...UofP Final Project After analysis of Berry’s Bug Blasters, the liquidity, profitability and solvency ratios were examined. Our analysis is attached and we will offer our discovery about the company’s financial position, which may benefit from our analysis, and what our data will reveal about the company’s performance and position in this memo to the CEO. After using the horizontal and vertical analysis Berry’s Bug Busters was able to see how their assets and debts are handled in relation to profits. Liquidity within a business is the ability to pay current liabilities using current assets. Liquidity ratios are important to a company as well as employees, creditors and banks. As of 2008, Berry’s Bug Blasters holds a 15.88% debt to total assets ratio. Solvency is the long-term financial practicality of a business including its ability to pay off long-term obligations. Key solvency ratios are debt to equity ratio, debt to capital ratio, debt to assets ratio, times interest earned ration, and fixed charge coverage ratio. Profitability is the ability of a business to earn profit for its owners. Profitability ratios are determined through the analysis of asset turnover, profit margin, return on assets, and return on common stockholders’ equity. In 2008 every dollar of asset owned Berry’s Bug Blasters sold $1.68 of goods and services. The profit margin is 6.58%; the return on assets showed the...
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...Week 5 Ratio Analysis Memo ACC/291 Kudler Foods Memo To: CEO-Kudler Foods. From: Team B Date: August 22, 2011 This memo is in regard to a recent horizontal and vertical analysis performed on Kudler Foods. The analysis completed was to inform the company of potential interests from different users. The users will be able to use ratios calculated to reveal performance and the current position of the company. The vertical and horizontal analysis is attached along with calculations of liquidity, profitability, and solvency ratios. The liquidity, profitability, and solvency ratios allow users to identify the financial health of Kudler Foods. The liquidity ratios include the current ratio, acid-test ratio, and inventory turnover. Kudler Fine Foods has no accounts receivables so there was no need for a receivables turnover calculation. The liquidity ratios show that the amount of liquid assets is high in comparison to the industry average. This means that Kudler Foods has assets that can be converted to cash very quickly. Creditors would look at these calculations and be appeased by the ability Kudler Foods has to pay their short-term liabilities. The profitability ratios calculations included asset turnover, profit margin, return on assets, and return on common stock-holder equity. The ratios calculated show by use of profitability ratios the company financial position is worrisome. This is said because ROA is low. When ROA is low then the company is using less money on...
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...Huffman Trucking Ratio Analysis Memo ACC/291 June 28, 2012 James Haynes Ratio Analysis Memo Starting in 1936, in Cleveland, Ohio, K. Huffman founded Huffman Trucking. “The growth of the company was the direct result of World War II and the increased demand for carrier services between factories in the Midwest to ports on the East Coast.” As of today, Huffman Trucking has transitioned from a single tractor trailer to 925 drivers and 800 tractors, and continues to provide the same delivery service across the nation. Our financial analysis team has looked over financial statements to determine the liquidity, profitability, and solvency ratios of Huffman Trucking. These ratios provide detailed information to creditors, investors, and employees. Together, the ratios reveal data related to the performance and position of Huffman Trucking. What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company? The liquidity ratio of a company shows the way the company is able to pay back short-term debt that is owed. Creditors would be interested in this type of ratio. The profitability ratios are the profit performance that makes up the financial success of the company. Profitability ratios would be beneficial to individuals outside of the company such as investors and creditors. Solvency ratios are the ability of the company to pay off the long term debt. The company’s solvency ratios are of interest to long-term creditors and the company’s’...
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...27109-7285 Restaurant Development Group Memo To: Date: Re: Registered Students March 1st 2006 Restaurant Development Group’s Winston-Salem Project From: Mr. Bobbie Filet Introduction Restaurant Development Group (RDG) is considering opening a new restaurant in conjunction with the “Winston-Salem Partnership” group that is attempting develop a center of entertainment in downtown Winston-Salem, NC. As part of the project, the company plans to renovate an existing restaurant space in the downtown area and begin operations in six months. RDG has decided to hire several teams of professionals to handle various facets of the project. One team will work closely with city and county government officials to insure the project has strong support from all relevant government agencies. Another team will be responsible for developing the marketing plan and handling media and public relations to insure the project has a positive reception within the media. Finally, the finance and accounting team has responsibility for examining the financial viability of renovating the restaurant and developing a cash flow budget to determine how much cash will be needed open and operate the restaurant. You are part of this last team and are charged with preparing the necessary analyses. In addition to the “go or no-go” decision, RDG management wants to know whether the restaurant should be open for dinner only or open for lunch and dinner. The purpose of this memo is to ask you to examine the financial...
