Create a memo based on the Annual Report of Texas Roadhouse

Create a memo based on the Annual Report of Texas Roadhouse in the link below

http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_TXRH_2016.pdf

Name of the company you selected.  

-Texas Road House  

The period stated in the annual report.  

-2016 year

The inventory method used by the selected company. Describe the advantages and  

disadvantages to the company because it uses this inventory method.  

-FIFO (First In First Out)

The inventory amount and where it was located.  

-Balance Sheet (page: F-3/112) --- 16,088

The depreciation method used by your company. Describe the advantages and disadvantages to the

company because it uses this depreciation method.

-Straight Line Method

The depreciation expense for the period and where it was located.

-Income Statement (page: F-4/113) --- 82,964

Assignment Requirements: In your memo, provide the following information Name of the company you selected. The period stated in the annual report. The inventory method used by the selected company. Describe the advantages and disadvantages to the company because it uses this inventory method. The inventory amount and where it was located. The depreciation method used by your company. Describe the advantages and disadvantages to the company because it uses this depreciation method. The depreciation expense for the period and where it was located. Your Business Memo needs to be written in a professional format per Purdue Owl (https://owlenglish.purdue.edu/owl/resource/590/03/). This memo should be 350-400 words.

Solution

BUSINESS MEMO

COMPANY NAME- TEXAS ROADHOUSE

(Restaurant Industry)

Texas Roadhouse is an American chain restaurant that specializes in steaks and promotes a Western theme. Texas Roadhouse Corporation is headquartered in Louisville, Kentucky. The chain operates about 549 (May 2018) locations in 49 U.S. states, and in Saudi Arabia, Kuwait, Bahrain, the United Arab Emirates, Qatar, the Philippines, and Taiwan.

PERIOD OF ANNUAL REPORT- For the Year Ended 2016 Annual Report

INVENTORY METHOD USED BY COMPANY – FIFO (First in, First out)

The majority of restaurants operate according to the first-in, first-out principle of inventory valuation

     ADVANTAGE OF USING FIFO METHOD

To Preserve freshness and avoid wastage most of company in restaurant business using FIFO inventory costing method. The first-in, first-out method is best for cases where inventory has a short demand cycle or is perishable, just like in the foodservice business. First-in, first-out is the most reliable indicator of inventory value for restaurants.

    DISADVANTAGE OF USING FIFO METHOD

INVENTORY AMOUNT DURING THE YEAR

Inventories (Net) - $16,088 (in thousands)

The Inventories Shown In Consolidated Balance Sheet of a Company 2016 Annual Report (F-3/112)

Shown on Assets Side of Balance Sheet and under sub Heading of Current Assets as third line item based on the liquidity of current assets.

DEPRECIATION METHOD USED BY COMPANY – Straight Line Method

In Company Depreciation is computed on property and equipment, including assets located on leased properties, over the shorter of the estimated useful lives of the related assets or the underlying lease term using the straight-line method.

     ADVANTAGE OF USING STRAIGHT LINE METHOD

Straight-line depreciation known as the equal-instalment depreciation method and is the simplest and most widespread form of depreciation used by businesses. It is suitable for assets that operate uniformly and consistently over the life of the item. Straight-line depreciation is suitable for less expensive items, such as furniture, that can be written off within the asset. As the restaurant also having mostly less expensive items like furniture and fixture like items.

    DISADVANTAGE OF USING STRAIGHT LINE METHOD

Most pieces of office equipment, machinery and other items purchased do not perform exactly the same each year. As assets age they become less efficient. Repair costs usually increase over time. Straight-line depreciation does not account for the loss of efficiency or the increase in repair expenses over the years and is, therefore, not as suitable for costly assets such as plant and equipment. So if a restaurant business using such type of fixed assets than they should not apply this method.

DEPRECIATION AMOUNT DURING THE YEAR

Depreciation and Amortization- $ 82,964(in thousands)

Depreciation is shown in the consolidated Statement of Income and Comprehensive Income of a Company 2016 Annual Report (F-4/113)

Depreciation is shown under the Cost and Expenses.