Assignment: Ratio Analysis
Purpose of Assignment
Focus 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.
About Your Signature Assignment
This signature assignment is designed to align with specific program student learning outcome(s) in your program. Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree. The signature assignments may be graded with an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for program improvements.
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:
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2017
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2016
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Current Ratio
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3.1
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2.1
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Asset Turnover
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2.8
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2.2
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Net Income
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Up 32%
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Down 8%
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Earnings per Share
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$3.30
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$2.50
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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 your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.