Using the Greasy Spoon Diner balance sheet in Exhibit, answer the following:
a. What are the debt-to-equity ratios at the beginning and end of the 2013 fiscal (business) year? Has it improved? If so, by how much?
b. The restaurant has less cash at the end of the year than it had at the beginning. Is this a bad thing or not? Explain.
c. Do you think the restaurant has enough cash to pay its expenses going into 2014?
d. If the restaurant grew its owner’s equity by 31 percent during the 2013 fiscal year, at that rate, how much will the business have in owner’s equity after one more year (on December 31, 2014)?
e. The restaurant added some capital equipment during the year. Do you think it took out another loan for that equipment, or did it pay cash? Explain your thinking.

  • CreatedMay 23, 2015
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