Assignment In Finance And Accounting: Senior Accountant Anal ✓ Solved

Assignm E Ntfinance And Accountingsenior Accountant Analysis

Assignm E Ntfinance And Accountingsenior Accountant Analysis1du E Date

Assignm E Ntfinance And Accountingsenior Accountant Analysis1du E Date

ASSIGNM E NT Finance and Accounting Senior Accountant Analysis 1 DU E DATE Week 5 S T R AY E R U N I V E RS I T Y | CO PY R I G H TS R E S E RV E D. SHAUN’S CRITERIA Hi Team, I wanted to provide you some guidelines as you determine how we’ll finance our expansion. Please give this careful consideration, as we need to get this right. 1.

I estimate we’ll need $150,000 to increase capacity in order to stock the five additional pop-up stands 2. We’ll need to make sure we have additional funds available to increase our marketing efforts to stimulate demand 3. I’d like to maintain or increase our profit margins 4. If we’re successful over the next two years, we’ll likely seek additional capital to expand into more stores, so I’d like to do all we can now to enhance our credibility We need to move on this quickly, so I’d like an answer by the end of the week. -Shaun S T R A Y E R U N I V E R S I T Y | CO PY R I G H T © . A L L R I G H TS R E S E RV E D.

2 FINANCING OPTIONS Option 1: Equity Raise $150,000 from a venture capital firm in exchange for 30% of the company Option 2: Debt Secure a loan of $150,000 at a 10% annual interest rate, to be repaid over 7 years Option 3: Debt + Self-Financing Secure a loan of $100,000 at a 7% annual interest rate, to be repaid over 7 years, and self- finance the remaining $50,000 JUNIOR ACCOUNTANT EMAIL Hi, I’m working on expenses from the last quarter for the revised income statement, but I’m unsure of what to do next. I grouped similar transactions to compile the following list: How would you like me to proceed given where we are in the process? Thanks in advance for your guidance. Best, Jenna S. • automotive maintenance cost • travel expenses • training and development costs • office rent • raw material purchases • inventory purchases • marketing expenses • payroll expenses • interest expenses • technology purchases • office supplies expenses S T R A Y E R U N I V E R S I T Y | CO PY R I G H T © . A L L R I G H TS R E S E RV E D. 3 SUNSTRUCK SUNG LASSES INCOME STATEMENT For Year Ended September 30, 2016 REVENUES Sales revenues Other revenue Total revenue COST OF GOODS SOLD (COGS) GROSS PROFIT EXPENSES Selling, general and administrative expenses Marketing and advertising expenses Total expenses INCOME FROM OPERATIONS OTHER EXPENSES Interest expense $778,590 $11,000 $789,590 ($428,225) $361,365 ($78,959) ($55,271) ($153,050) $208,314 ($51,000) $157,315 Income tax expense NET INCOME PRETAX INCOME ($55,060) $22,500 Depreciation and amortization ($18,820) $102,255NET INCOME 4 S T R A Y E R U N I V E R S I T Y | CO PY R I G H T © . A L L R I G H TS R E S E RV E D. SUNSTRUCK SUNG LASSES BALANCE SHEET At September 30, 2016 ASSETS CURRENT ASSETS Cash Accounts receivable Merchandise inventories Total current assets LONG-TERM ASSETS Property, truck and equipment TOTAL ASSETS LIABILITIES CURRENT LIABILITIES $145,500 $468,000 $613,500 $37,500 LONG-TERM LIABILITIES Truck loan Accounts Payable $28,000 $55,220 $62,280 $40,000 B+M loan $360,000 Total long-term liabilities TOTAL LIABILITIES $479,500 SHAREHOLDERS’ EQUITY CONTRIBUTED CAPITAL $12,000 RETAINED EARNINGS TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY TOTAL SHAREHOLDERS’ EQUITY $122,000 $442,000 $134,000 $613,500 Operating loan $42,000 S T R A Y E R U N I V E R S I T Y | CO PY R I G H T © . A L L R I G H TS R E S E R V E D. 5 $75,000 SUNSTRUCK SUNG LASSES STATEMENT OF CASH FLOWS For Year Ended September 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Cash collected from customers Cash paid to suppliers and employees Cash paid for interest Cash paid for taxes Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Cash paid on truck loans $99,140 ($20,000) ($529,580) ($50,000) ($55,060) $733,780 Net cash used for investing activities CASH FLOWS FROM FINANCING ACTIVITIES Cash received from operating cash loan ($60,000) $12,000 NET INCREASE IN CASH DURING YEAR CASH AT BEGINNING OF YEAR Net cash provided by financing activities ($23,255) CASH AT THE END OF YEAR TO DATE $27,885 $12,000 $51,140 Cash paid on B+M loans ($40,000) NAME: INSTRUCTOR: DATE: Assignment 2 FINANCE & ACCOUNTING – SENIOR ACCOUNTANT Analysis Due Date: Week 5 Note: While representative of possible situations faced by SunsTruck Sunglasses, all scenarios in this assignment are fictional.

Real Business Large discount retailers like Target and Walmart employ large teams of Finance and Accounting professionals to help measure and understand the financial health of the business. Financial and accounting information helps these businesses make educated financial decisions, such as whether or not to continue partnering with a retail supplier. While often smaller businesses, it is equally important for these retail suppliers to use financial and accounting data to make educated decisions, such as the best approach to gaining additional funding. Your Role This week, you’ll assume the role of Senior Accountant with SunsTruck Sunglasses. What Is a SENIOR ACCOUNTANT?

