Yesterday you received a call from your Aunt Emma. She read in the newspaper that Cuppa of Java Inc. had reported its most recent results. Her investment club purchased shares in the Cuppa of Java back in 2010 because they thought it was a sound Canadian company with significant growth potential. However changes in the coffee business and the continued expansion of Starbucks into the Canadian market has resulted in increased competition. The company tried to counteract these trends by buying up several smaller independent coffee chains in 2018 but the results appear to have been equivocal. To streamline operations, Cuppa of Java sold some of the lower volume and less profitable locations in 2019. The lockdown of the dine in portion of coffee stores for almost 9 months in 2020 as a result of the coronavirus pandemic decreased sales. The company responded to this threat by offering a bulk coffee delivery service that generated $6000 in extra revenues. Unfortunately, another coffee chain implemented a similar program in December 2020 so management is not sure how this will impact 2021 sales. Aunt Emma has some specific questions. To help you answer her questions she has forwarded you some information from the 2020 annual report. Specifically, she wants to know: Financial Position: calculate a liquidity and leverage ratio and interpret the trends. Is the D/E ratio worrying? How does the times interest earned ratio complement the D/E ratio

Balance Sheet 2020 2019 2018 2017 Current Assets Cash Receivables Inventory Prepaids $259 $489 $1,287 $200 $296 $500 $1,260 $200 $413 $461 $1,309 $200 $452 $382 $896 $200 $2,235 $2,256 $2,383 $1,930 Property & Equipment Goodwill Other LT Assets $3,097 $3,502 $1,055 $3,448 $3,502 $1,055 $3,597 $3,836 $1,217 $2,523 $971 $491 $7,654 $8,005 $8,650 $3,985 Total Assets $9,889 $10,261 $11,033 $5,915 Current Liabilities $2,707 $2,414 $2,506 $1,849 Long Term Debt $2,759 $2,873 $3,741 $1,133 Shareholders Equity $4,423 $4,974 $4,786 $2,933 Total Liabilities & Equity $9,889 $10,261 $11,033 $5,915