Project #22392 - Business Finance MOD 1 & 2

General Guidelines:

The proper, and professional, presentation of solutions associated with this comprehensive problem are part of the overall grading of each module.  Because all analytic work is to be completed in Excel, but the solution submission is to be in Word, you must become familiar with importing schedules from Excel into Word in a professional manner.  Please see the instructions contained in the Getting Started folder in Blackboard.

Each module is due as indicated in the Learning Activities folder for the particular week and is to be uploaded into the Assignment as shown in the Grade Center.

The final upload to Blackboard will include the Excel file and the Word document.  Make sure to include your name in cell A1 in the Excel file, along with the section of your class, and the Word document should be professionally prepared and use the guidelines in the School of Business Writing Manual.

 


 

Module One – 24 points

Smith-John Widgets, Inc., produces widgets for the frazzle industry.  The company sells all products on accounts with net 30 day terms.  The company has been without someone to assess the financial condition for some time (using only a bookkeeper to post activity to the general ledger accounts) and, therefore, is asking you to help with a more current assessment of the company’s position.

Part A:  Below you will find a series of accounts that represent the trial balance of the business firm.  These accounts encompass both income statement and balance sheet accounts.

Required:  Prepare (using Excel) a proper form Income Statement and Balance Sheet for Smith-John.  A Proper Form statement contains the data in columns similar to the data that is presented above.  Each year is presented next to the subsequent year.  If you do not follow this instruction you will automatically drop 4 points from the total.  Present the final solution in a Word document with the module and part clearly identified and in proper form.  (5 points for each statement.)


 

Part B:  Based on the financial statements that were prepared with this data, complete the following financial ratio calculations and provide a narrative discussion of these results as compared to industry averages (provided.)

Ratios required:

Ratio

Industry Average

1.    Profit margin

3.2%

2.    Return on assets (use ending assets)

6.0%

3.    Return on common equity  (use ending common equity)

15.6%

4.    Receivable turnover (use ending receivables)

8.5 x

5.    Inventory turnover (use ending inventory)

12.0 x

6.    Fixed asset turnover (use ending fixed asset balance)

5.75 x

7.    Total asset turnover (use ending assets)

1.89 x

8.    Current ratio

3.10

9.    Quick ratio

1.40

10.Debt to total assets (use ending assets)

37.0%

 

Your solution should include the required ratios for each year and then provide a narrative discussion regarding the results as they compare to the industry averages.  This analysis should discuss whether or not Smith-John is better or worse than the industry average but it should not stop there.  You should also include a discussion as to why or how the difference can be explained, i.e., the reason for the variance.  The final solution is to be provided in the Word document, with the module and part clearly identified.  The narrative discussion will reference the appropriate ratio and the comparison to the appropriate industry average.

The final upload to Blackboard will include the Excel file and the Word document.  Make sure to include your name in cell A1 in the Excel file, along with the section of your class, and the Word document should be professionally prepared and use the guidelines in the School of Business Writing Manual.

 

 

Subject Business
Due By (Pacific Time) 02/09/2014 12:00 am
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