A$-4\mathrm{.}3$ The most recent financial statements for Prairie Restaurants Ltd$.$ are as follows. Current liabilities

Accounts payable $140$

Income taxes payable $30$

Total current liabilities

$175$

Long$-$term debt

Bonds, $10\%$

Total liabilities

$\frac{220}{395}$

Shareholders' equity

Notes

There are $10$ thousand shares outstanding, with the most recent price being $$45$ per share.

Prairie Restaurants employs $5,000$ people.

Prairie Restaurants runs its own credit card program, which provides incentives for customers

to pay within $10$ days. $90\%$ of sales are on credit.

The amount of inventory, all of which is purchased on credit, has remained the same during

the year.

Industry data on the restaurant industry are as follows:

$($a$)$ ROE

$($b$)$ ROCE

$($c$)$ Operating profit margin

$($d$)$ Gross profit margin

$($e$)$ Average inventory turnover period

$($f$)$ Average collection period for receivables

$(g)$ Average payment period for payables

$($h$)$ Sales revenue to capital employed

$($i$)$ Sales revenue per employee

$($j$)$ Current ratio

$($k$)$ Acid test ratio

$($I$)$ Leverage ratio

$($m$)$ Times interest earned ratio

$($n$)$ Dividend payout ratio

$(0)$ Dividend cover ratio

$($p$)$ Dividend yield

$($q$)$ EPS

$($r$)\frac{P}{E}$ ratio

$12\%$

$30\%$

$10\%$

$18\%$

$15$ days

$7$ days

$30$ days

$3$ times

$$1\mathrm{.}5$ million

$2\mathrm{.}0$

$1\mathrm{.}0$

$80\%$

$10$ times

$20\%$

$5$ times

$2\%$

$$1\mathrm{.}50$

$25$

Required:

$($a$)$ Prepare calculations for the same ratios as shown above for Prairie Restaurants.

$($b$)$ Based on comparisons to the industry ratios, how would you rate Prairie

Restaurants?

Prairie Restaurants Ltd$.$

Statement of Retained Earnings

for the year ended December $31,2010$

$($in $ thousands$)$

Opening retained earnings, January $19$

Add: Net income $25$

Less: Dividends paid $(15)$

Closing retained earnings, December $31,200$

Prairie Restaurants Ltd$.$

Balance Sheet

as at December $31,2010$

$($in $ thousands$)$

Current assets

Cash

$25$

Accounts receivable

$150$

Inventory

$75$

Total current assets

$250$

Property, plant, and equipment

Land

$50$

Buildings

Less: Accumulated depreciation

Furniture and fixtures

Less: Accumulated depreciation

Total property, plant, and equipment

$390$

Total assets

$640$