AFS- Case 10.10

Read and complete case study 10-10, “Eat at My Restaurant” in your text. Address the following elements, which are also required elements at the end of the case study:

• Comment on the difference between net cash provided by operating activities and net income.  Speculate on which number is likely to be the better indicator of long-term profitability.
• Comment on the data reviewed for each firm.
• Do any of these firms appear to have a cash flow problem?

Your answers should be in an essay form with an introduction and conclusion; ensure you are addressing each element clearly and thoroughly, following these guidelines: 

• Requirement (a) of the problem should be answered in general terms; you do not need to consider the 3 firms in the case.  However, you do need to make a choice and rationalize that choice. 
• When addressing requirement (b), you should make AT LEAST 4 observations on each firm, focusing on the cash flow ratios provided. 
• All information should be considered when answering requirement (c).  Even if you don’t think any one company is “in trouble,” you should still choose a company and support your choice.

2 pages

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