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...Case 9 Kota Fibers, Ltd. Kota Fibers, Ltd. was founded in Kota, India in 1962. Kota produced nylon to provide synthetic fiber yarns to local textile weavers. The synthetic fiber yarns were mainly used to make traditional women’s colorful dresses in India called the saris. One sari averaged eight yards of fabric. Indian women usually purchased three saris every year. India’s female population is around 500 million, with a demand for saris accounting for more than twelve billion yards of fabric and a stable business. The demand was being supplied by domestic textile mills that fulfilled their yarn requirements from suppliers like Kota Fibers. Kota used new technology and domestic raw materials to produce their quality product. Demand for synthetic textiles was characterized by a stable year to year growth with fluctuation based on special Indian festivals and celebrations. The most important festival was the Diwali celebration in mid-autumn, which made a seasonal peak in demand for new saris. Therefore, mid-summer was the seasonal peak demand for nylon yarn from Kota. Unit industry growth was expected to be 15% per year. Consumers purchased their saris from cloth merchants located all around the country. Cloth merchants were important local figures that were well known to the area residents who granted credit in order to support their sales. The suppliers were very competitive in order to keep the merchant’s business. The suppliers were aggressive in price, service, and credit...
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... | | |Principles of Accounting II | | |1/13/2014-3/16/2014 | Copyright © 2011 by University of Phoenix. All rights reserved. Course Description This course introduces accounting concepts in a business environment. Students learn to create and apply accounting documents in making better business decisions. Other topics include plant assets, liabilities, accounting for corporations, investments, statements of cash flows, financial statement analysis, time value of money, payroll accounting, and other significant liabilities. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: University policies: You must be logged into the student website to view this document. Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Where to Go to Class ...
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... | | |XACC/291 Version 1 | | |Principles of Accounting II | Copyright © 2011 by University of Phoenix. All rights reserved. Course Description This course introduces accounting concepts in a business environment. Students learn to create and apply accounting documents in making better business decisions. Other topics include plant assets, liabilities, accounting for corporations, investments, statements of cash flows, financial statement analysis, time value of money, payroll accounting, and other significant liabilities. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: University policies: You must be logged into the student website to view this document. Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Course Materials Weygandt, J. J., Kimmel...
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...The Morgan Bistro - Ratio Analysis Memo Jennifer Allara, Vanessa Ford, Karla Morales, & Kimberly Richardson ACC/291 October 15, 2012 Emily Baculik | |XYZ Accounting, LLC | Memo To: CEO, Baderman Resort From: Allara, Ford, Morales, & Richardson CC: Boardman Management Group Date: 10/13/2012 Re: The Morgan Bistro – Financial Ratio Analysis 1. What do the liquidity, profitability, and solvency ratios reveal about the company’s financial position? 2. Which users may be interested in each type of ratio? Short terms creditors and such as bankers and suppliers would be interested in evaluating the company’s liquidity ratios. Investors would be very pleased with the current ration of this company for example since for both years 2005 and 2006 the current ratio gave a clean bill of health. In 2005 for every dollar in current liabilities, there was $1.12 in current assets. And in 2006 there was $1.12 in current assets. Bankers and stockholders would be interested in knowing the solvency of the company. They would be interested in solvency rations such as debt ratio, debt equity ratio and interest coverage ratio. Investors will be interested in knowing the returns that they can earn on their investments. For both 2005 and 2006 the debt to total assets ration indicated that the company should be able...
