Student Name: xxxxxxxxxxxxxxx

Candidate Number:xxxxxxxxxxxxx

School: Bishop Anstey High School

Centre Number: 160009

Teacher(s): Mr Salfarlie

Project: SBA

Territory: Trinidad and Tobago

Year of Examination: 2022

Subject: Principles of Accounts

Topic Sentence: An investigation into the impact of the covid 19 pandemic on the liquidity

performance of a small to medium pizzeria called " Pepe's" in Tobago for the period September

to December 2021.
Table of Contents

Topic 3

Objectives 4

Background 5

Methodology 6

Presentation and Analysis of Data 7

Conclusion 17

Recommendations 18

Bibliography 19

Appendix 20

2
Topic

An investigation into the impact of the COVID-19 pandemic on the liquidity performance of a

small to medium pizzeria called “Pepe’s” in Tobago for the period September to December

2021.

3
Objectives:

- To determine the impact of the pandemic on the cash receipts and the cash payments of a small

to medium size pizzeria restaurant.

- To determine how the changes in cash receipts and cash payments of such SME’s (small to

medium enterprises) during the pandemic impacted on the liquidity performance of Pepe’s

Pizzeria.

4
Background

Pepe Pizzeria, located on corner Milford Road & Pigeon Point Road Bon Accord, Tobago is a

small food establishment. Popularly referred to as Pepe’s , this local restaurant serves a variety of

pizzas as well as other Italian delicacies. Pepe’s is ideally located in the busy tourist area of

Crown Point and typically attracts a high volume of customers. However, due to the Covid-19

pandemic, there has been a notable decrease in sales revenue and the liquidity of the business.

In an attempt to reduce the rapid increase of Covid-19 cases the government of Trinidad and

Tobago implemented very strict guidelines resulting in the sale of food being restricted to

curbside pick-up and take away. In addition to that, time restrictions were also implemented and

as a result Pepe’s experienced a noticeable decline in sales revenue which severely affected

liquidity. Liquidity is a measure companies use to examine their ability to cover short-term

financial obligations, (Scott Beaver, 2020). A decrease in sales would cause limited liquidity

which means the business does not have sufficient working capital to cover their day to day

expenses.

It is important to study the relationship between maintaining a business while meeting the

precautions that are put in place to mitigate the spread of the Covid-19 virus. As an accounting

student and a consumer, I will be able to understand the limitations caused by the pandemic and

how it can affect the liquidity and revenue of the business. I hope that my findings will highlight

the impact this has had on the business as well as how they can recover from it.

5
Methodology

The collection of data was done via a pre-constructed structured interview to be answered by the
owner of Pepe’s restaurant. The interview provided insight of the impact of the pandemic on
Pepe’s cash receipts and cash payments as well as how those changes may have impacted the
liquidity performance of a small to medium sized pizzeria restaurant business. Only fixed
questions were asked, however the oral responses given were detailed and gave clarification to
all questions asked to an extent. Due to the business’ need to maintain financial confidentiality,
some answers given were general and there was room for interpretation.

For further information, the researcher observed Pepe’s to obtain firsthand data and the business
activity. Other similar businesses in the area were also observed which helped to compare and
contrast the effects of the pandemic on business. However, observation only provided limited
insights as the researcher was unable to observe all aspects of the comparative businesses.
Secondary sources of data from news articles on business profitability in the covid-19 pandemic
helped the data collection process by providing personal experiences from business owners
compared to the textbook which had more generalized information. Online websites and articles
were also used, however, it was difficult to check the accuracy of the information found there.

6
Presentation and Analysis of Data

Research question 1: What are the total monthly cash balances for the period September to
December 2021 and the budgeted cash balances for period two, January to April 2022?

Presentation of data:

Graph showing the total monthly cash balances for the period September to December
2021

Figure 1

7
 Graph showing the budgeted cash balances for the period January to April 2022

Figure 2

Analysis of data:
During the first period (September to December 2021) Pepe’s had a total of $9,500 in cash
balances compared to the January to April 2022 (period 2), with a projected total cash balance of
$11,800. This showed that the short term well-being of the business was projected to increase by
24.2%. The noticeable increase in cash receipts from January to April 2022 as compared to
September to December 2021, is perhaps a direct result of Pepe Pizzeria’s strategic investment in
new equipment to expand and diversify menu offerings.

