Reference no: EM131065817

Assignment 1- Financial Statement Analysis

Part 1 - Financial Analysis

The condensed financial statements of Soule Company for the years 2013 and 2014 are presented below.

Soule Company
Balance Sheets
December 31

	2014	2013
Current assets
Cash and cash equivalents	£ 330	£ 360
Accounts receivable (net)	470	433
Inventory	430	300
Prepaid expenses	120	160
Total current assets	1350	1,343
Property, plant, and equipment	420	380
Investments	10	10
Intangibles and other assets	530	510
Total assets	£2,310	£2,243
Current liabilities	£ 900	£ 810
Long-term liabilities	390	303
Stoc kholders' equity-common	1,020	1.04
Total liabilities and stockholders' equity	£2,310	£2,243

Soule Company
Income Statements
For the Years Ended December 31

	2014	201 3
Sales revenue	£ 4,000	£3,600
Costs and expenses
Cost of goods sold	9.84	895
Selling and ad ministrative expenses	2,400	2,330
Total costs and expenses	10	20
Interest expense	3,394	3,245
In come before income taxes	606	355
Income tax expense	242	142
Net income	£ 364	£ 213

Compute the following ratios for 2014 and 2013.

(a) Current ratio.

(b) Inventory turnover. (Inventory on 12/31112 was £326.)

(c) Profit margin ratio.

(d) Return on assets, (Assets on 12/31/12 were E2,100,)

(e) Return on common stockholders' equity. (Stockholders' equity on 12/31/12 was £960.)

(f) Debt to total assets ratio.

(g) Times interest earned.

Critically evaluate your ratio calculations and conclude on the current state of the company.

Part 2 - Performance Evaluation

Evaluate the financial performance of a company of your choosing using the knowledge and technical skills that you have gained during the course so far. Provide a theoretical explanation of any ratio analysis. No need to recalculate ratios, often the financial reports provides these.

Attach the company financial statements as an appendix to your statement as reference to your work.

Present your findings in a Management Business Report wordage should be 1500 +0'- 10%.

Guidelines for assignment
- This is an individual assignment
- Ground your answer in relevant theory
- Plagiarism and reproduction of someone else's work as your own will be penalized
- Make use of references, where appropriate - Use Harvard or APA referencing method.
- Late submission are not accepted

Assignment 2 - Budgeting

Learning Objectives for Course.

1. Develop quantitative skills necessary to read, interpret and perform the calculations for the accounting reports involved in cost control and profit planning.

2. Evaluate and identify financial strengths and weaknesses of a business through appropriate conceptual analysis.

3. Analyse information and knowledge effectively in order to develop meaning to solve complex problems and make decisions;

Question 1 - Planning and Control

Write an essay of 1000 words demonstrating your conceptual understanding of the following questions.

1. Is budgeting used primarily for scorekeeping, attention, directing or problem solving?

2. How do strategic planning, long range planning and budgeting differ?

3. Why is budgeted performance better than past performance as a basis for judging actual results?

4. What are the major benefits of budgeting?

5. Is budgeting an unnecessary burden for day to day problems? Explain your answer.

6. Why is the sales forecast the starting point for budgeting?

7. How do Spreadsheets aid the application of sensitivity analysis?

Question 2 - Budget Preparation - Intellectual and Practical Skills

Application of learning:

Prepare the following budgets for the 6 months ending September 2013. You are required to use Excel spreadsheets, which can be copied into word once you finish, should you wish. A template is available for you to use as a basis.

a) Sales budget

b) Cash Budget

c) Debtors Budget

d) Creditors Budget

e) Production Cost Budget

f) Raw Materials and finished goods Budget

g) Profit and Loss Account Budget

h) Balance Sheet Budget

Draw conclusions from your budgets and prepare a short management report.

Europe Ltd Balance Sheet as at 31st March 2013
		£	£
Fixed Assets			100,000
Current Assets
Debtors	(Feb £10000, March  £14000)	24000
Stock	Raw Materials	9000
	Finished Goods	13000
		46000
Current Liabilities
Creditors	(Feb £10000, March  £10000)	18000
Bank		3000
		21000
Net Current Assets / Working Capital			25000
NET ASSETS
			125000
Financed by:
	Share Capital		100,000
	Profit and Loss		25,000
TOTAL SHAREHOLDERS FUNDS			125,000

Notes:

- Fixed Assets are depreciated at 20% straight line method per year.

- Purchases will be £51D00 in April, increasing by £1000 per month and paid 2 months alter purchase.

Sales in April will be £20,000„ increasing by E2,000 per month and paid 2 months in arrears.

Production costs per unit will be:
  Direct materials f 15
  Direct Labour £12
  Production overheads ES

- Direct Labour and production overheads are paid as they are incurred.

- Production units per month are 500 units

- Sales units in April are 400 units, increasing by 40 units per month.

Expenses run at E10,000 per month, paid in the month that they are incurred.