Can anybody give me the solution?

At the beginning of 2004 Tony Pasto bought a restaurant called The Pasta Bowl, which served Italian and Mediterranean style food. Since then Tony has had a major efficiency drive to reduce costs. Tony does not pay himself a salary, but lives on the dividends that the company pays him twice each year.

In an attempt to improve the profitability of the restaurant Tony undertook a major upgrade of the dining area of the restaurant and had it painted and installed new chairs and tables in 2006. Once the upgrade was complete and the restaurant looked like an authentic Italian Caf茅 Tony realised that the trend in restaurants was shifting toward South East Asian food as customers were getting tired of pasta and pizza.

At the end of 2006 Tony was offered $70,000 to sell the restaurant. Tony has come to you for advice on whether to keep the restaurant or to sell it and invest the money elsewhere.


Additional Information:

*The share capital represents 10,000 shares. The shares of The Pasta Bowl are not listed on the stock exchange as it is a private company and all of the shares are owned by Tony Pasto. The offer price for the company can be used to determine an estimate of the market value of the shares in 2006 only.
*Of the operating expenses, selling and administrative expenses account for the following:
2006: $517,5002005: $505,0002004: $493,000
The remainder of the operating expense is financial. The financial expense is wholly comprised of interest.
*For the purpose of this assignment ignore the taxation implications of Tony's investment.



REQUIRED:

1.Using the financial data provided, prepare a report to Tony Pasto which analyses the profitability, liquidity and solvency of The Pasta Bowl Pty Ltd. (maximum length 1000 words).
2.As part of your report present a recommendation based upon your analysis as to whether you believe Tony Pasto should keep or sell the restaurant (maximum length 250 words - this is additional to the 1000 words of the main body of the report). To put your recommendation in context, where appropriate you should point out limitations of the data provided and their impact upon your subsequent conclusion.
3.Calculate any ratios and perform any other appropriate data manipulation needed to provide a sound empirical basis to your report (not part of the word limit, include these as an appendix to the report).


The Pasta Bowl Pty Ltd.
Comparative Income Statement
for the years ended 31 December 2006, 2005 and 2004.
(in thousands of $'s)

200620052004
Net Sales1,052986942
Cost Of Goods Sold 410404405
Gross Profit642582537
Operating Expenses 520508495
Operating Profit before Tax1227442
Income tax expense 49 30 17
Operating Profit after Tax$ 73$ 44$ 25



The Pasta Bowl Pty Ltd.
Comparative Balance Sheet as at 31 December 2006, 2005 and 2004
(in thousands of $'s)

200620052004
Assets:
Cash at Bank30135136
Accounts Receivable (net)121411
Inventory282931
Prepaid Expenses865
Property, Plant and Equipment (net) 199 97 99
Total Assets$277$281$282

Liabilities:
Current Liabilities536066
Non-Current Liabilities303030
Total Liabilities 83 90 96
NET ASSETS$194$191$186

Shareholders' Equity:
Share Capital100100100
Retained Profits 94 91 86
$194$191$186


Restaurant Industry Averages
Gross profit margin41%
Operating profit before tax margin8%
Owners equity64%
Asset turnover3.37
Days stock on hand26

well, it's too big question, and am really sorry, can't read the whole,

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If I had enough time i would have helped you.
if you still need help contact me thru my user name and i will see what i can do.
Peace

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