The University Club at the University of Regina was in financial distress. The club had been losing money for several years and was being subsidized by the University of Regina. However, due to budget cuts by the Saskatchewan government, the university was no longer in a position to subsidize the operations of the club. The board of the club had to make some tough decisions at this time. Could the club exist without university subsidy? Should the board increase membership fees, increase the number of members, or simply close the club? To make an informed decision they needed to perform a detailed analysis of the financial statements. An accounting professor, who had recently joined the club's board, suggested performing ratio analysis to assess the problem areas.

1) How do you evaluate the financial performance of a business using financial statements?

2) What risks and opportunities are faced by the University Club at the University of Regina?

3) Calculate and interpret financial ratios as analytical tools for decision-making. What do the ratios tell you?

4) Using both quantitative and qualitative information, what should the Board do?