Senior accountants take ownership of reporting costs, profitability, margins and expenditures for a given business. They use the principles of accounting to analyze sales information, create financial reports, make recommendations about the financial health of the company, and more. They are also responsible for training junior accounting staff. For the last six months, SunsTruck has partnered with the discount retail store to run a pop-up sunglasses stand in their stores for a big summer promotion. Due to the high customer purchase rate, the store has requested stock for five additional stores.

SunsTruck needs to increase its capacity to meet the additional demand. In order to do so, SunsTruck needs additional money. In this assignment, you will need to help determine which type of financing option is best for your company and train your junior accountants on the accounting cycle and financial statements. Instructions Step 1: FINANCING The junior accounting team has assembled a Financing Report that (a) offers three options for securing the additional funds required to meet the new order; and (b) details the criteria Shaun, the owner of SunsTruck, would like you to consider when choosing one of the three options. Based on this report: · Identify which financing option you think is the best option for SunsTruck to pursue given Shaun’s constraints.

Underline your selection: Option 1: Equity Option 2: Debt Option 3: Debt + Self-Financing Explain the rationale for your decision. Note: You should complete Steps 2 & 3 after reading the material in Week 5. Step 2: ACCOUNTING CYCLE A junior accountant is working to get everything in order for the new financing and has come to you with a question about what do next in the accounting cycle. · Read the email the junior accountant sent you and identify the best next step to take in the accounting cycle. Explain your reasoning. Step 3: FINANCIAL STATEMENTS A potential investor has been identified, but before it is willing to commit, it has requested information about SunsTruck’s current debt from the junior accountants. Identify the correct financial statement for your junior accountants that will provide the investor with the information it has requested. Underline your selection: Income Statement Balance Sheet Cash Flow Statement Explain to your junior accountants why you are giving them this financial statement and where the debt information is located. Step 4: FINANCIAL ANALYSIS If you were the type of financier selected in Step 1, would you invest in SunsTruck? Explain the rationale for your decision.

Sample Paper For Above instruction

As the Senior Accountant at SunsTruck Sunglasses, my primary responsibility is to analyze and interpret the company’s financial data to assist in making strategic decisions regarding expansion funding, financial reporting, and stakeholder communication. This paper will evaluate the optimal financing option for SunsTruck, detail the appropriate steps in the accounting cycle, identify the correct financial statement for debt inquiry, and conclude with an investment analysis from the perspective of the chosen financier type.

Evaluation of Financing Options

Initially, the company must decide how to secure the necessary $150,000 to support the expansion into five additional retail stores. The three options under consideration include equity financing, debt financing, and a hybrid approach combining debt with self-financing. Shaun, the owner, emphasizes the importance of maintaining or increasing profit margins and enhancing credibility for future capital raises. Given these constraints, my recommendation is to pursue Option 3: Debt + Self-Financing.

This hybrid approach balances the advantages and disadvantages of debt and equity. The loan of $100,000 at a 7% interest rate is manageable within the company's cash flows and allows preservation of ownership stakes, which might be diluted in equity financing. Self-financing the remaining $50,000 demonstrates commitment from the owner and can reduce reliance on external sources, thereby improving the company's perceived stability and credibility.

Next Step in the Accounting Cycle

The junior accountant has queried about the subsequent step after organizing transactions for the revised income statement. The appropriate next step in the accounting cycle is to record the transactions in the accounting journal, ensuring all financial events are accurately captured. This is crucial because the journal entries serve as the foundation for preparing adjusting entries, trial balances, and ultimately, the financial statements. Therefore, I advise the junior accountant to proceed with journalizing the grouped transactions.

Financial Statement Selection

When approached by a potential investor requiring information about SunsTruck’s current debt, the appropriate financial statement to provide is the Balance Sheet. The balance sheet offers a snapshot of the company's assets, liabilities, and shareholders' equity at a specific point in time, which includes details about short-term and long-term debt obligations. This is essential for the investor to evaluate the company's leverage, liquidity, and overall financial health.

The debt information is specifically located under the liabilities section of the balance sheet, where current liabilities (such as accounts payable and operating loans) and long-term liabilities (such as the truck loan and B+M loan) are listed. Providing this comprehensive overview allows the investor to assess risk and determine the company's capacity to service existing and new debts.

Investment Decision Based on Financing Choice

If I were the financier opting for the debt + self-financing approach, I would consider investing in SunsTruck if the company demonstrates solid revenue generation, positive cash flows, and manageable debt levels. The company’s gross profit and net income suggest operational profitability, while its manageable liabilities indicate a capacity to service debt. Additionally, the company’s ongoing cash flows, as shown in the cash flow statement, provide further assurance of financial stability.

However, my investment decision would also hinge on qualitative factors such as management expertise, market conditions, and growth prospects. Overall, given the current financial data, I would be inclined to invest, particularly because the hybrid financing approach indicates a balanced strategy to fuel growth while maintaining financial prudence.

Conclusion

In summary, choosing the hybrid debt and self-financing option aligns with Shaun’s constraints and strategic goals, while the accurate representation of the company’s liabilities via the balance sheet enables informed decision-making by potential investors. Proper adherence to the accounting cycle ensures accurate and reliable financial reporting, which in turn supports sound investment decisions and sustainable growth.

References

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• Gibson, C. H. (2019). Financial Reporting & Analysis. South-Western College Pub.
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