9B18B016

UNIVERSITY OF REGINA CLUB: FINANCIAL STATEMENT ANALYSIS Professors Nourhene BenYoussef, Walid Busaba and Saqib Khan wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Copyright © 2018, Ivey Business School Foundation Version: 2018-09-10

The University Club at the University of Regina was in financial distress. The club had been losing money for several years and was being subsidized by the University of Regina. However, due to budget cuts by the Saskatchewan government, the university was no longer in the position to subsidize the operations of the club. The club’s board members had to make some tough choices, but they needed a detailed analysis of the financial statements to make an informed decision. Loraine Taylor, the accounting professor who had recently joined the club’s board, suggested performing ratio analysis to assess the problem areas. THE UNIVERSITY CLUB The University Club was a formal dining facility located on the campus of the University of Regina and was structured as a non-profit, membership-based corporation. A board of directors, comprised of 10 board members elected from the general membership, was responsible for the governance of the club. The club’s main objectives as stated in the constitution were the following: • To promote communication, fellowship, and goodwill among individuals working within or

associated with the University of Regina. • To provide quality food services, lounge facilities, recreation, and entertainment for members of the

club. The University Club was incorporated in 1965 and had been housed in its current location since 1974, when the University of Regina became an autonomous institute. Up to the 1990s, the club was referred to as the Faculty Club, at which time the name changed to the University Club. The University Club was an upscale facility on campus and was the preferred venue to entertain university guests, faculty, and staff recruits, and to conduct special events. Although such services were available not far from the campus, the club was the only facility on campus, which made it convenient for the faculty and other university community members, especially in the cold winters. As the whole university was connected internally,

A ut

ho riz

ed fo

r u se

o nl

y in

th e

co ur

se A

cc ou

nt in

g an

d Fi

na nc

e at

C en

te nn

ia l C

ol le

ge ta

ug ht

b y

S hi

rle y

La m

ar re

fr om

S ep

3 0,

2 02

0 to

A pr

3 0,

2 02

1.

U se

o ut

si de

th es

e pa

ra m

et er

s is

a c

op yr

ig ht

v io

la tio

n.

Page 2 9B18B016 people from anywhere on campus could walk to the club without needing to put on their coat or boots in the coldest winter days—a huge benefit in Regina. While the location was advantageous for those working on campus, it was not so for anyone from outside campus. The restaurant was located on the second floor in College West in an obscure location, making it difficult for outsiders to find. Parking was not free, and the paid parking lot was also quite far away. Restaurant space was also limited, with no room for expansion, and the kitchen space was tight and became hot when the stoves and the dishwasher were operating. Both the furniture in the dining area and the equipment were aging and would need to be replaced soon. THE FINANCIAL POSITION As the statement of financial position and the income statement for the years 2007 through 2016, indicated, Taylor was concerned that net income was negative in seven out of these 10 years (see Exhibit 1). The university valued the services that the club provided to its faculty, guests, and the professionals working at several private organizations housed in the research park on campus. Therefore, the university subsidized these losses by writing off the accounts payable. The most recent write-off occurred in 2009, when the university wrote off all outstanding debts owed to it by the club. However, the Saskatchewan government’s budget deficit of over $1.5 billion1 reduced university funding by 3.5 per cent. With this financial crunch, the university was no longer able to subsidize the club’s shortfalls. Taylor noted that the gross income in these 10 years ranged from $500,000 to $700,000. This seemed to be an anomaly to Taylor—negative net income despite a sizeable positive gross income. She wanted to dig deeper by performing a detailed ratio analysis. FINANCIAL RATIO ANALYSIS Financial ratios were calculated from the financial statements of a business and provided a picture of the financial health of the company. These ratios could be divided into several categories based on the type of information they provided. Liquidity Ratios Liquidity ratios, which provided information about the ability of the business to meet its short-term liabilities, included the current ratio and the quick ratio. Current Ratio

𝐶𝐶𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢 𝑢𝑢𝑟𝑟𝑢𝑢𝑟𝑟𝑟𝑟 = 𝐶𝐶𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢 𝐴𝐴𝐴𝐴𝐴𝐴𝑢𝑢𝑢𝑢𝐴𝐴

𝐶𝐶𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢 𝐿𝐿𝑟𝑟𝑟𝑟𝐿𝐿𝑟𝑟𝐿𝐿𝑟𝑟𝑢𝑢𝑟𝑟𝑢𝑢𝐴𝐴

If the current ratio fell below 1, the business did not have enough short-term resources to meet its current liabilities and was insolvent.

1 All currency in Canadian dollars.

A ut

ho riz

ed fo

r u se

o nl

y in

th e

co ur

se A

cc ou

nt in

g an

d Fi

na nc

e at

C en

te nn

ia l C

ol le

ge ta

ug ht

b y

S hi

rle y

La m

ar re

fr om

S ep

3 0,

2 02

0 to

A pr

3 0,

2 02

1.