8
 Research Question 2: What were the current and acid test ratios for the period September to
December 2021 (Period 1) and how did they differ from the budgeted January to April 2022
(Period 2) ratios?

Presentation of Data:

A Ratio Analysis Table Showing the Current Ratio and the Acid Test ratio for the
September to December 2021 period (Period 1) and for the January to April budgeted
period (Period 2)

Period 1 Period 2
Ratio Formula
Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.

Current Current 86,000 90,000 92,000 89,000 93,000 96,300 103,400 104,000
Ratio Assets ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷
Current 52,000 52,000 52,000 52,000 59,000 54,000 56,000 46,000
Liabilities=
x:1
= = = = = = = =
1.7 : 1 1.7: 1 1.8:1 1.7 : 1 1.6 : 1 1.8 : 1 1.8 : 1 2.3 : 1

Acid Test (Current (65,000 - (66,500 - (68,000- (69,500- (74,000- (77,500- (84,000- (88,800
Ratio Assets- 21,000) 23,500) 24,000) 19,500) 19,000) 18,800) 19,400) -
Inventory) ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ 15,200)
Current 52,000 52,000 52,000 52,000 59,000 54,000 56,000 ÷
Liabilities = 46,000
x:1
= = = = = = = =
0.8 : 1 0.8 : 1 0.8 : 1 1:1 0.9 : 1 1:1 1.2 : 1 1.6 : 1
Figure 3

9
Analysis of data (Period 1) Analysis of Data (Period 2)

The current ratio for the September to At the start of the second period, the acid test

December period was 1.7:1 for three of the ratio dropped by .1, however the business is

four months and had a slight increase to 1.8:1 projected to increase with the highest ratio

in November. This showed that the business being 1.6 :1. The current ratios for this period

was able to cover its short term debts. are projected to be substantially higher

However, when the Acid test ratio was done excluding the drop in January. The month of

for this period, it showed that the business did April the business is projected to have

not have sufficient liquid assets to pay their sufficient assets to cover their liabilities 2.3

debts. The ratio was at 0.8:1 in the first three times.

months but slightly improved to 1:1 in the last

month, proving to be just enough to cover

their expenses and debts.

10
Research Question 3: Based on the information gathered from your research, what is the

projected sales revenue for the January to April 2022 period?

Presentation of Data:

Table showing the Sales Revenue Budget for the Period, January to April 2022

Month January February March April

Sales Revenue 126,500 145,475 174,570 209,484

($)
Figure 4

Analysis of Data:

In the last month of the first period the sales revenue for the first period was $110,000. The

budgeted sales revenue for the period January to April 2022 are expected to increase by 15%

from the previous month in January to February. January had a sales revenue of $126,500 and

February, $145,475. In march there was a 20% increase from February, with a sales revenue of

$174,570. April similar to March was projected to increase by 20% with a total of $209,484.

11
Research Question 4: What were the net current assets for (Period 1), September to December

and how did they compare to the projected Net currents assets for (Period 2), January to April?

Presentation of data:

Bar Graphs Representing the Net Current Assets for the Periods September to December

and January to April

Figure 5

12
Figure 6

Analysis of data:

The first month in both periods one and two started with a net current asset of $34,000 however

the other months in the period varied. Period one (September to December) had an average of

$37,250 compared to period two which is expected to have $45,425. This showed a 21.5%

average increase in net current assets in period 2. April is suspected to have the highest net

current assets for both periods, valuing at $58,000.

