XACC 291 Ratio Analysis Memo for Riordan Mfg- For courseworkhero.co.uk

Syllabus

XACC/

2

9

1

Version 1

School of Business

XACC/291 Version 1

Principles of Accounting II

Week One: Principle Assets

Details

Due

Points

Objectives

1.1 Prepare journal entries to account for transactions related to accounts receivable and bad debt using both percentage of sales and the percentage of receivables methods.

1.2 Distinguish between tangible and intangible assets.

Course Preparation

Read the course description and objectives.

Read the instructor’s biography and post your own.

Reading

Read Ch. 8 of Financial Accounting.

Read Ch. 9 of Financial Accounting.

Review Ch. 1 of Financial Accounting.

Review Ch. 2 of Financial Accounting.

Review Ch.

3

of Financial Accounting.

Participation/

Discussion

Participate in class discussion.

All Week

CheckPoint

Exercises – Week One

Resource: Ch. 9 of Financial Accounting

Complete Exercise E9-2.

Submit as either a Microsoft® Excel® or Word document.

9/01/13

Week Two: Principle Assets

1.3 Identify the entries associated with acquisition, disposal, and sales of plant assets.

1.4 Distinguish between revenue and capital expenditures, and the entries associated with each.

CheckPoint

Reflection

Write a 350- to 500-word summary explaining the differences between revenue expenditures and capital expenditures during a useful life and identifying any similarities. Briefly explain the entries of revenue expenditures and capital expenditures.

Format your summary consistent with APA guidelines.

9/3/2013

Individual

Exercises and Problems – Week Two

Complete Exercises E9-1, E9-7, & E9-

12

.

Complete Problem P9-7B.

Submit as a Microsoft® Excel® or Word document.

9/8/2013

Week Three: Liabilities

1.5 Differentiate among accounts payable, notes payable, and accrued expenses.

1.6 Prepare necessary journal entries to record the issuance of bonds, the periodic interest, and the amortization of bond premiums and discounts.

Read Ch. 10 of Financial Accounting.

Week Four: Liabilities

Objective

1.7 Calculate depreciation and amortization expense using various methods.

Checkpoint

Recognizing Differences

Write a 350- to 500-word paper in which you differentiate between valuation, depreciation, amortization, and depletion. Is it appropriate to calculate depreciation using two different methods? Why?

Format your paper consistent with APA guidelines.

9/18/13

Individual

Exercises and Problems – Week Four

Resource: Ch. 10 of Financial Accounting

Complete Exercises E10-6, E10-8, & E10-18.

Complete Problems 10-3A & 10-6A.

Submit as a Microsoft® Excel® or Word document.

9/22/13

Week Five: Equity and Investments

1.8 Differentiate among the types of stocks issued by corporations.

Read Ch. 11 of Financial Accounting.

Read Ch. 12 of Financial Accounting.

Discussion

Stocks

Write a 250- to 350-word paper explaining why preferred stock is referred to as preferred and what some of the features added to preferred stock are that make it more attractive to investors. Would you select preferred stock or common stock as an investment? Why?

Format your paper consistent with APA guidelines.

9/29/13

Week Six: Equity and Investments

1.9 Calculate stocks, dividends, and stock splits.

1.10 Record treasury stock transactions.

1.11 Prepare journal entries associated with the issuance of preferred and common stocks and the declaration and payment of dividends.

Stocks and Transactions

Write a response to the following scenario:

Chen, Inc. purchases 1,000 shares of its own previously issued $5 per common stock for $12,000. Assuming the shares are held in the treasury, what effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) total stockholders’ equity?

The treasury stock purchased in the above question was resold by Chen, Inc. for $15,000. What effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) total stockholders’ equity?

Format your response consistent with APA guidelines.

10/02/13

Exercises and Problems – Week Six

Resources: Ch. 11 & 12 of Financial Accounting

Complete Exercises E11-15, E12-1, & E12-2.

Complete Problem 11-6A.

Submit as a Microsoft® Excel® or Word document.

10/06/13

Week Seven: Financial Statement Analysis

1.12 Prepare a statement of cash flows using both direct and indirect methods.

Read Ch. 13 of Financial Accounting.

Read Ch. 14 of Financial Accounting.

Cash Flow

Write a 350-word response to the following:

Why are companies required to prepare a statement of cash flows? Why is the statement of cash flows divided into three sections? What does each section tell you about the operations of a company?

Format your response consistent with APA guidelines.

10/13/13

Week Eight: Financial Statement Analysis

1.13 Apply ratio, vertical, and horizontal analyses to financial statements.

Nongraded Activities and Preparation

Ratio Analysis Memo

Continue working on the Ratio Analysis Memo assignment due in Week Nine.

Direct and Indirect Cash Flows

Write a 350-word response regarding the differences between the direct and indirect presentation of cash flows. Why does the Financial Accounting Standards Board allow both methods? Which do you prefer? Why?

Format your response consistent with APA guidelines.

10/16/13

Exercises – Week Eight

Resources: Ch. 13 & 14 of Financial Accounting

Complete Exercises E13-8 & E14-3.

Submit as a Microsoft® Excel or Word® document.

10/20/13

Week Nine: Ethics

1.14 Identify situations that might lead to unethical accounting practices.

1.15 Examine the effects of unethical behavior and the Sarbanes-Oxley Act on financial statements.

Read the “Fraud and Internal Control” section in Ch. 7 of Financial Accounting.

Read Appendix F of Financial Accounting.

