After graduating from university and investigating the

opportunities available to #8481

After graduating from university and investigating the opportunities available to her, Natalie
chooses to work for Koebel's Family Bakery Ltd. She begins the process of familiarizing herself
with the business operation and all of the information that is generated to enable her parents to
run their business on a day-to-day basis. While at a trade show, Natalie is introduced to Gerry
Richards, operations manager of Biscuits, a national food retailer and publicly traded company.
After much discussion, Gerry asks Natalie (acting for Koebel's Family Bakery Ltd.) to consider
being Biscuits' major supplier of oatmeal chocolate chip cookies. He provides Natalie with the
most recent copy of Biscuits' financial statements. He anticipates that Koebel's Family Bakery
will need to provide Biscuits with approximately 1,500 dozen cookies a week. Koebel's Family
Bakery is to provide a monthly invoice to Biscuits and will be paid approximately 30 days from
the date the invoice is received in its Toronto office.Natalie is thrilled with the offer; however,
she is concerned that taking on this additional contractual commitment along with the one that
has just recently been negotiated for providing cupcakes will be too much for Koebel's Family
Bakery to handle.InstructionsNatalie has come to you for advice and asks the following
questions.(a) Gerry Richards has provided me with a full set of Biscuits' financial statements.
Can you please identify each financial statement included in this package and explain what type
of information each one provides?(b) How do I know that the information included in the
financial statements is verifiable and prepared on a timely basis?(c) I would like to be sure that
Biscuits will be able to pay Koebel's Family Bakery's invoices. How can I determine if Biscuits
has enough cash to meet its current liabilities? Are there any ratios or financial information I
should look at to obtain that information?(d) Is Biscuits profitable? Are there any ratios or
financial information I should look at specifically to obtain that information?(e) Does Biscuits
have any non-current debt? If so, is Biscuits able to pay off both its debt and the related interest
on its debt? Are there any ratios or financial information I should look at specifically to obtain
that information?(f) If Koebel's Family Bakery were to sign a contract committing to provide
1,500 dozen cookies a week, what other factors should be considered before accepting the
contract?View Solution:
After graduating from university and investigating the opportunities available to

ANSWER
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