13
Research question 5: Are there any similar businesses near Pepe's? How do they differ?

Data Presentation:

14
15
Analysis of data:

Directly opposite of Pepe’s in the Colosseum Mall, Pizza boys has a branch. This large

competitor plays a threat on the sales of Pepe's especially during the pandemic. Unlike Pepe’s,

Pizza boy’s is a major franchise, their prices vary and their restaurant is widely known. Pizza

boy’s cheapest pizza is $38 whereas Pepe’s is $50. Pepe’s menu is limited only to pizza and two

calzone options whereas their competition offers more variety of pizza toppings, and calzone

fillings as well as hoagies and burgers at cheaper rates as well. Though Pepe’s offers authenticity

and better quality pizza, the average person, especially during the pandemic, may choose the

cheaper option that offers more variety and they are more comfortable with.

16
Conclusion

To conclude, within the first period ending December 31,2021, Pepe’s was not very profitable,

this is believed to be a result of the strict Covid-19 restrictions during those times. They had

issues covering their liabilities and their assets were substantially lower compared to the second

period. In the second period, there is a gradual increase in sales and profit. However, January is

projected to be the lowest earning month between both periods as the ratios are lower and net

current assets. April 2022 is projected to be the most profitable month for the business. There is

always room for improvement in business especially during these times, from my research

Pepe’s has the possibility to be a quite profitable business. Completing my research, I believe

that it was successful in completing all objectives and I developed my knowledge on the

operations of the businesses during the pandemic but also my understanding of principles of

accounts.

17
TABLE OF RECOMMENDATIONS

The pandemic has caused everything to become virtual. Digitization

should be considered by Pepe’s as this would make them more

accessible and have a strong presence of social media would also

1.
bring them more customers

Limited offers such as family deals, buy one pizza get another for

half price or free at home delivery within a particular radius, can all
2.
be helpful in increasing sales.

Grab and go meals i.e. frozen pizzas, can be distributed at various

groceries or quick shops across the island to increase sales but it can
3.
also act as a form of advertising the business name.

Partnering with a food delivery app, instead of conducting their own

deliveries would make more financial sense as they would not have

the liability of vehicle maintenance, gas or the salary of the driver.

4.
The price of working with an already established app would be much

less.

The introduction of new menu items or the improvement of current dishes

can help to differentiate the business from others especially considering the
5.
variety of pizzerias within the Crown Point area. Specialty items that cannot

be obtained anywhere else would definitely increase sales.

18
Bibliography

Robinson, Sheila, and Frank Wood. Principles of Accounts for the Caribbean. Sixth Edition ed.,

London, Hodder Education, An Hachette UK Company, 2018.

Caribbean COVID-19: Food Security & Livelihoods Impact Survey, Regional Summary Report |

February 2021. (2021, April 1). Reliefweb. https://reliefweb.int/report/haiti/caribbean-covid-19-

food-security-livelihoods-impact-survey-regional-summary-report

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Appendix

Principles of Accounts SBA Interview Questions

Topic: An investigation into the impact of the COVID-19 pandemic on the liquidity

performance of a small to medium pizzeria called “Pepe’s” in Tobago for the period

September to December 2021.

Objective One: To determine the impact of the pandemic on the Cash Receipts and Cash Payments of a
small to medium sized Pizzeria restaurant business.

Question 1. What are the main sources of Cash Receipts generated by the business daily?
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Question 2. Are there any specific limitations facing the business during the pandemic that
have adversely impacted the generation of these Cash Receipts?

_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Question 3. What are the main Cash Payments made by the business daily?
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Question 4. Has it been necessary for you to make any adjustments to your daily Cash Payments during
this ongoing pandemic?

_____________________________________________________________________________________
20
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Objective Two: To determine how the changes in the Cash Receipts and Cash Payments may have
impacted the liquidity performance of a small to medium sized Pizzeria restaurant business?

Question 5. Cash is described as the lifeblood of a business; do you agree and how do you plan to
sustain the liquidity performance of your establishment during this ongoing pandemic?

_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Question 6. Two key liquidity ratios are the Current Ratio and the Acid Test Ratio, which have
benchmarks of 2:1 and 1:1 respectively. How would you rate the liquidity performance of your
business using these critical ratios?

_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Question 7. Have you used tools like simple Cash Budgets and Cash Flow statements to help in
the planning and monitoring of the liquidity performance of the firm?

_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

Question 8. Are there any new strategies that you plan to adopt to improve the liquidity performance of
the business?

_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

21