What is Wuffyburgers up to?
Something is up at Wuffyburgers' Southampton headquarters. The company has been in touch with a number of merchant banks to raise a considerable sum of capital for some as yet undisclosed venture.
Wuffy has been one of the fastest growing hamburger chains in the country since it was founded by Brendan Wuffy seven years ago. Starting from a roadside kiosk in Southampton, Wuffyburgers has been opening a fast food outlet on an average of one every three weeks for the past two years.
However, there have been signs that Wuffy's expansion has been slowing down as the UK fast food market gets more competitive, and other cheaper imitators are following the Wuffy model of quick cheap takeaway hamburgers with a variety of tasty fillings.
The question has been what is going to happen next, and so far Wuffy has been playing his cards close to his chest. His disastrous takeover of Burgerzone in 1998 is still remembered by ther market. Then, when undisclosed losses on Burgerzone's books came to light, it sent Wuffy's share price plunging. In fact shares only regained their 1998 levels last year, before going on to their present high.
We would recommend our investors to hold their Wuffyburger shares until we can see where Brendan Wuffy intends to take his company. But for those who have faith in Mr Wuffy's Midas touch, now might be a good moment to take a punt.
© City Finance News
1. c
The article is mainly about what Wuffy will do next. It mentions the company's past and what it is doing now because these might give some idea of what will happen next.
2. c
Most of the signs - rapid expansion and acquisitions - indicate a successful company. However, we cannot be sure until we see (for example) how much debt the company has taken on.
3. b
Wuffy's problem is shared by many successful companies that have not managed monopoly status - rivals doing what they do, and sometimes doing it better.
4. d
Burgerzone had been losing money that the board should have been aware of but were not. Since it is the job of accountants to find such problems, the problem was bad accounting
5. c
The shares are higher than ever, bacause the writer uses the word "peak" which means the highest point.
6. c
"Hold" as an investment term means keep the shares, because they may improve, or at least not lose value.
7. a
Wuffy is trying to raise money from banks. This can be done by borrowing, or through a bond. It may be planning to release more shares, but this is not an option in the questions.
8. c
If the idea that Mr Wuffy is raising money for is a good one, then buying shares is a good idea. But remember that Burgerzone takeover ....