U se

o ut

si de

th es

e pa

ra m

et er

s is

a c

op yr

ig ht

v io

la tio

n.

Page 3 9B18B016 Quick Ratio

𝑄𝑄𝑢𝑢𝑟𝑟𝑄𝑄𝑄𝑄 𝑢𝑢𝑟𝑟𝑢𝑢𝑟𝑟𝑟𝑟 = 𝐶𝐶𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢 𝐴𝐴𝐴𝐴𝐴𝐴𝑢𝑢𝑢𝑢𝐴𝐴 − 𝐼𝐼𝑢𝑢𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝑢𝑢𝐼𝐼

𝐶𝐶𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢 𝐿𝐿𝑟𝑟𝑟𝑟𝐿𝐿𝑟𝑟𝐿𝐿𝑟𝑟𝑢𝑢𝑟𝑟𝑢𝑢𝐴𝐴

Since the inventory was the most illiquid current asset, a more conservative liquidity ratio could be calculated by excluding inventory from the current assets. The quick ratio for any business would always be lower than the current ratio. Activity Ratios The activity ratios, which provided information on how well the business was managing its assets, included the total asset turnover ratio, the receivables turnover ratio, and the inventory turnover ratio. Total Asset Turnover

𝑇𝑇𝑟𝑟𝑢𝑢𝑟𝑟𝐿𝐿 𝐴𝐴𝐴𝐴𝐴𝐴𝑢𝑢𝑢𝑢 𝑇𝑇𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝐼𝐼𝑢𝑢𝑢𝑢 = 𝑇𝑇𝑟𝑟𝑢𝑢𝑟𝑟𝐿𝐿 𝑂𝑂𝑂𝑂𝑢𝑢𝑢𝑢𝑟𝑟𝑢𝑢𝑟𝑟𝑢𝑢𝑂𝑂 𝑅𝑅𝑢𝑢𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢 𝐴𝐴𝐼𝐼𝑢𝑢𝑢𝑢𝑟𝑟𝑂𝑂𝑢𝑢 𝑇𝑇𝑟𝑟𝑢𝑢𝑟𝑟𝐿𝐿 𝐴𝐴𝐴𝐴𝐴𝐴𝑢𝑢𝑢𝑢𝐴𝐴

This ratio depended on the asset configuration of the business. If the business had a higher level of fixed assets, the ratio would be low and vice versa. Receivables Turnover

𝑅𝑅𝑢𝑢𝑄𝑄𝑢𝑢𝑟𝑟𝐼𝐼𝑟𝑟𝐿𝐿𝐿𝐿𝑢𝑢𝐴𝐴 𝑇𝑇𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝐼𝐼𝑢𝑢𝑢𝑢 = 𝑇𝑇𝑟𝑟𝑢𝑢𝑟𝑟𝐿𝐿 𝑂𝑂𝑂𝑂𝑢𝑢𝑢𝑢𝑟𝑟𝑢𝑢𝑟𝑟𝑢𝑢𝑂𝑂 𝑅𝑅𝑢𝑢𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢

𝐴𝐴𝐼𝐼𝑢𝑢𝑢𝑢𝑟𝑟𝑂𝑂𝑢𝑢 𝐴𝐴𝑄𝑄𝑄𝑄𝑟𝑟𝑢𝑢𝑢𝑢𝑢𝑢 𝑅𝑅𝑢𝑢𝑄𝑄𝑢𝑢𝑟𝑟𝐼𝐼𝑟𝑟𝐿𝐿𝐿𝐿𝑢𝑢

Receivables turnover could be transformed into average collection period, measured in days. This more direct measure was easy to comprehend and compare.

𝐴𝐴𝐼𝐼𝑢𝑢𝑢𝑢𝑟𝑟𝑂𝑂𝑢𝑢 𝐶𝐶𝑟𝑟𝐿𝐿𝐿𝐿𝑢𝑢𝑄𝑄𝑢𝑢𝑟𝑟𝑟𝑟𝑢𝑢 𝑃𝑃𝑢𝑢𝑢𝑢𝑟𝑟𝑟𝑟𝑃𝑃 = 𝐷𝐷𝑟𝑟𝐼𝐼𝐴𝐴 𝑟𝑟𝑢𝑢 𝑃𝑃𝑢𝑢𝑢𝑢𝑟𝑟𝑟𝑟𝑃𝑃 (365 𝑓𝑓𝑟𝑟𝑢𝑢 𝑟𝑟𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝐿𝐿)

𝑅𝑅𝑢𝑢𝑄𝑄𝑢𝑢𝑟𝑟𝐼𝐼𝑟𝑟𝐿𝐿𝐿𝐿𝑢𝑢𝐴𝐴 𝑇𝑇𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝐼𝐼𝑢𝑢𝑢𝑢

