Reference no: EM131148625

Introduction and Objectives

The objectives of the project assignment are for students to:
• Demonstrate their understanding of, and ability to apply concepts covered and learned in the course;
• Improve written business communication skills.

Required

You and your colleagues have just purchased the Leap Forward Placement Agency (LFPA). You own 100% of the shares of LFPA. To provide your company with some financial flexibility you are approaching a bank for a bank loan of $500,000. Accordingly you need to prepare a financial information package for the bank that includes:

1. A balance sheet, income statement and statement of retained earnings for LFPA for 2014 and 2015. When you purchased LFPA, you were provided with the financial data but it is disorganized and has not been put into financial statement format.

2. A financial statement analysis of the 2014 and 2015 data complete with a horizontal analysis, a vertical analysis and the appropriate financial statement ratios. Some ratios from the placement and recruiting industry have been supplied.

3. A cash budget and projected income statement for 2016 for LFPA. To assist with this you may wish to prepare additional supporting schedules like a sales budget, a cash receipts budget, a direct wages budget and a cash disbursements budget

4. A cost volume profit analysis for 2016 that identifies

a. which expenses are fixed and which expenses are variable - note some expenses are mixed and therefore need to be split into their variable and fixed components,
b. the breakeven point in number of placements and dollars
c. the number of placements that are required to be sold to generate an after tax profit of $200,000, of $400,000 and of $600,000. Assume a tax rate of 25%.
d. If sales in 2017 are projected to increase by 10% from 2016 what will the percentage increase in income before taxes from 2016 to 2017 be?

5. A qualitative report that includes:
a. An executive summary of your financial package for the bank manager with an overview of the information/analysis that you supplied, key highlights from your analysis and a conclusion on why the bank should grant you the loan. Make sure you are presenting the information with your objective in mind (you want the bank to give you a loan).

b. A qualitative interpretation of each type of analysis done - what does the analysis tell you and how does it help or hinder LFPA from being a good applicant for the loan.

In addition you are to assess another team's report/submission. You will review their submission and provide an evaluation using a rubric provided by the professor as a guide.

Summary of Information Provided

Each group has been given an excel spreadsheet that includes:

a) A tab with project data - financial statement data, additional data for ratio calculations, CVP analysis and budget preparation. Note that each groups' financial data is slightly different.

b) Tabs for each of the financial statements you need to create

c) A tab for you to do your ratio calculations in

d) A tab for you to do your CVP analysis in

e) A tab for your cash budget (with some examples of headings/descriptions)

You may insert additional tabs if you wish to do so.

Attachment:- FINANCIAL STATEMENT.rar