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...Memo to CEO of Riordan Manufacturing XACC/291 November 15, 2014 Professor Doug Kildsig TO: Riordan Manufacturing CEO FROM: DATE: 11/15/2014 SUBJECT: Financial Analysis A detailed financial analysis has been performed on the balance sheet and income statement of Riordan Manufacturing. The purpose of this memo is to explain the results of the analysis and provide an overview of the company’s current financial position. Financial Ratios Financial ratios are essential for analyzing the liquidity and profitability of the company. Based on the 2010 income statement and balance sheet for Riordan Manufacturing the following ratios have been calculated. First, the liquidity ratios tell the proportion of liquid assets to as they relate to current liabilities. These ratios are important because they can show how vulnerable a company is to bankruptcy or insolvency. Next, the profitability ratios show us the level of performance from an operational standpoint. These ratios can be used to find weaknesses and strengths in operational policies at Riordan Manufacturing. Last, the solvency ratios are used to compare the company’s debt to assets. Creditors can determine if a company is a suitable candidate for a loan by using this ratio. |Liquidity Ratios |Solution | ...
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...AApple Inc. Memo To: Tim Cook, CEO From: Team D Date: December 3, 2012 The purpose of this memo is in regards to a recent horizontal and vertical analysis preformed on Apple Inc. for the following years 2009, 2010, and 2011. The liquidity, profitability and solvency ratios analysis reveal that the company positions as follows: * Liquidity – * Current ratios 1.88:1 (2009), 2.01:1 (2010), 1.60:1 (2011) = Trend Flat * Acid Test (quick) ratios 1.85:1 (2009), 1.96:1 (2010), 1.58:1 (2011) = Trend Decreasing * Receivables turnover 14.84:1 (2009), 14.70:1 (2010), 19.90:1 (2011) = Trend Increasing * Inventory turnover 53.28:1 (2009), 52.51:1 (2010), 70.49:1 (2011) = Trend Increasing * Profitability Ratios * Asset Turnover .930:1 (2009), .868:1 (2010), .903:1 (2011) = Trend Decreasing * Profit Margins .401% (2009), .394% (2010), .405% (2011) = Trend Increasing * Return on Assets .173%% (2009), .186% (2010), .223% (2011) = Trend Increasing * Return on Common Stockholders’ Equity .260% (2009), .293% (2010), .338 (2011) = Trend Increasing * Solvency Ratios * Debt to Total Debt Ratio .334% (2009), .364% (2010), .342 (2011) =Trend Flat * Times Interest Earned 1.189 times (2009), 1.429 times (2010), 3.443 times (2011) = Trend Increasing Analysis suggests that users would be interested in the different types of financial ratios concerning the liquidity, profitability, and solvency:...
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...Memo of Financial Analysis Sena Lopez ACC/291 December 9, 2014 Malinda Marsh INTERNAL MEMO TO: KOHL COMPANY FROM: SENA LOPEZ RE: FINDINGS FROM VERTICAL AND HORIZONTAL ANALYSIS DATE: 9TH DECEMBER 2014 I am writing to let you know the performance of the company (Kohl) as compared to its competitive company (J.C Penny) in the same industry. Horizontal analysis: This also known as a trend analysis is used to evaluate financial statements over a period. Its main purpose is to determine if an increase or decrease have occurred. Kohl’s current assets are less by 11.38% from $6370. The reported gross profit of kohl’s is ($7032) which is higher than a penny by 1.03%. The net sales of Kohl Company are $18391 which is higher than a penny by 3.56%. From the ratios trend, Kohl Company is in poor financial operation. Vertical analysis: This also known as the common-size analysis is used with the financial statement data in a percent base amount. Kohl Company has a low current ratio of 2.1 as compared to 2.4 of J.C Penny. The gross profit of Kohl Company is 38.2% which is lower by 1% as compared to J.C penny. The assets turnover of Kohl Company is slightly lower than that of J.C penny. In general Kohl, Company is performing poorly as compared to Penny Company. Liquidity ratios measure the ability of a company to meet the short – term obligations when they fall due. Short-term creditors such as bankers and suppliers are more interested in this information to access liquidity...
