Question

The Second Cup Ltd. is Canada’s largest specialty coffee café franchisor (as measured by the number of cafés), with 360 cafés. Exhibits 9-5A to C contain Second Cup’s statement of financial position, Note 12 detailing accounts payable and accrued liabilities, and Note 3(n).
Required:
a. Refer to Note 3(n) in Exhibit 9-5C. How does Second Cup account for gift card sales? Provide an explanation of breakage.
b. Calculate the current ratio for 2013 and 2012. Comment on the company’s ability to meet its current liabilities. Has it improved over the prior year?
c. Calculate the accounts payable turnover ratio and accounts payable payment period. Second Cup’s cost of goods sold was $4,054 thousand for its 2013 fiscal year. Comment on these ratios.


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  • CreatedJune 11, 2015
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