Rather than start from scratch, however, you and your partners decide to look at two existing establishments, Better Brew and Perfect Blend. The two are for sale at the same price, and they are located in equally attractive areas. You manage to get enough financial data to compare the year-end condition of the two companies. (Attached) I must choose between the two.
1: What factors should I consider before deciding which company to buy? What additional data might be helpful to me? (Note that net income is implied).
2: What questions should I ask about the methods used to record revenues and expenses?
3: On the basis of the data provided, which company would you purchase? Detail the process you used to make your decision.
4: Visit this respected online coffee buying guide, http://www.coffeereview.com
As an owner of a coffee shop, how might you use this resource?
WHICH COMPANY WOULD YOU PURCHASE?
One the basis of the information that is given to use we decide that you should purchase Perfect Blend rather than Better Brew. The reasons are:
1. The proprietary ratio for Better Brew is 25,000/95,000 =0.26 but the proprietary ratio for Perfect Blend is 55,000/161,000=0.34. The proprietary ratio is appropriate in case of Perfect Blend as it should be close to 1:3. So Perfect Blend is the better buy.
2. The Current ratio in case of Better Brew is 23,000/70,000 =0.32 but the current ratio for ...