The average collection period should have been close to the limit specified in the credit terms of the business. For example, if the credit terms of a business allowed 30 days’ credit sales, the average collection period would be close to 30; if it was significantly higher than 30, it indicated a problem. Inventory Turnover

𝐼𝐼𝑢𝑢𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝑢𝑢𝐼𝐼 𝑇𝑇𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝐼𝐼𝑢𝑢𝑢𝑢 = 𝐶𝐶𝑟𝑟𝐴𝐴𝑢𝑢 𝑟𝑟𝑓𝑓 𝐺𝐺𝑟𝑟𝑟𝑟𝑃𝑃𝐴𝐴 𝑆𝑆𝑟𝑟𝐿𝐿𝑃𝑃 𝐴𝐴𝐼𝐼𝑢𝑢𝑢𝑢𝑟𝑟𝑂𝑂𝑢𝑢 𝐼𝐼𝑢𝑢𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝑢𝑢𝐼𝐼

Inventory turnover would have been high for a business like a grocery store and low for a business that sold specialized in farm equipment.

A ut

ho riz

ed fo

r u se

o nl

y in

th e

co ur

se A

cc ou

nt in

g an

d Fi

na nc

e at

C en

te nn

ia l C

ol le

ge ta

ug ht

b y

S hi

rle y

La m

ar re

fr om

S ep

3 0,

2 02

0 to

A pr

3 0,

2 02

1.

U se

o ut

si de

th es

e pa

ra m

et er

s is

a c

op yr

ig ht

v io

la tio

n.

Page 4 9B18B016 Inventory turnover could also have been transformed into a more direct and easily comprehensible measure called “days in inventory,” which was calculated as follows:

𝐷𝐷𝑟𝑟𝐼𝐼𝐴𝐴 𝑟𝑟𝑢𝑢 𝐼𝐼𝑢𝑢𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝑢𝑢𝐼𝐼 = 𝐷𝐷𝑟𝑟𝐼𝐼𝐴𝐴 𝑟𝑟𝑢𝑢 𝑂𝑂𝑢𝑢𝑢𝑢𝑟𝑟𝑟𝑟𝑃𝑃 (365 𝑓𝑓𝑟𝑟𝑢𝑢 𝑟𝑟𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝐿𝐿)

𝐼𝐼𝑢𝑢𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝑢𝑢𝐼𝐼 𝑇𝑇𝑢𝑢𝑢𝑢𝑢𝑢𝑟𝑟𝐼𝐼𝑢𝑢𝑢𝑢

Financial Leverage Ratios The financial leverage ratios provided information about the level of debt financing employed by a business and also its ability to service that debt. The leverage ratios that Taylor wanted to calculate and analyze included the debt ratio, the debt-to-equity ratio, and the interest coverage ratio. Debt Ratio

𝐷𝐷𝑢𝑢𝐿𝐿𝑢𝑢 𝑅𝑅𝑟𝑟𝑢𝑢𝑟𝑟𝑟𝑟 = 𝑇𝑇𝑟𝑟𝑢𝑢𝑟𝑟𝐿𝐿 𝐷𝐷𝑢𝑢𝐿𝐿𝑢𝑢 𝑇𝑇𝑟𝑟𝑢𝑢𝑟𝑟𝐿𝐿 𝐴𝐴𝐴𝐴𝐴𝐴𝑢𝑢𝑢𝑢𝐴𝐴

If this ratio was high, the firm was highly leveraged and employed a relatively higher amount of debt financing. Higher leverage was associated with a higher level of risk because it increased the fixed cost in terms of interest payments. Debt-to-Equity Ratio

Debt-to-Equity 𝑅𝑅𝑟𝑟𝑢𝑢𝑟𝑟𝑟𝑟 = 𝑇𝑇𝑟𝑟𝑢𝑢𝑟𝑟𝐿𝐿 𝐷𝐷𝑢𝑢𝐿𝐿𝑢𝑢 𝑇𝑇𝑟𝑟𝑢𝑢𝑟𝑟𝐿𝐿 𝐸𝐸𝐸𝐸𝑢𝑢𝑟𝑟𝑢𝑢𝐼𝐼

Debt-to-equity ratio also provided the same information as debt ratio and was high for highly leveraged firms. Interest Coverage Ratio

𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝐴𝐴𝑢𝑢 𝐶𝐶𝑟𝑟𝐼𝐼𝑢𝑢𝑢𝑢𝑟𝑟𝑂𝑂𝑢𝑢 𝑅𝑅𝑟𝑟𝑢𝑢𝑟𝑟𝑟𝑟 = 𝐸𝐸𝑟𝑟𝑢𝑢𝑢𝑢𝑟𝑟𝑢𝑢𝑂𝑂𝐴𝐴 𝐵𝐵𝑢𝑢𝑓𝑓𝑟𝑟𝑢𝑢𝑢𝑢 𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝐴𝐴𝑢𝑢 𝑟𝑟𝑢𝑢𝑃𝑃 𝑇𝑇𝑟𝑟𝑇𝑇𝑢𝑢𝐴𝐴

𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝐴𝐴𝑢𝑢 𝐸𝐸𝑇𝑇𝑂𝑂𝑢𝑢𝑢𝑢𝐴𝐴𝑢𝑢

The debt ratio and debt equity ratio provided information about the level of debt financing employed by the business; however, the interest coverage ratio provided information about the ability of the business to fulfill its debt obligation in terms of making interest payments. Profitability Ratios As the name suggested, the profitability ratios provide information about how profitable the business was, and included the gross and net profit margins.

A ut

ho riz

ed fo

r u se

o nl

y in

th e

co ur

se A

cc ou

nt in

g an

d Fi

na nc

e at

C en

te nn

ia l C

ol le

ge ta

ug ht

b y

S hi

rle y

La m

ar re

fr om

S ep

3 0,

2 02

0 to

A pr

3 0,

2 02

1.

U se

o ut

si de

th es

e pa

ra m

et er

s is

a c

op yr

ig ht

v io

la tio

n.

Page 5 9B18B016 Gross Profit Margin

𝐺𝐺𝑢𝑢𝑟𝑟𝐴𝐴𝐴𝐴 𝑃𝑃𝑢𝑢𝑟𝑟𝑓𝑓𝑟𝑟𝑢𝑢 𝑀𝑀𝑟𝑟𝑢𝑢𝑂𝑂𝑟𝑟𝑢𝑢 = 𝐺𝐺𝑢𝑢𝑟𝑟𝐴𝐴𝐴𝐴 𝐼𝐼𝑢𝑢𝑄𝑄𝑟𝑟𝐼𝐼𝑢𝑢

𝑇𝑇𝑟𝑟𝑢𝑢𝑟𝑟𝐿𝐿 𝑂𝑂𝑂𝑂𝑢𝑢𝑢𝑢𝑟𝑟𝑢𝑢𝑟𝑟𝑢𝑢𝑂𝑂 𝑅𝑅𝑢𝑢𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢

Gross income was calculated by subtracting the cost of goods sold from total operating revenues. This calculation provided an idea of the profitability of a business before accounting for overhead costs. Net Profit Margin

𝑁𝑁𝑢𝑢𝑢𝑢 𝑃𝑃𝑢𝑢𝑟𝑟𝑓𝑓𝑢𝑢 𝑀𝑀𝑟𝑟𝑢𝑢𝑂𝑂𝑟𝑟𝑢𝑢 = 𝑁𝑁𝑢𝑢𝑢𝑢 𝐼𝐼𝑢𝑢𝑄𝑄𝑟𝑟𝐼𝐼𝑢𝑢

𝑇𝑇𝑟𝑟𝑢𝑢𝑟𝑟𝐿𝐿 𝑂𝑂𝑂𝑂𝑢𝑢𝑢𝑢𝑟𝑟𝑢𝑢𝑟𝑟𝑢𝑢𝑂𝑂 𝑅𝑅𝑢𝑢𝐼𝐼𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢

Net profit margin provided an idea about what percentage of the sales revenue the business was able to convert into profits after covering all expenses and paying taxes. Benchmarking The financial ratios above provided a set of numbers that needed to be benchmarked to provide useful information for deciding the future of the faculty club. Two types of benchmarks could have been used: cross-sectional and time series. Cross-sectional analysis used the ratios of similar firms (firms within the same industry) as a benchmark at the same point in time. For example, a current ratio of 1.5 for the firm in question might raise a red flag if the ratio was 2.5 on average for the other firms in the same industry. The only comparable data available at the time were the average financial ratios of two other Canadian university clubs for the year 2015 (see Exhibit 2). Time series analysis used the historical ratios of the same firm as the benchmark. For example, a current ratio of 1.45 could have been reason for concern if the firm’s ratio had been around 2.2 over the previous five years. Courses of Action The deliberations on the future of the club led the board to consider one of three courses of action. The first was to increase the membership fee. This would have been a reversal of a policy adopted a few years earlier, when the fee was reduced from a fixed percentage of salary to a fixed low monthly fee of $10. The risk of this action was that more members would drop out, and total membership revenue would decrease. If the board chose to pursue this option, careful analysis would be required to come up with a fee figure that was sufficient to cover the club’s losses. The second course of action was to increase the number of members. A few years earlier, the board had attempted and failed to boost membership when it replaced the percentage-of-salary fee. Membership numbers could be increased if membership were made mandatory for all faculty members. However, such a decision required faculty union approval, and the board was reluctant to go that route.

