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    Financial analysis of Shadracks or Brighams

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    You and your best friend have decided to quit your jobs, turn in your retirement, and purchase your own restaurant. In your market area there are a lot of restaurants, and you've looked at several that were available for sale. You'll narrowed your choices to either Shadracks or Brighams. From you and your friend's experience, both restaurants have good food, and generally good service. The owner of Shadracks' says that he and his wife want to retire and move to Key West. The owner of Brighams indicates that he is tired of the long hours, and has accepted a salaried position with his old employer, IBM. Both restaurants have provided you with a year end balance sheet and income statement (below).
    Please prepare a paper on your analysis and recommendations regarding the following questions. (You must choose one or the other of the two restaurants to purchase):
    1. Based solely on the financial analysis of the information provided, which restaurant would you buy? (Be sure to share the financial ratios and other pertinent financial analysis you use in making your decision)
    2. Explain other financial information that could help you make a better decision if it were available.
    3. What other questions that are not specifically financial in nature would you want answered about these two restaurants?
    Balance Sheet Shadracks Brighams
    Current Assets
    Cash 4500 8800
    A/R 2000 6000
    Inventory 20000 44000
    Total Current Assets 26500 58800

    Fixed Assets
    Land 50000 100000
    Building 250000 45000
    Equipment 80000 120000
    less accumulated depreciation -22000 -180000
    Total Fixed Assets 358000 490000

    Total Assets 384500 548800

    Current Liabilities
    A/P 22000 55000
    Wages Payable 8000 4000
    Total Current Liabilities 30000 59000

    Long-term Dept 180000 320000

    Total Liabilities 210000 379000

    Owners Equity
    Capital 100000 50000
    Retained Earnings 48000 61000
    Total Owners Equity 148000 111000

    Total Liabilities & Equity 358000 490000

    Income Statement Shadracks Brighams
    Revenue 460000 700000
    Cost of Goods Sold 276000 413000
    Gross Profit 184000 287000

    Expenses
    Payroll 92000 136400
    Benefits 13800 20460
    Advertising 9200 18600
    Utilities 23000 37200
    Telephone 2400 3000
    Repairs & Maintenance 5520 9920
    Supplies 3220 6200
    Interest 16000 26500
    Depreciation 11000 19000
    Total Expense 176140 277280

    Net Profit 7860 9720

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    https://brainmass.com/business/finance/financial-analysis-of-shadracks-or-brighams-179921

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    You and your best friend have decided to quit your jobs, turn in your retirement, and purchase your own restaurant. In your market area there are a lot of restaurants, and you've looked at several that were available for sale. You'll narrowed your choices to either Shadracks or Brighams. From you and your friend's experience, both restaurants have good food, and generally good service. The owner of Shadracks' says that he and his wife want to retire and move to Key West. The owner of Brighams indicates that he is tired of the long hours, and has accepted a salaried position with his old employer, IBM. Both restaurants have provided you with a year end balance sheet and income statement (below).
    Please prepare a paper on your analysis and recommendations regarding the following questions. (You must choose one or the other of the two restaurants to purchase):
    1. Based solely on the financial analysis of the information provided, which restaurant would you buy? (Be sure to share the financial ratios and other pertinent financial analysis you use in making your decision)
    2. Explain other financial information that could help you make a better decision if it were available.
    3. What other questions that are not specifically financial in nature would you want answered about these two restaurants?

    Balance Sheet Shadracks Brighams
    Current Assets
    Cash 4500 8800
    A/R 2000 6000
    Inventory 20000 44000
    Total Current Assets 26500 58800

    Fixed Assets
    Land 50000 100000
    Building 250000 45000
    Equipment 80000 120000
    less accumulated depreciation -22000 -180000
    Total Fixed Assets 358000 490000

    Total Assets 384500 548800

    Current Liabilities
    A/P 22000 55000
    Wages Payable 8000 4000
    Total Current Liabilities 30000 59000

    Long-term Dept 180000 320000

    Total Liabilities 210000 379000

    Owners Equity
    Capital 100000 50000
    Retained Earnings 48000 61000
    Total Owners Equity 148000 111000

    Total Liabilities & Equity 358000 490000

    Income Statement Shadracks Brighams
    Revenue 460000 700000
    Cost of Goods Sold 276000 413000
    Gross Profit 184000 287000

    Expenses
    Payroll 92000 136400
    Benefits 13800 20460
    Advertising 9200 18600
    Utilities 23000 37200
    Telephone 2400 3000
    Repairs & Maintenance 5520 9920
    Supplies 3220 6200
    Interest 16000 26500
    Depreciation 11000 19000
    Total Expense 176140 277280

    Net Profit 7860 9720
    Your work MUST include a reference list. All research should be cited in the body of the speaker notes. Reports without citations are unacceptable. Your report should contain an abstract, a short introduction, and conclusion in addition to the body of the presentation. Please note that if you have a source in your reference section, you need to cite it in the body of the paper per APA guidelines and vice-versa.

    1. Based solely on the financial analysis of the information provided, which restaurant would you buy? (Be sure to share the financial ratios and other pertinent financial analysis you use in making your decision)
    For detailed calculations see attached excel file.
    In financial analysis, we need qualitative information and try to read between the numbers. We have to ask all the right questions. Over the years, there are some ratios, which have become more popular ...

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    This explains the steps of doing financial analysis of Shadracks or Brighams

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