured liabilities And identify which company has the least favorable performance in each ratio category and why Fill out your answers in the following table given the information below: GIVEN INFORMATION: Salim's Fitness Kardiac Golden Cash 30,000 65,000 5,000 Accounts receivables net 250,000 654,000 565,000 Inventory 760,000 590,000 190,000 Plant and equipment net 640,000 1,850,000 985,000 Accounts payable 335,000 970,000 180,000 Notes payable secured by mortgages on plant and equipment 590,000 1,500,000 215,000 Common shares 700,000 500,000 450,000 Retained earning 55,000 189,500 900,000 FILL OUT YOUR ANSWERS IN THIS TABLE Salim's Fitness Kardiac Golden Least Favorable studio Debt ratio Equity ratio Pledged assets to secured liabilities Then please answer the rest of the theory questions below 12 marks * * * * * * * * * * * * * * * * * * PART B Debt ratio: explain why the studio you chose above is least favorable. Show all calculations (2 marks) Equity ratio: explain why the studio you chose above is the least favorable. Show your calculations (2 marks) Pledged assets to secured liabilities ratio: explain why the studio you chose above is least favorable, show your calculations (2 marks) You are the financial manager of Golden Gym. What 3 questions does the CEO want answered by finance? Give examples in the context of a gym or fitness studio. (6 marks) Name 4 general goals that all three studios would want to achieve, any large corporation would want to achieve these 4 goals. (4 marks) You are the financial manager of Kardiac Gym and the CEO has asked you to get ready to prepare the Statement of Cash Flows next week. What are the 3 categories of this statement and what do they include? (6 marks) Answer- Cash flow comes in three forms: operating, investing, and financing. Operating cash flow includes all cash generated by a company's main business activities. Investing cash flow includes all purchases of capital assets and investments in other business ventures. Operating Activities- Operating activities includes cash receipts from goods sold, payments to employees, taxes, and payments to suppliers. These activities can be found on a company's financial statements and in particular the income statement and cash flow statement. Investing Activities- Investing activities include purchases of physical assets, investments in securities, or the sale of securities or assets. Negative cash flow from investing activities might not be a bad sign if management is investing in the long-term health of the company. Financing Activities- Financing activities include transactions involving debt, equity, and dividends. Cash flow from financing activities provides investors with insight into a company's financial strength and how well a company's capital structure is managed. Are standardized financial statements useful when looking at these three Fitness Studios? Why or why not, explain your answer (2 marks). Answer- Yes, they are useful because their main aim is to ensure transparency, reliability, consistency, and comparability of the financial statements. They do so by standardizing accounting policies and principles of Gyms . So the transactions of all companies will be recorded in a similar manner if they follow these accounting standards. Name 5 categories of financial ratios (5 marks) Answer- Liquidity ratios. Leverage ratios. Efficiency ratios. Profitability ratios. Market value ratios. Liquidity Ratio- Liquidity ratios measure a company's ability to pay debt obligations and its margin of safety through the calculation of metrics including the current ratio, quick ratio, and operating cash flow ratio. Leverage Ratio- A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt (loans) or assesses the ability of a company to meet its financial obligations. Efficiency Ratio- The efficiency ratio indicates the expenses as a percentage of revenue, with a few variations - it is essentially how much a corporation or individual spends to make a dollar; entities are supposed to attempt minimizing efficiency ratios. Probability Ratio- Probability is the chance that an event will occur. It is measured by the ratio of the favorable cases to the total number of cases possible. ... Such a ratio is called the probability. Market Value Ratio- Market value ratios help evaluate the economic status of publicly traded companies and can play a role in identifying stocks that may be overvalued, undervalued, or priced fairly. ... Others include the price/cash ratio, dividend yield ratio, market value per share, and the market/book ratio. You have just calculated 3 ratios for Salim's Fitness Studio in part A above. What category of ratios are they? What does this category of ratios measure? (2 marks) Name 2 internal and 2 external users of the Financial Statements of Kardiac Gym in the context of the health and fitness business industry. (4 marks)