A ut

ho riz

ed fo

r u se

o nl

y in

th e

co ur

se A

cc ou

nt in

g an

d Fi

na nc

e at

C en

te nn

ia l C

ol le

ge ta

ug ht

b y

S hi

rle y

La m

ar re

fr om

S ep

3 0,

2 02

0 to

A pr

3 0,

2 02

1.

U se

o ut

si de

th es

e pa

ra m

et er

s is

a c

op yr

ig ht

v io

la tio

n.

Page 6 9B18B016 The third course of action was the most difficult and painful. It was to close the club. This decision would result in layoffs of long-term employees, who had over many years developed personal relationships with the faculty through excellent service. It would also be negatively received by the membership and the faculty in general, because the club provided valuable services that were not available elsewhere on campus. CONCLUSION Taylor realized that the decision was not strictly financial. However, she strongly believed that the ratio analysis would reveal whether the club was viable, or could be made viable, without university subsidy. She was hopeful that she might identify issues hidden in the numbers, which if addressed properly, could help revitalize the club. With that conviction, she pulled all the numbers in her Microsoft Excel spreadsheet and set out to work.

A ut

ho riz

ed fo

r u se

o nl

y in

th e

co ur

se A

cc ou

nt in

g an

d Fi

na nc

e at

C en

te nn

ia l C

ol le

ge ta

ug ht

b y

S hi

rle y

La m

ar re

fr om

S ep

3 0,

2 02

0 to

A pr

3 0,

2 02

1.

U se

o ut

si de

th es

e pa

ra m

et er

s is

a c

op yr

ig ht

v io

la tio

n.

P ag

e 7

9B 18

B 01

6

E X

H IB

IT 1

: U N

IV E

R S

IT Y

C LU

B 1

0- Y

E A

R S

T A

T E

M E

N T

S U

M M

A R

Y O

F FI

N A

N C

IA L

P O

S IT

IO N

A N

D IN

C O

M E

S T

A TE

M E

N T

R E

S U

LT S

C

ur re

nt A

ss et

s 20

07 20

08 20

09 20

10 20

11 20

12 20

13 20

14 20

15 20

16 Ca

sh 6,

85 2.

09 $

31

,0 86

.9 9

$

20 ,1

91 .3

9 $

86

,2 80

.2 3

$

19 ,6

93 .7

7 $

22

,5 87

.2 6

$

68 ,6

90 .0

4 $

19

,4 13

.7 1

$

10 0,

90 4.

43 $

25

,0 70

.4 1

$

G.

S. T.

P ai

d -

$

65 .9

3 $

16

.6 8

$

86 .3

4 $

45 .5

9 $

17 .0

7 $

(4 .0

0) $

52 .0

2 $

(5 2.

10 )

$

12

.7 8

$

Ac

co un

ts Re

ce ive

ab le

96 ,8

68 .0

9 $

78 ,0

20 .1

3 $

56

,2 04

.2 6

$

19 ,3

13 .5

4 $

12

3, 34

3. 67

$

11 0,

08 0.

57 $

10

7, 43

9. 61

$

93 ,0

01 .7

6 $

65

,7 13

.2 2

$

38

,9 68

.4 0

$

In

ve nt

or y

* 16

,7 00

.6 9

$

17

,8 07

.1 4

$

19 ,7

75 .7

4 $

22

,8 65

.4 5

$

24 ,5

76 .3

9 $

24

,9 43

.2 4

$

27 ,4

87 .9

3 $

22

,1 86

.1 8

$

22 ,1

88 .2

7 $

19 ,9

46 .6

8 $

Ot he

rs 4,

00 3.

93 $

12

,2 09

.6 2

$

15 ,1

41 .4

5 $

14

,8 52

.1 2

$

14 ,8

52 .1

2 $

14

,8 52

.1 2

$

14 ,8

52 .1

2 $

51

,1 82

.2 4

$

51 ,1

82 .2

4 $

51 ,8

59 .0

6 $

To ta

l C ur

re nt

A ss

et s

(in clu

di ng

C as

h on

h an

d) 12

4, 42

4. 80

$

13 9,

18 9.

81 $

11

1, 32

9. 53

$

14 3,

39 7.

68 $

18

2, 51

1. 55

$

17 2,

48 0.

25 $

21

8, 46

5. 69

$

18 5,

83 5.

90 $

23

9, 93

6. 06

$

13 5,

85 7.

