Metta Rest Spa: Should the Stricklands Lend?
(3 pages of text)
A Canadian couple whose daughter owned Metta Rest Spa, a flotation spa that opened in September 2014 in Vancouver, British Columbia, had invested almost CA$1.2 million in the business. Their daughter had recently asked for another $60,000 to keep the business afloat, and in early 2016 the couple needed to decide whether to invest more money in the business. The business had a net loss in 2015 and needed cash to continue to operate. What other information should they be asking for? They needed to know if the business would be able to sustain itself without requiring their retirement funds.
The case can be used in a managerial accounting course at the introductory level. After working through the case and assignment questions, students will be able to do the following:
- Evaluate the performance of a small business.
- Identify information needed to make a lending/investment decision.
- Analyze financial and managerial accounting information to make a lending/investment decision.
Arts, Entertainment, Sports and Recreation
Canada, Small, 2016
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