Ketan Trivedi and Bharat Shah, former oll merchants from Ahmedabad, Inda, opened a fast-food restaurant in...

 

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Ketan Trivedi and Bharat Shah, former oll merchants from Ahmedabad, Indía, opened a fast-food restaurant in Calgary, in hopes of establishing a chain in Canada. They called their restaurant Chai and Snacks. For $6 per serving, Chai and Snacks offers 12 homemade snacks every day. Trivedi and Shah report that in their first year of operation, they netted $210,000 on sales of $700,000. They report that it costs about $2 per serving to make the snacks. Assume that Trivedi and Shah have approached your bank for a loan. As the loan officer, you should consider a variety of factors, including the company's margin of safety. Assuming that other information about the company is favourable, would you consider the company's margin of safety to be comfortable enough to extend the loan? Note to student: See Guldance Answers online. Ketan Trivedi and Bharat Shah, former oll merchants from Ahmedabad, Indía, opened a fast-food restaurant in Calgary, in hopes of establishing a chain in Canada. They called their restaurant Chai and Snacks. For $6 per serving, Chai and Snacks offers 12 homemade snacks every day. Trivedi and Shah report that in their first year of operation, they netted $210,000 on sales of $700,000. They report that it costs about $2 per serving to make the snacks. Assume that Trivedi and Shah have approached your bank for a loan. As the loan officer, you should consider a variety of factors, including the company's margin of safety. Assuming that other information about the company is favourable, would you consider the company's margin of safety to be comfortable enough to extend the loan? Note to student: See Guldance Answers online.

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