32 $

Fi xe

d As

se ts To

ta l F

ur ni

tu re

A ss

et s

66 ,1

04 .6

5 $

67 ,2

68 .6

5 $

74

,8 05

.9 9

$

81 ,3

85 .8

7 $

86

,1 35

.8 9

$

86 ,1

35 .8

9 $

87

,3 42

.2 6

$

84 ,7

27 .1

6 $

84

,7 27

.1 6

$

84

,7 27

.1 6

$

Ac

cu m

ula te

d De

pr ec

ia tio

n - F

ur ni

tu re

A ss

et s

(6 6,

10 4.

65 )

$

(6

7, 26

8. 65

) $

(7

1, 84

6. 23

) $

(7

7, 27

4. 11

) $

(8

2, 28

2. 48

) $

(8

4, 42

3. 18

) $

(8

6, 50

3. 39

) $

(8

4, 72

7. 16

) $

(8

4, 72

7. 16

) $

(8 4,

72 7.

16 )

$

To ta

l K itc

he n

As se

ts (n

et o

f D ep

re ci

at io

n) 6,

08 6.

84 $

6,

36 1.

98 $

3, 07

8. 05

$

2,

89 1.

27 $

3, 57

3. 01

$

5,

76 7.

02 $

3, 54

1. 65

$

12

,0 44

.1 4

$

13 ,2

70 .4

5 $

5, 80

2. 99

$

To ta

l O th

er E

qu ip

m en

t ( ne

t o f D

ep re

ci at

io n)

1, 37

2. 75

$

0. 05

$

55

2. 57

$

22 ,8

60 .3

5 $

24

,2 34

.3 5

$

17 ,3

30 .7

3 $

11

,9 16

.4 8

$

4, 21

4. 69

$

2,

39 2.

38 $

54

5. 20

$

To ta

l L ea

se ho

ld Im

pr ov

em en

ts (n

et o

f D ep

re ci

at io

n) 17

,7 79

.8 5

$

10

,2 38

.1 3

$

17 ,9

52 .5

8 $

10

,4 05

.8 0

$

63 ,1

45 .3

2 $

54

,7 06

.9 1

$

46 ,6

43 .0

6 $

41

,1 55

.7 0

$

36 ,0

18 .1

1 $

29 ,3

22 .4

6 $

Uc lub

V an

(n et

o f D

ep re

ci at

io n)

8, 76

7. 23

$

14 ,1

23 .4

5 $

10

,5 92

.4 7

$

7, 06

1. 54

$

3,

49 9.

91 $

- $

-

$

- $

91

6. 95

$

- $

In

ac tiv

e (2

02 .9

5) $

1,

03 3.

62 $

- $

- $

-

$

- $

-

$

- $

-

$

- $

To

ta l F

ixe d

As se

ts 33

,8 03

.7 0

$

31

,7 57

.2 3

$

35 ,1

35 .4

4 $

47

,3 30

.7 2

$

98 ,3

06 .0

0 $

79

,5 17

.3 8

$

62 ,9

40 .0

6 $

57

,4 14

.5 3

$

52 ,5

97 .8

9 $

35 ,6

70 .6

5 $

To ta

l O th

er A

ss et

s 11

,0 07

.1 7

$

(5

41 .6

9) $

(1 ,9

76 .8

1) $

(8

,0 65

.7 6)

$

(7

04 .5

8) $

6,

45 6.

55 $

5, 54

1. 02

$

4,

33 2.

53 $

10 ,9

90 .9

9 $

11 ,3

59 .9

8 $

To ta

l A ss

et s

16 9,

23 5.

67 $

17

0, 40

5. 35

$

14 4,

48 8.

15 $

18

2, 66

2. 63

$

28 0,

11 2.

97 $

25

8, 45

4. 18

$

28 6,

94 6.

77 $

24

7, 58

2. 96

$

30 3,

52 4.

95 $

18

2, 88

7. 95

$

Li ab

ilit ie

s To

ta l C

ur re

nt L

ia bi

liti es

29 6,

05 3.

86 $

31

0, 08

2. 75

$

16 ,7

75 .2

4 $

58

,7 06

.9 4

$

17 1,

68 0.

62 $

15

9, 62

2. 29

$

14 9,

14 2.

03 $

14

8, 16

8. 43

$

24 4,

46 3.

16 $

16

6, 97

0. 29

$

To ta

l L ia

bi liti

es 29

6, 05

3. 86

$

31 0,

08 2.

75 $

16

,7 75

.2 4

$

58 ,7

06 .9

4 $

17

1, 68

0. 62

$

15 9,

62 2.

29 $

14

9, 14

2. 03

$

14 8,

16 8.

43 $

24

4, 46

3. 16

$

16 6,

97 0.

29 $

EQ UI

TY To

ta l E

qu ity

(1 26

,8 18

.1 8)

$

(1 39

,6 77

.4 0)

$ 12

7, 71

2. 91

$

12 3,

95 5.

