Businеss Саsе Study Аnаlysis – Quеstiоn 9

  • Category:
    Business
  • Document type:
    Assignment
  • Level:
    Undergraduate
  • Page:
    1
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    291

Businеss Саsе Study Аnаlysis – Quеstiоn 9

Average value of current ratio

The average value of quick ratio for businesses in the restaurant industry is in the range of 0.86 to 1.3 (Kelly & Williams 2015, p. 135; Pratt 1997, p. 261; Sagner 2002, p. 35). On the other hand, Frank’s All-American BarBeQue’s
current ratios for the years 2008, 2009 and 2010 were 1.895, 2.099 and 1.935 respectively. What this means is that Frank’s All-American BarBeQue is doing very well in regard to being able to repay its short-term debts since the company has more current assets than current liabilities.

Average value of quick ratio

According to Brown (2006), the acceptable current ratio for businesses in the restaurant industry is in the range of 0.5 to 1.25. Frank’s All-American BarBeQue’s
quick ratios for the years 2008, 2009 and 2010 were 0.935, 1.143 and 0.960 respectively. This means that Frank’s All-American BarBeQue’s quick ratios are well within the acceptable range. This suggests that the business is very much in a good position to settle its short-term debts even when its inventory is excluded from the current assets (University of Canberra 2016, p. 599).

References

Brown, DR 2006, The food service manager’s guide to creative cost cutting: over 2,001 innovative and simple ways to save your food service operation thousands by reducing expenses, Atlantic Publishing Group, Inc., Ocala, FL.

Kelly, M & Williams, C 2015, BUSN, 7th edn, Cengage Learning, Stamford, CT.

Pratt, J 1997, Financial accounting: in an economic context, 3rd edn, John Wiley & Sons, Hoboken, NJ.

Sagner J 2002, The real world of finance: 12 lessons for the 21st century, John Wiley & Sons, New York.

University of Canberra 2016, Small business management in the 21st century, University of Canberra, Canberra.