The following ratios and other information are based on a companys comparative financial statements for a two-year period:

			2019		2020
	Current ratio		1.95		2.25
	Quick ratio		1.20		0.75
	Debt to total assets ratio		0.20		0.60
	Debt to equity ratio		0.25		1.50
	Earnings per share		0.15		0.35
	Gross profit margin		35%		45%
	Total assets		$2,110,000		$3,680,000
	Current assets		$1,064,700		$1,593,000

What is the amount of current liabilities at the end of 2019 & 2020?

			2019	2020
	Current Liabilities		$	$

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What is the amount of total debt at the end of 2019 & 2020?

			2019	2020
	Total Debt		$	$

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What is the total shareholders' equity at the end of 2020?

			2019	2020
	Total shareholders' equity		$	$

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If the company has 1,593,000 common shares outstanding for all of 2019 & 2020 and has issued no other shares, what were its net earnings for 2019 & 2020?

			2019	2020
	Net Earnings		$	$

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: 1,380 square feet (128 square metres)
Sales		$245,000		$288,000		$334,000
Gross margin		176,000		199,000		236,000
Other expenses		152,000		188,000		205,000
Net income		$24,000		$11,000		$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 1,550 square feet (144 square metres) and contains 6 yogourt machines, a topping bar, and seating for 20.
		Sales average $407,000 for stores in their first year and $670,000 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 1,550-square-foot store is $354,000 for machines, franchise fees, and other capital costs, plus $53,000 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 $407,000 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.

Use financial statement analysis to evaluate the performance of Marks store compared with the average Yogourt Yogourt franchise.

Marks store has not performedperformed well relative to the average Yogurt Yogurt franchise.

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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? (Round answers to 1 decimal place, e.g. 15.7.)

Marks store
Return on equity		%
Return on assets		%

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Do you recommend Christine purchase Marks store?

YesNo, I do notdo recommend that Christine purchase Marks store