Finance Student Name: This Quiz Has 642188

Financestudent Name This Quiz Has

This quiz has two sections. The first section is about chapter 2 and the second section about chapter 3. Make sure you answer the questions using the learning from our textbook. Question 1 is 30% of your grade: 1 is 13%, 2 is 13% and Question 1 is 4% Question 2 is 70% of your grade: Question 1 is 35%, Question 2 is 20%, Question 3 is 15%.

Paper For Above instruction

The assignment involves analyzing two distinct business scenarios: one relating to Nepean Boards' financial position and expansion prospects, and the other concerning Tuxedo Air Inc.'s performance and industry comparisons. Both require applying financial analysis techniques including the preparation of financial statements, ratio analysis, and industry benchmarking.

Scenario 1: Nepean Boards - Financial Analysis and Expansion Evaluation

Nepean Boards, a small snowboard manufacturer based in Ottawa, is contemplating a significant expansion which includes opening a new store in Calgary and supplying its products to third-party retailers. The company's founder, Scott Redknapp, has limited financial expertise, and prior to expansion, the company's financial records were informal and minimal. However, recent growth in sales has prompted the need for more detailed financial information for potential investors and lenders.

As Jennifer Bradshaw's assistant, the task is to prepare a comprehensive statement of comprehensive income, including income and expenses, for the years 2014 and 2015, as well as a statement of financial position (balance sheet) for these years. These financial statements should be built using the available data, including bank statements, sales receipts, tax returns, and other records, reflecting the company's financial performance and position accurately.

Given the current financial state—covering profitability, liquidity, and solvency—an assessment of Scott's expansion plans is necessary. Critical considerations include whether the company has sufficient profits or cash flows to sustain growth and if the company’s financial health supports the increased investment needed for expansion. A positive outlook depends on the company's profitability and liquidity ratios, while any financial distress signals, such as high debt levels or low cash reserves, would raise caution about expansion risks.

Scenario 2: Tuxedo Air Inc. - Performance Analysis and Industry Benchmarking

In the second scenario, Ed Cowan has been engaged to analyze Tuxedo Air Inc., a niche lite aircraft manufacturer, by calculating industry-specific financial ratios from provided statements and comparing Tuxedo Air’s performance with the broader industry. Tuxedo Air specializes in custom-built aircraft, primarily selling to individual owners, and benefits from a quick production cycle due to prefabricated part use. The company receives deposits on orders, providing revenue ahead of completion, which affects cash flow and financial metrics.

Some key ratios include profitability measures, liquidity ratios, activity ratios, and leverage ratios. Calculating these ratios involves using data such as sales, assets, liabilities, and industry ratios. These ratios will help to assess the firm's efficiency, financial health, and competitive position relative to industry standards.

Furthermore, the suitability of choosing Bombardier as a benchmark aspirant is debated, along with other aerospace companies like Boeing, XOJET, Piper Aircraft, and AeroCentury. The decision hinges on comparability in product types, market segments, and operational scales. For example, Boeing and Bombardier produce commercial aircraft on a different scale, which may make them less ideal as benchmarks compared to smaller niche manufacturers like Piper Aircraft or AeroCentury.

Analyzing Tuxedo Air's ratios against industry averages provides insight into areas where the company excels or needs improvement, such as inventory turnover relative to current liabilities, which indicates how effectively the company is managing its inventory in relation to its short-term obligations. A ratio higher than the industry average might suggest efficient inventory management, whereas a lower ratio could indicate excess inventory or slow turnover, impacting liquidity negatively.

In summation, ratio analysis combined with industry benchmarking offers a comprehensive view of Tuxedo Air's competitive position and operational efficiency. Deciding on the best companies to compare involves evaluating operational similarities and financial scale, aiming to derive meaningful insights that can guide strategic decisions.

Conclusion

Both scenarios demonstrate the importance of detailed financial analysis in supporting business decisions—whether it involves evaluating growth potential or benchmarking performance. Accurate financial statements, ratio calculations, and industry comparisons are essential tools for management and investors seeking to understand and improve organizational performance.

References

• Brigham, E. F., & Houston, J. F. (2019). Fundamentals of Financial Management (15th ed.). Cengage Learning.
• Graham, J. R., & Harvey, C. R. (2001). The theory and practice of corporate finance: evidence from the field. Journal of Financial Economics, 60(2-3), 187-243.
• Higgins, R. C. (2018). Analysis for Financial Management (11th ed.). McGraw-Hill Education.
• Khan, M. Y., & Jain, P. K. (2016). Financial Management: Text, Problems, and Cases (7th ed.). McGraw-Hill Education.
• Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2019). Essentials of Corporate Finance (9th ed.). McGraw-Hill Education.
• Shapiro, A. C. (2020). Multinational Financial Management (12th ed.). Wiley.
• Stickney, C. P., Brown, P., & Wahlen, J. M. (2019). Financial Reporting and Analysis (14th ed.). Cengage Learning.
• Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2020). Financial Statement Analysis (12th ed.). McGraw-Hill Education.
• White, G. I., Sondhi, A. C., & Fried, D. (2018). The Analysis and Use of Financial Statements (3rd ed.). Wiley.
• Brigham, E. F., & Houston, J. F. (2021). Fundamentals of Financial Management (16th ed.). Cengage Learning.