Financial Statement Analysis Paper

Words: 1154
Pages: 5


Financial Statement Analysis Paper
Principles of Accounting
Mr. John Opincar
June 24, 2009

Landry’s has become a successful company over the years because the customers enjoy the specialty items that they serve on their menu. It has become a company that we enjoy taking our families out to dinner, celebrating birthday parties and certain special events. However, this paper will complete the financial analysis for the reported years of 2002 and 2003. Upon review of the financial statements will find out the financial performance of Landry’s and show the analysis. The ratio analysis of Landry’s will be reviewed as well and in details discussed from their
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(Phillips, Libby, & Libby, 2005, p580/ch13) Landry’s asset turnover is very impressive. In 2002 it was 1.11 which indicates the restaurant had a high profit margin in 2002. In 2003 Landry’s asset turnover decreased to 1.09, which indicates a slight increase in profit margin from 2002. Companies with low profit margins tend to have high asset turnover, those with high profit margins have low asset turnover. (Investopedia,) The low asset turnover indicates that Landry’s has a good pricing strategy. Landry’s low asset turnover also indicates the franchises growth in revenue in relation to sales. Current cash debt coverage is a cash-basis ratio that accounts for the changing liabilities and cash flows that a company experiences during the course of a time period. Current cash debt coverage ratio is a measure of liquidity (Investor Words, n.d.). The ratio is calculated by taking the net cash provided by operating activities and dividing it by the average current liabilities. The average current liabilities are determined by adding the current year’s and previous year’s current liabilities and dividing them by two. In the case of Landry’s Restaurants in 2002 the current cash debt coverage was 90% and in 2003 the current cash debt coverage was 79%. The cash debt coverage ratio shows the percent of debt that current cash flow of a