You've been given the following information from Bob's Burgers, a local restaurant in Kamloops.

Bob's Burgers

Balance Sheet

31-Dec

Assets

Current

Cash 20,000

A/R 15,000

Inventory 2,500

Notes receivable -

PP&E 500,000

Intangible Assets 3,000

Total Assets 540,500

Liabilities

Current

A/P 7,500

Salary payable 12,000

Current portion of LTD 10,000

Mortgage -

Shareholder Equity

Common shares 500

Retained Earnings 510,500

Total Liabilities & Shareholder equity 540,500

Bob's Burgers

Income Statement

31-Dec

Revenue 625,000

Cost of Goods Sold ?

Gross Profit 312,500

Operating Expenses

Rent Expense 15,000

Salary Expense 125,000

Insurance Expense 2,500

amortization Expense 50,000

Office Expense

Income before tax ?

Tax 40,000

Net Income ?

Industry Averages

Working Capital 25,000

Current Ratio 2

Inventory Turnover 200

Days in Inventory 1.825

Debt to Total Assets 0.01

Gross Profit Margin 70%

Profit margin 20%

Using the industry averages above, prepare the following:

Required:

1. Take any 4 of the ratio's above and briefly describe how they are calculated and what

the number means

2. Using the Balance Sheet and Income Statement provided, compare 4 of the company

actual ratio's to the industry average ratio's and determine if the company is doing

better or worse than the industry average.

3. Can you make any recommendations from a management accounting standpoint on

how the company could do better?