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...Ratio Analysis Memo Principles of Accounting II ACC/291 Ratio Analysis Memo For the first ratio of solvency debt to total assets one must take the total debt Kroger owns 20,440.7 and divide it by the total assets 24,651.5. Once this is done Kroger has a debt to total assets ratio of .83, which means that 83% of Kroger's assets are financed by creditors. This is a not a good debt to assets ratio because Kroger only owns 17% of its assets out right. Kroger has a high debt to asset ratio which can be negative, but could also be less expensive then obtaining funds with equity. Carrying a high debt to assets ratio comes with risk, because the company must pay on its obligations or risk creditors seizing assets. Companies with low debt to assets ratios tend to have many shareholders that they must share profits with. The key to running a quality company is balancing that with assets to build a balanced financial backing planned for future acquisitions. Kroger's times interest earned calculation is done by taking the net income 1,496.5 plus interest expense -462 plus tax expense 793.8 which gives 1827.8 for a total. Then after this calculation is done one must divide it by the interest expense 462 which gives 3.9 for a times interest earned. The times interest earned ratio shows Kroger's ability to pay interest payments on loans when they come due. Kroger's 3.9 times interest earned ratio shows that Kroger can pay its interest 3.9 times with its income. This high number helps...
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...The purpose of converting the SUA system to Peachtree is to see the differences between the systems and to choose the better system for the company. We can convert the SUA system to a computerized accounting system, and we strongly recommend adapting Peachtree as our accounting system. In the following pages, we show flowcharts and tables for revenue and expenditure cycles to compare both manual and Peachtree systems. Advantages: - Peachtree is an easier process compared to a manual process. Almost all professional accountants know how to use Peachtree. It is a system that takes a difficult and complex process and redesigns it into an easy process. - Less time and labor is consumed. In the purchase order, Peachtree could automatically create a Purchase Order or Sales Invoice and fill in the prices on it, whereas we’d have to manually duplicate a PO or Sales Invoice and then calculate the prices. - It is more accurate than the manual process. The Peachtree software always ensures that all the entries go to the correct general ledger or subsidiary ledger. In the cash receipt process, the SUA system requires all entries to be written, and journals to be filed. Peachtree provides an automated system that’s easier to record and follow. In the SUA system, on the other hand, it is easier to record incorrect data. - Less paper work and less chance of losing data. Peachtree helps prevent lost data. Most of the files are stored in the computer. ...
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...case. FOR INDVIDUAL ASSIGNMENTS: For individual assignments, you must answer the questions labeled “Memo.” Individual Memo for Rapid Repair Auto Parts Rapid Repair’s profitability appears good but their cash balance has shrunk. Write a report that provides a financial analysis and summarizes their current situation (Hint: ratios and cash flow analysis). What changes do your recommend, if any, in 2013? Preparatory Questions for Horniman Horticulture Horniman’s profitability appears good but their cash balance has shrunk just like the previous case. Write a report that forecasts the financial outlook for 2006 (including forecasted income statement and balance sheet). How much external funds are needed (EFN), if any, for 2006? Preparatory Questions for Panera Bread Company 1. Complete the financing portion of Panera Bread Company’s 2007 forecast financial statements, and provide a forecast for the next 5 years. A worksheet has been provided for this purpose. As an initial (base case) analysis, assume all borrowings are some form of debt. You may also assume the share repurchase occurs in 2008 and that interest expense is equal to 6% of outstanding debt. One set of assumptions is for sales growth of 25% for the first two years after 2007 and 5% thereafter (other sales growth patterns should be explored). Perform sensitivity analysis of the important assumptions. Note that...
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...While conducting a Vertical and Horizontal analysis of our financial statements along with my ratio calculations I have found that our company Berry’s Bug Busters did not do as well in some areas as in the previous 2007 year but the company is still in a really good position. As well as Berry’s Bug Busters is not relying on debt financing as much as it once did. Among the three ratios conducted Liquidity, Profitability, and Solvency the users who would be most interested in these would be a short term creditor, a long term creditor, and stock holders. The short term creditor an example would be a bank is interested in the liquidity ratio “The liquidity of the borrower is extremely important in evaluating the safety of a loan” (Weygandt, Kimmel, & Kieso, 2010, p. 676). According to Weygandt, Kimmel, and Kieso (2010), While long term creditors and short term creditors both have interest in profitability ratios and solvency ratios either to see the companies ability to survive over a long period of time or to see the likelihood of growth in stocks and dividends (p 676). Liquidity Ratios The Liquidity ratios reveal that the company paid off its liabilities better in this past year than in 2007 our current ratio went up by 2.42 from 2007 when it was 3.57 to 2008 where it was 5.99. Along with the current ratio the acid test ratio also went up by 2.31 from 2007 where it was 3.01 to 2008 which came to 5.32. Although we see a growth through these set of numbers our companies...
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