Assignment #4 - Financial Statement Analysis
Strayer University
Obtaining financing is one of the challenges facing a new venture. The financial planning and good budgeting will be significant factors in helping Portions Restaurant reach success. The restaurants financial statement analysis below lists the sources of funding, the capital structure, debt to equity ratios, the intentions of going public and a break even analysis.
The sources of funding Portions Restaurant is operating as a sole proprietorship, as a sole proprietorship, the restaurant will have limited sources of funds. In a sole proprietorship the owner’s personal financial condition determines his or her credit standing. Additionally, sole proprietorships may
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Usually, an entrepreneur meets financial needs by employing a combination of debt and equity financing (Hisrich, 2010 p. 309). Portions restaurant will use debt financing and as the restaurant becomes more established and the profits reliable, the ability to pay off the debt will become easier.
Intentions to go public Portions restaurant will rely on the guilt free mission and concept to make the restaurant a trend setter in the industry. Being a trend setter will eventually make Portions Restaurant an industry leader. It is important to keep an eye on how the world is changing and what directions things are going because trends form the context on which all new product forecasting is occurring (Iacobucci, 2011 p. 92). Considering that restaurant goers want more healthy menu items, Portions Restaurant is on pace to becoming an industry leader. As the popularity of the guilt free dining increases, the restaurant will seek expansion and going public will allow for an increase in profit to fund the expansions to markets throughout the United States. Going public occurs when the entrepreneur and other equity owners of the venture offer and sell some part of the company to the public through a registration statement filed with the securities commission of the country (Hisrich 2010 p. 359). Going public has many advantages, not only will the
Wells Fargo shows a much higher profitability ratio than Samsung, with over 8X that of Samsung. This is to be expected as services are typically more profitable than hardware sales which operate on leaner margins. Wells Fargo also outperforms Samsung significantly on return on sales with over 25X better performance. This again is attributable to better margins on services than hardware. Wells Fargo has a much stronger return on equity than Samsung with a Dupont ratio over 5X higher than Samsung's. Samsung has a stronger financial leverage ratio than Wells Fargo with almost 20% lower ratio for Samsung. Samsung also has a much lower total asset turnover than Wells Fargo. This is attributable to the quick turnover of assets in the manufacturing industry compared to the slow turnover of assets in the financial services sector.
This paper provides a summary of our analysis of the data obtained for 60 Crusty Dough Pizza Company restaurants. We compared 16 pizza store characteristics to monthly profit in order to determine the best indicators of success. The results of this analysis may be used to determine the store services and attributes that have the most bearing on profitably.
Although the restaurant industry is perceived to have high risk of failure, the risk of a restaurant failing is not too different from other small businesses. Parsa et al. quantified the risk of failure at 26% in the first year and 57% by year 3. He also described several factors that can influence the risk of failure. Those include physical location, firm size, speed of growth, differentiation from other restaurants in the market, adapting to external trends, and management experience. In terms of location and differentiation, Paul’s bar will be located in a new development designed to attract affluent customers and with very few competitors. Paul’s small firm size increases risk because of barriers to attract partners (i.e. suppliers and bankers are prejudiced against smaller firms) and growth that may be too rapid to manage. On the other hand, Robert already has experience in the restaurant business and should know how to run the bar and subsequent restaurant. Their choice of a piano bar may be in response to local trends that favor success.
There are many key aspects to owning and operating a successful restaurant in a competitive market with little or no room for error. A restaurant’s
3. What are each of the financial statements commonly called in for-profit health care organizations and in not for-profit care organizations?
■ They don't have enough assets that generates a positive cash flow except the restaurant.
uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company 's manufacturing overhead data:
The first choice of business is the franchise. In a franchise, legal binding agreement is entered into between two firms, the franchisor (the product or service owner) and the franchisee (the firm to market the product or service in a particular location). The franchisee pays a certain sum of money for the right to market this product” (Rubin, 1978, p.224). The franchising is more prevalent in the restaurant industry (Hoffman & Preble, 2003). The two distinct features of this business type include; first, in order to notable service components should
This paper describes a financial statement analysis project useful in both preparerbased and user-based introductory courses in financial accounting. The project
Now that the small business idea has become more that just fine print, it is time to put together a loan package that explains the story of the company. There are important questions to answer, demonstrating the company’s ability to correctly make important financial decisions, and detail how the business will pay off the loan. This paper will include the requirements of a loan package, creditor requirements, a ratio analysis, loan justification, and how the company plans to use the proceeds.
This paper examines financial ratio analysis by defining, the three groups of stakeholders that use financial ratios, the five different kinds of ratios used and their applications, the analytical tools used in analysis, and finally financial ratio analysis limitations and benefits.
Landry’s Debt to Asset ratio also increased from year 2002 to 2003. In 2002 Landry had a debt to asset ratio of 0.39. In 2003 Landry’s debt to asset ratio increased to 0.45. While both numbers are acceptable and considerably low, the increase from 2002 to 2003 could influence potential investors to not invest in Landry’s stock. This increase also suggests that Landry’s debt also increased from 2002 to 2003. Overall, while there was a slight increase from 2002 to 2003 Landry’s still had a good debt to asset ratio. We think that a contributing factor to the debt
3. Assume that cost of goods sold for a company consists only of variable costs and gross margin is = (revenue – cost of goods sold)/revenue. Which of the following is true
By: Charn Gek Cheng, Chiang Soo Ling, Kummar Sokali Muthu Mogan, Lee Siew Fen Samantha
Debt and equity financing are your two basic options to raise money for a start-up company or growing business. Debt financing includes long-term loans you get from the bank. Equity financing is private investor money you get in exchange for a share of ownership in the business. Now I want to explain about the advantages and disadvantages of using equity capital and debt capital to finance a small business's growth. The advantages of Debt is financing allows you to pay for new buildings, equipment and other assets used to grow your business before you earn the necessary funds. This can be a great way to pursue an aggressive growth strategy, especially if you have access to low interest rates. Closely related is the advantage of paying off your debt in installments over a period of time. Relative to equity financing, you also benefit by not relinquishing any ownership or control of the business. Interest on the debt can be deducted on the company's tax return, lowering the actual cost of the loan to the company. Raising debt capital is less complicated because the company is not required to comply