69 $

10

8, 43

2. 35

$

98 ,8

31 .8

8 $

13

7, 80

4. 74

$

99 ,4

14 .5

3 $

59

,0 61

.7 8

$

15

,9 17

.6 6

$

To ta

l L ia

bi liti

es a

nd E

qu ity

16 9,

23 5.

67 $

17

0, 40

5. 35

$

14 4,

48 8.

15 $

18

2, 66

2. 63

$

28 0,

11 2.

97 $

25

8, 45

4. 18

$

28 6,

94 6.

77 $

24

7, 58

2. 96

$

30 3,

52 4.

95 $

18

2, 88

7. 95

$

A ut

ho riz

ed fo

r u se

o nl

y in

th e

co ur

se A

cc ou

nt in

g an

d Fi

na nc

e at

C en

te nn

ia l C

ol le

ge ta

ug ht

b y

S hi

rle y

La m

ar re

fr om

S ep

3 0,

2 02

0 to

A pr

3 0,

2 02

1.

U se

o ut

si de

th es

e pa

ra m

et er

s is

a c

op yr

ig ht

v io

la tio

n.

P ag

e 8

9B 18

B 01

6

E X

H IB

IT 1

(C O

N TI

N U

E D

)

20 07

20 08

20 09

20 10

20 11

20 12

20 13

20 14

20 15

20 16

Re ve

nu e

To ta

l C lu

b Sa

le s

19 3,

10 5.

42 $

24 8,

10 6.

33 $

30 9,

16 0.

57 $

26

4, 83

5. 75

$

25 8,

98 8.

22 $

22

9, 23

3. 48

$ 18

4, 92

6. 18

$

15 1,

29 1.

97 $

16 1,

00 8.

14 $

15

6, 10

5. 07

$

To ta

l O ff

Pr em

is e

C at

er in

g 14

1, 85

4. 02

$ 17

5, 61

0. 38

$ 20

8, 80

0. 94

$

28 6,

27 1.

28 $

24

6, 14

2. 30

$

36 1,

93 7.

01 $

47 4,

08 0.

17 $

39

5, 90

1. 39

$ 41

6, 81

8. 83

$

42 7,

92 9.

18 $

To ta

l o n

C am

pu s

C at

er in

g Sa

le s

28 5,

09 6.

77 $

24 8,

37 3.

49 $

32 0,

06 0.

96 $

23

6, 57

0. 55

$

21 2,

12 1.

32 $

21

0, 98

7. 31

$ 22

3, 87

9. 09

$

18 0,

29 9.

02 $

23 4,

86 8.

98 $

22

2, 41

4. 63

$

To ta

l C at

er in

g Sa

le s

in C

lu b

34 ,1

97 .5

3 $

38

,3 25

.3 0

$

26 ,1

46 .1

7 $

76

,7 98

.4 1

$

91 ,2

49 .4

2 $

79 ,4

23 .0

5 $

88

,3 07

.5 0

$

85

,6 82

.7 6

$

10 4,

89 0.

59 $

10

3, 45

6. 89

$

O th

er R

ev en

ue M em

be rs

D ue

s Sa

le s

57 ,4

92 .0

3 $

58

,2 32

.1 0

$

60 ,3

11 .2

2 $

37

,0 63

.6 1

$

38 ,1

09 .9

8 $

40 ,5

62 .4

3 $

39

,0 14

.5 7

$

35

,0 19

.6 6

$

33 ,4

33 .7

1 $

33 ,9

04 .2

1 $

Su

bs id

y fo

r D ue

s Sh

or tfa

ll -

$

-

$

-

$

8,

53 1.

98 $

11 ,3

70 .0

0 $

10 ,5

81 .2

7 $

9,

86 5.

51 $

11 ,3

70 .0

0 $

11

,3 70

.0 0

$

11

,3 70

.0 0

$

Li qu

or T

ax C

om m

is si

on 30

3. 06

$

22 8.

04 $

28 9.

49 $

33

5. 21

$

35 9.

88 $

39

3. 17

$

39

3. 96

$

30 5.

97 $

33

2. 09

$

34 0.

33 $

O th

er In

co m

e 2,

80 3.

50 $

- $

36 4.

10 $

34

.1 1

$

-

$

- $

57 2.

38 $

-

$

-

$

- $

To ta

l O th

er R

ev en

ue 60

,5 98

.5 9

$

58 ,4

60 .1

4 $

60

,9 64

.8 1

$

45 ,9

64 .9

1 $

49

,8 39

.8 6

$

51

,5 36

.8 8

$

49 ,8

46 .4

2 $

46 ,6

95 .6

2 $

45

,1 35

.8 1

$

45

,6 14

.5 4

$

To ta

l R ev

en ue

71 4,

85 2.

32 $

76 8,

87 5.

64 $

92 5,

13 3.

