financial markets

This activity helps students recognize the significant role accounting plays in providing financial information to management for decision making through the evaluation of financial statements. This experiential assignment requires students to use ratios to evaluate and analyze a company’s liquidity, solvency, and profitability.

Two-Rivers Inc. (TRI) manufactures a variety of consumer products. The company’s founders have run the company for thirty years and are now interested in retiring. Consequently, they are seeking a purchaser, and a group of investors is looking into the acquisition of TRI. To evaluate its financial stability, TRI was requested to provide its latest financial statements and selected financial ratios. Summary information provided by TRI is presented below.

#2

Purpose of Assignment 

This week’s activity illustrates the role a company’s accounting method plays in financial statement reporting. In this assignment, students evaluate the events occuring in a business setting and determine how to properly analyze those events to identify the impact on both cash and accrual accounting methods. 

Resources 

Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Commission (SEC) 

Tutorial help on Excel and Word functions can be found on the Microsoft Office website. There are also additional tutorials via the web offering support for Office products. 

Assignment Steps

Scenario: BizCon, a consulting firm, has just completed its first year of operations. The company’s sales growth was explosive. To encourage clients to hire its services, BizCon offered 180-day financing – meaning its largest customers do not pay for nearly 6 months. Because BizCon is a new company, its equipment suppliers insist on being paid cash on delivery. Also, it had to pay up front for 2 years of insurance. At the end of the year, BizCon owed employees for one full month of salaries, but due to a cash shortfall, it promised to pay them the first week of next year. 

As the senior accountant, the Chief Financial Officer has asked you to prepare a memo to be sent to management notifying them of the delayed wage payments. 

Prepare the memo in a maximum 500 words using business writing (see week 1) including the following information to better outline the situation:

Explain how cash and accrual accounting differs for each of the events listed in the above scenario and describe the proper accrual accounting.

Assess how at the end of the year, BizCon reported a favorable net income, yet the company’s management is concerned because the company is very short of cash. Explain to management how BizCon could have positive net income and yet run out of cash.

USE the memo template provided in week 1 for formatting. ONLY use APA for citations and references.

#3

Purpose of Assignment 

The activity requires students to perform research and analysis on competing companies and the potential implications of international standards. This real-world analysis is key to understanding how a company’s profitability, liquidity, and solvency can be useful for all users. Students also learn to analyze financial statements and use managerial tools to make decisions from an investor’s and creditor’s standpoint. 

Assignment Steps 

Select two competing companies, that are US publicly traded, and locate annual reports for these two companies by going DIRECTLY TO THE COMPANY WEBSITES TO DOWNLOAD THE ANNUAL REPORT OR 10-K. DO NOT USE SUMMARY SITES. 

Research the two companies on the Internet and download the Annual Reports with the Income Statement, Statement of Shareholders’ Equity, Balance Sheet, and Statement of Cash Flows. 

IN EXCEL:

Make a 5-year trend analysis for each company:

Net sales.

Net income. 

Compute for the two most recent years the:

Debt to assets ratio.

Compute for two most recent years the:

Profit margin.

Asset turnover.

Return on assets.

Develop a maximum 500-word APA Formatted Paper and include the following:

Evaluate the financial opportunity presented by the companies. If you were a creditor, which company would you be more likely to lend money to? Defend your decision.

Which company would you recommend as an investment? Discuss the items that were considered in your decision.

At which company would you prefer a management position and why?

Show your work in Excel®. 

Complete calculations/computations using Excel®

Include the four financial statements along with your assignment or a working link, clearly indicated.

Format your assignment consistent with APA guidelines USING THE APA TEMPLATE PAPER I PROVIDED.

Click/Select the Add Text button to type in or paste your assignment. Alternately, you can upload your assignment from your system by Clicking/Selecting the Add Files button or upload it from your OneDrive account by Clicking/Selecting the OneDrive button.

#4

Purpose of Assignment 

The materials covered this week distinguish between the different costing methods and provides needed tools for decision making. This case study focuses on determining equivalent units in a production business setting. 

Resources

Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Committee (SEC) 

Assignment Steps

Scenario: Davis Skaros has recently been promoted to production manager. He has just started to receive various managerial reports, including the production cost report you prepared. It showed his department had 2,000 equivalent units in ending inventory. His department has had a history of not keeping enough inventory on hand to meet demand. He has come to you, very angry, and wants to know why you credited him with only 2,000 units when he knows he had at least twice that many on hand.

Prepare a maximum 500-word informal memo and explain to Mr. Skaros why his production cost report showed only 2,000 equivalent units in ending inventory. Using a professional tone, explain to him clearly why your report is accurate.

USE the memo template provided in week 1.

#5

Purpose of Assignment 

The Case Study focuses on CVP (Cost-Volume-Profit), break-even, and margin of safety analyses which allows students to experience working through a business scenario and applying these tools in managerial decision making. 

Resources

Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Commission (SEC) 

Scenario: Mary Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $24,000 in fixed costs to the $270,000 in fixed costs currently spent. In addition, Mary is proposing a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Mary’s ideas but concerned about the effects these changes will have on the break-even point and the margin of safety.

Assignment Steps

Complete the following: 

Compute the current break-even point in units, and compare it to the break-even point in units if Mary’s ideas are used.

Compute the margin of safety ratio for current operations and after Mary’s changes are introduced (Round to nearest full percent).

Prepare a CVP (Cost-Volume-Profit) income statement for current operations and after Mary’s changes are introduced.

Prepare a maximum 500-word informal memo to management addressing Mary’s suggested changes. 

Explain whether Mary’s changes should be adopted. Why or why not? Analyze the above information (three bullet points above) and use this information to support your suggestion.

USE the memo template provided in week 1.

Show your work in Excel. 

Complete calculations/computations using Excel. 

Submit your assignment.

Resources:

Center for Writing Excellence

Reference and Citation Generator

Grammar and Writing Guides

#6

Purpose of Assignment 

This comprehensive review covers the concepts from the past 6 weeks.

Resources

Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Committee (SEC)

Assignment Steps

Reflect and review the last 6 weeks of class material.

Develop a 500 word examination of :

How can you utilize the information from each week in a current or future managerial role?

APA format is NOT required. Just answer the question.

Submit your assignment.

Resources: 

Center for Writing Excellence

Reference and Citation Generator

Grammar and Writing Guides

The Memo

MEMO

To:

From:

Date:

Subject:

Good afternoon, XXXXX, 

Opening: this is a chance to diffuse tension and set the tone for the memo. Kindly and very briefly state the point of the memo.

Summary: the summary is the body. Here you will present FACTS, not opinions, to allow the read to make an informed decision.

Closing: the final remarks are a call to action. Invite the reader to contact you with any further questions. 

Signature

Title

Contact info(can be fake for class)

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