Question: Purpose of Assignment
This week's focus is on the preparation of financial reports for internal users, such as managers. This case study applies the concepts of managerial accounting, through comparative and ratio analysis, and requires students to identify financial data needed by managers for decision making.
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Assignment Steps
Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Committee (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.
Scenario: You are a loan officer for White Sands Bank of Taos. Paul Jason, president of P. Jason Corporation, has just left your office. He is interested in an 8-year loan to expand the company's operations. The borrowed funds would be used to purchase new equipment. As evidence of the company's debt-worthiness, Jason provided you with the following facts:
2017 2016 Current Ratio 3.1 2.1 Asset Turnover 2.8 2.2 Net Income Up 32% Down 8% Earnings per Share $3.30 $2.50
Jason is a very insistent (some would say pushy) man. When you told him you would need additional information before making your decision, he acted offended and said, "What more could you possibly want to know?" You responded you would , at minimum, need complete, audited financial statements.
Develop a minimum 700-word examination of the financial statements and include the following:
• Explain why you would want the financial statements to be audited.
• Discuss the implications of the ratios provided for the lending decision you are to make. That is, does the information paint a favorable picture? Are these ratios relevant to the decision? State why or why not.
• Evaluate trends in the performance of P. Jason Corporation. Identify each performance measure as favorable or unfavorable and explain the significance of each.
• List three other ratios you would want to calculate for P. Jason Corporation, and in your own words explain in detail why you would use each.
• As the loan officer, what else would you do to gain a better understanding of Paul Jason's, and the Corporation's financial picture and why?
• Based on your analysis of P. Jason Corporation, will you recommend approval for the requested loan? Provide specific details to support your decision.
Format the assignment consistent with APA guidelines.
Second part: Financial Statement Analysis and Decision Making Activity
Companies :Medtronic and Boston Scientific.
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
Resources: U.S. Securities and Exchange Commission (SEC), websites such as Annual Reports (AnnualReports.com)
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.
Select two competing companies, one of which must be an international company, and locate annual reports for these two companies on the Internet.
Research the two companies on the Internet and download the Income Statement, Statement of Shareholders' Equity, Balance Sheet, and Statement of Cash Flows.
Develop a minimum 525-word examination of the financial statements and include the following:
1. Make a 5-year trend analysis for each company, using 2011 as the base year, of:
• Net sales.
• Net income. Discuss the significance of the trend results.
2. Compute for 2015 and 2014 the:
• Debt to assets ratio.
• Times interest earned. How would you evaluate each company's solvency?
3. Compute for 2015 and 2014 the:
• Profit margin.
• Asset turnover.
• Return on assets.
1. Return on common stockholders' equity. How would you evaluate each company's profitability?
2. 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.
3. Which company would you recommend as an investment? Discuss the items that were considered in your decision.
• Research global implications for the international company selected. How might changing environmental factors affect organizational choices?
• Consider the ethical climate (internal or external) of your chosen companies. Describe the ethical issues and impact on the stakeholders.
What has been/is being done to resolve these issues? Do you agree with these methods for resolution? If not, what might you do differently?
Show your work in Microsoft® Word or Excel®.
Complete calculations/computations using Microsoft® Word or Excel®.
Include the four financial statements along with your assignment.
Format your assignment consistent with APA guidelines.