46 $

91

0, 44

0. 90

$

85 8,

34 1.

13 $

93

3, 11

7. 74

$ 1,

02 1,

03 9.

36 $

85 9,

87 0.

77 $

96 2,

72 2.

35 $

95

5, 52

0. 31

$

To ta

l C os

t o f G

oo ds

S ol

d 19

9, 75

1. 67

$ 20

6, 92

0. 11

$ 23

6, 00

1. 85

$

23 0,

58 5.

91 $

18

4, 98

5. 83

$

21 4,

44 5.

82 $

20 8,

80 7.

90 $

18

3, 85

1. 73

$ 21

6, 95

6. 53

$

21 5,

50 5.

47 $

G ro

ss In

co m

e 51

5, 10

0. 65

$ 56

1, 95

5. 53

$ 68

9, 13

1. 61

$

67 9,

85 4.

99 $

67

3, 35

5. 30

$

71 8,

67 1.

92 $

81 2,

23 1.

46 $

67

6, 01

9. 04

$ 74

5, 76

5. 82

$

74 0,

01 4.

85 $

Ex pe

ns es

To ta

l S el

lin g

an d

G en

er al

E xp

en se

s 10

1, 61

4. 14

$ 10

4, 15

7. 57

$ 12

9, 37

5. 92

$

11 9,

46 1.

77 $

12

7, 39

3. 66

$

14 0,

96 0.

08 $

14 5,

31 5.

42 $

90

,0 40

.4 2

$

13 0,

13 3.

12 $

13

0, 56

5. 89

$

To ta

l A dm

in is

tra tio

n C

ha rg

es B

on us

40 6,

67 0.

69 $

46 2,

46 3.

66 $

51 0,

88 1.

09 $

56

5, 59

8. 86

$

56 1,

64 7.

16 $

58

7, 31

2. 31

$ 62

4, 56

1. 30

$

62 4,

36 8.

84 $

65 5,

98 5.

44 $

65

2, 59

3. 08

$

To ta

l O pe

ra tin

g Ex

pe ns

es 50

8, 28

4. 83

$ 56

6, 62

1. 23

$ 64

0, 25

7. 01

$

68 5,

06 0.

64 $

68

9, 04

0. 83

$

72 8,

27 2.

39 $

76 9,

87 6.

72 $

71

4, 40

9. 25

$ 78

6, 11

8. 56

$

78 3,

15 8.

97 $

Ne t I

nc om

e 6,

81 5.

81 $

4, 66

5. 70

-$

48

,8 74

.5 9

$

5, 20

5. 64

-$

15

,6 85

.5 3

-$

9,

60 0.

46 -$

42 ,3

54 .7

4 $

38 ,3

90 .2

1 -$

40

,3 52

.7 4

-$

43

,1 44

.1 2

-$

N

ot e:

G .S

.T . =

g oo

ds a

nd s

er vi

ce s

ta x;

* In

ve nt

or y

in cl

ud es

fo od

a nd

li qu

or . T

he n

um be

rs a

re fi

ct io

na l b

ut r

ep re

se nt

at iv

e.

S ou

rc e:

U ni

ve rs

ity o

f R eg

in a

C lu

b A

nn ua

l R ep

or ts

.

A ut

ho riz

ed fo

r u se

o nl

y in

th e

co ur

se A

cc ou

nt in

g an

d Fi

na nc

e at

C en

te nn

ia l C

ol le

ge ta

ug ht

b y

S hi

rle y

La m

ar re

fr om

S ep

3 0,

2 02

0 to

A pr

3 0,

2 02

1.

U se

o ut

si de

th es

e pa

ra m

et er

s is

a c

op yr

ig ht

v io

la tio

n.

Page 9 9B18B016

EXHIBIT 2: AVERAGE RATIOS FOR THE TWO OTHER CANADIAN UNIVERSITY CLUBS

Average Comparable Current ratio 1.11 Quick ratio 0.97 Total asset turnover 1.50 Receivable turnover 8.07 Average collection period 45.48 Inventory turnover 13.10 Days in inventory 27.86 Debt ratio 0.31 Debt-to-equity ratio 0.44 Gross profit margin 0.67 Net profit margin –0.02

Source: Financial statements of two other Canadian university clubs (provided to the authors in confidence); numbers have been altered to maintain privacy.

A ut

ho riz

ed fo

r u se

o nl

y in

th e

co ur

se A

cc ou

nt in

g an

d Fi

na nc

e at

C en

te nn

ia l C

ol le

ge ta

ug ht

b y

S hi

rle y

La m

ar re

fr om

S ep

3 0,

2 02

0 to

A pr

3 0,

2 02

1.

U se

o ut

si de

th es

e pa

ra m

et er

s is

a c

op yr

ig ht

v io

la tio

n.