Capstone Discussion Question

Respond to the capstone discussion question.

· Identify situations that might lead to unethical practices and behavior in accounting. Do you think the Sarbanes-Oxley Act has made a difference in the ethical behavior of companies regarding their financial accounting? Why or why not?

10/23/13

Final Project

Ratio Analysis Memo

Resources: Virtual Organizations

Click the Virtual Organization link on the student website to access the Virtual Organizations.

Select one of the Virtual Organizations as the basis for this assignment.

Obtain faculty approval of your selected organization before beginning the assignment.

Access the information contained in your selected organization’s balance sheet and income statement to calculate the following:

· Liquidity ratios

Current ratio

Acid-test, or quick, ratio

Receivables turnover

Inventory turnover

· Profitability ratios

Asset turnover

Profit margin

Return on assets

Return on common stockholders’ equity

· Solvency ratios

Debt to total assets

Times interest earned

Show your calculations for each ratio.

Create a horizontal and vertical analysis for the balance sheet and the income statement.

Write a 350- to 700-word memo to the CEO of your selected organization in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions:

· What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company?

· Which users may be interested in each type of ratio?

· What does the collected data reveal about the performance and position of the company?

Format your memo consistent with APA guidelines.

10/27/13

Content

60 Percent

Points Available

13.8

Points Earned

X/13.8

Additional Comments:

· All key elements of the assignment are covered in a substantive way.

· Calculates the following aspects using information from the balance sheets and income statements from the selected Virtual Organization:

Liquidity ratios

· Current ratio

· Acid-test, or quick, ratio

· Receivables turnover

· Inventory turnover

Profitability ratios

· Asset turnover

· Profit margin

· Return on assets

· Return on common stockholders’ equity

Solvency ratios

· Debt to total assets

· Times interest earned

· Show your calculations for each ratio.

· Identifies situations that may lead to unethical accounting practices

· Examines the effects of Sarbanes-Oxley on financial statements

· Prepares at least one question for class discussion

· Displays a horizontal and vertical analysis for the balance sheet and income statement

· Provides a memo addressing the following questions:

· What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company?

· Which users may be interested in each type of ratio?

· What does the collected data reveal about the performance and position of the company?

Organization / Development

20 Percent

Points Available

3.1

X/3.1

· The memo is 350 to 700 words in length.

· Paragraph transitions are present, logical, and maintain the flow throughout the paper.

· The tone is appropriate to the content and assignment.

· Sentences are complete, clear, and concise.

· Sentences are well constructed, strong, and varied.

· Sentence transitions are present and maintain the flow of thought.

Mechanics

20 Percent

· The paper—including tables and graphs, headings, title page, and reference page—is consistent with APA formatting guidelines and meets course-level requirements.

· Intellectual property is recognized with in-text citations and a reference page.

· Rules of grammar, usage, and punctuation are followed.

· Spelling is correct.

Total Available

Total Earned

23

Riordan Manufacturing, Inc.
Consolidated Balance Sheet

Fiscal Year Ending
September 30th

2011

2010

Assets

Current Assets

      Cash

$3,725,406

$2,807,029

      Accounts Receivable

3,192,094

2,695,342

      Current Portion of Notes Receivable

84,255

102,976

      Inventories

9,709,611

8,517,203

      Prepaid Expenses and Other Items

666,591

402,240

Total Current Assets

$17,377,957

$14,524,790

Notes Receivable, less current portion

$842,551

$936,168

Investment in Joint Venture

1,734,004

1,609,004

Property, Plant and Equipment – net

26,366,949

16,658,218

Intangible Assets – net

904,473

Other Assets

183,203

192,845

Total Assets

$47,409,137

$34,825,498

Liabilities and Stockholders’ Equity

Current Liabilities

      Current Portion of Long-Term Debt

$1,560,959

$474,032

      Accounts Payable

1,141,561

1,391,385

      Accrued Liabilities

430,477

524,685

      Income Taxes Payable

552,155

359,955

Total Current Liabilities

$3,685,152

$2,750,057

Bank Line of Credit

$114,759

$295,865

Long-Term Debt – less current portion

9,500,741

1,006,955

Deferred Income Taxes – net

660,503

825,629

Total Liabilities

$13,961,155

$4,878,506

Common Stock
Stated par value is $.01.
20,000,000 shares authorized.
Issued and Outstanding 15,801,332 net of treasury shares.

$29,055,488

Retained Earnings / (Accumulated Deficit)

4,392,494

891,504

Total Stockholders’ Equity

$33,447,982

$29,946,992

Total Liabilities and Stockholders’ Equity

Riordan Manufacturing, Inc.
Income Statement
For the 12 months ending September 30th

2011

2010

Sales

$66,608,660

$56,534,254

Direct Cost of Goods Sold

51,592,470

43,970,250

Gross Margin

$15,016,190

$12,564,004

Operating Expenses

Sales, Marketing & Other

$1,328,615

$1,265,348

Depreciation

1,378,616

1,152,125

Quality Assurance

1,151,176

1,112,247

Research & Development

1,039,637

962,627

General & Administrative

4,954,751

4,674,293

Machining & Systems

143,808

125,050

Total Operating Expenses

$9,996,603

$9,291,690

Profit Before Interest &

Taxes

$5,019,587

$3,272,314

Non-Operating Expenses

Interest Expense

$604,616

$121,533

1,104,309

719,909

Total Non-Operating Expenses

$1,708,925

$841,442

Net Profit After Taxes

$3,310,662

$2,430,872