Balance sheet and income statement
Chapter 9 & 10
1. In the Appendix (Chapter 16), you will find the income statements and balance sheets for Frank's All-American BarbecueQue for the years 2011 to 2015. Compute some of the key financial ratios for this business and discuss the meanings of any trends.
Review the YouTube video below and become familiar with financial analysis ratios.
1. Review the Pro forma statements and the Balance Sheet information and assess how the statements were develop. Identify the Net Profit to /Sales ratio percentages. Review current Restaurant Profit to Sales ratio percentages today and make a statement about whether Frank's All-American BarBeQue has realistic figures.
2. Compute: Current Assets/Current Liabilities; (p. 503 Balance Sheet Information)
What does the percentage indicate?
3. What is the Net Profit/Sales ratio for 2013? What does it mean?
4. Compute Frank's All-American BarBeQue break-even analysis using the following information:
Average Variable cost= 45 %. Fixed cost = $56,313
Break-even Formula is Fixed Costs/1-Variable Cost %
(Your answer will be in dollars)
What does the Break-Even in dollars mean?
Show your work in the submission and formulas used.
2. Locate the average values of these values for the restaurant industry and comment on how well or poorly Frank's All-American Barbeque appears to be doing with respect to thhe industry.
Projected Profit and Loss
Our analysis anticipates significant growth in profits in the next five years with the opening of a second Frank’s All-American BarBeQue in Darien. The profit margins should increase from in excess of $850,000 in 2011 to nearly $1,600,000 by 2015 and should be in excess of 20 percent for all five years. A complete analysis of the profit and loss statements is in Table 16.8 "Profit and Loss". The annual profits are illustrated in Figure 16.8 "Yearly Profits".
Table 16.8 Profit and Loss
Pro Forma Profit and Loss 2011 2012 2013 2014 2015
Sales $4,191,683 $4,585,163 $4,904,564 $5,253,740 $5,636,277
Direct cost of sales $2,095,844 $2,292,580 $2,452,282 $2,626,871 $2,817,939
Cooks payroll $120,000 $120,600 $121,500 $122,500 $123,500
Other costs of sales $0 $0 $0 $0 $0
Total cost of sales $2,215,844 $2,413,180 $2,573,782 $2,749,371 $2,941,439
Gross margin $1,975,839 $2,171,983 $2,330,782 $2,504,369 $2,694,838
Gross margin % 47.14% 47.37% 47.52% 47.67% 47.81%
Operating Expenses
Servers payroll $278,400 $278,400 $232,500 $234,500 $212,600
Advertising/promotion $0 $0 $0 $0 $0
Other servers expenses $0 $0 $0 $0 $0
Total servers expenses $278,400 $278,400 $232,500 $234,500 $212,600
Servers % 6.64% 6.07% 4.74% 4.46% 3.77%
General and Administrative Expenses
General and administrative payroll $96,000 $96,600 $99,000 $100,000 $101,000
Marketing/promotion $12,000 $0 $0 $0 $0
Depreciation $0 $0 $0 $0 $0
Rent $180,000 $0 $0 $0 $0
Utilities $13,200 $0 $0 $0 $0
Insurance $22,000 $0 $0 $0 $0
Payroll taxes $74,160 $74,340 $67,950 $68,550 $65,565
Other general and administrative expenses $0 $0 $0 $0 $0
Total general and administrative expenses $397,360 $170,940 $166,950 $168,550 $166,565
General and administrative % 9.48% 3.73% 3.40% 3.21% 2.96%
Other Expenses
Other payroll $0 $0 $0 $0 $0
Consultants $0 $0 $0 $0 $0
Other expenses $0 $0 $0 $0 $0
Total other expenses $0 $0 $0 $0 $0
Other % 0.00% 0.00% 0.00% 0.00% 0.00%
Total operating expenses $675,760 $449,340 $399,450 $403,050 $379,165
Profit before interest and taxes $1,300,079 $1,722,643 $1,931,332 $2,101,319 $2,315,673
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) $1,300,079 $1,722,643 $1,931,332 $2,101,319 $2,315,673
Interest expense $43,755 $34,995 $30,980 $30,980 $30,980
Taxes incurred $376,897 $506,294 $570,106 $621,102 $685,408
Net profit $879,427 $1,181,354 $1,330,246 $1,449,237 $1,599,285
Net profit/sales 20.98% 25.76% 27.12% 27.58% 28.37%
Figure 16.8 Yearly Profits
Projected Balance Sheet
Table 16.10 "Balance Sheet Forecast" is a balance sheet forecast for Frank’s All-American BarBeQue.
Table 16.10 Balance Sheet Forecast
Pro Forma Cash Flow
Assets 2011 2012 2013 2014 2015
Current Assets
Cash $1,172,844 $2,209,415 $3,521,573 $4,979,631 $6,591,014
Inventory $72,421 $79,197 $109,296 $117,245 $125,954
Other current assets $278,372 $278,372 $278,372 $278,372 $278,372
Total current assets $1,523,636 $2,566,983 $3,909,241 $5,375,249 $6,995,341
Long-Term Assets
Long-term assets $583,675 $583,675 $583,675 $583,675 $583,675
Accumulated depreciation $145,765 $145,765 $145,765 $145,765 $145,765
Total long-term assets $437,910 $437,910 $437,910 $437,910 $437,910
Total assets $1,961,546 $3,004,893 $4,347,151 $5,813,159 $7,433,251
Liabilities and Capital 2011 2012 2013 2014 2015
Current Liabilities
Accounts payable $189,416 $193,009 $259,021 $275,791 $296,597
Current borrowing $135,000 $135,000 $135,000 $135,000 $135,000
Other current liabilities $20,329 ($33,671) ($87,671) ($87,671) ($87,671)
Subtotal current liabilities $344,745 $294,338 $306,350 $323,120 $343,926
Long-term liabilities $262,400 $174,800 $174,800 $174,800 $174,800
Total liabilities $607,145 $469,138 $481,150 $497,920 $518,726
Paid-in capital $75,000 $75,000 $75,000 $75,000 $75,000
Retained earnings $399,975 $1,279,402 $2,460,755 $3,791,002 $5,240,239
Earnings $879,427 $1,181,354 $1,330,246 $1,449,237 $1,599,285
Total capital $1,354,402 $2,535,755 $3,866,002 $5,315,239 $6,914,524
Total liabilities and capital $1,961,546 $3,004,893 $4,347,151 $5,813,159 $7,433,251
Net worth $1,354,402 $2,535,755 $3,866,002 $5,315,239 $6,914,524