In This Assignment You Will Demonstrate Your Mastery Of The

In This Assignment You Will Demonstrate Your Mastery Of the Following

In this assignment, you will demonstrate your mastery of the following course competency: ACC-307-02: Identify issues in financial reporting using key ratios and generally accepted accounting principles. Use the provided workbook and the Final Project Part II template to create your report. Specifically, you must address the critical elements listed below. Most of the critical elements align with a particular course competency (shown in brackets).

I. Part II: Ratio Analysis Report

Abstract: Summarize the story of profitability and liquidity for your company. In other words, highlight the most important aspects of your report, including your major conclusions. [ACC-307-02]

Computations: Identify and describe your computations from the Financial Analysis tab of your workbook. Be sure to format your key results in table or graphical format, as appropriate. Explain why each cited figure was included in your report in terms of its importance for the organization. [ACC-307-02]

Comparison: Evaluate the financials of the company by comparing current ratios to both historical and industry-average ratios. Clearly identify all unexpected or aberrant figures. [ACC-307-02]

Conclusion: Draw informed conclusions based on your computations and comparisons in the previous paragraphs. Be sure to justify your claims with specific evidence and examples. [ACC-307-02]

In Module Six, you will submit a complete draft of your ratio analysis report. This milestone will be graded with the Milestone Three Rubric.

Final Submission Part II: Final Ratio Analysis Report

In Module Eight, you will submit the second part of your final project, which is the final version of your ratio analysis report. It should be a complete, polished artifact containing all of the critical elements of Final Project Part II. It should reflect the incorporation of feedback gained throughout the course.

This submission will be graded with the Final Project Part II Rubric.

Guidelines for Submission: Your ratio analysis report must be 2-3 pages in length (plus a cover page and references) and must be written in APA format. Use double spacing, 12-point Times New Roman font, and one-inch margins. All references must be cited in APA format.

Paper For Above instruction

The ratio analysis report is a fundamental analytical tool used by financial managers and stakeholders to assess a company's financial health and stability. The purpose of this report is to critically evaluate the company's profitability and liquidity through key financial ratios, compare these ratios to historical data and industry benchmarks, and draw informed conclusions that can guide strategic decisions. In this paper, the various essential components of the ratio analysis report will be discussed, including the abstract, computational analysis, comparison, and conclusion, all structured around the course competency ACC-307-02: identifying issues in financial reporting using key ratios and generally accepted accounting principles (GAAP).

Abstract: Summarizing Profitability and Liquidity

The abstract serves as a concise overview of the company's financial performance, emphasizing profitability and liquidity. Profitability ratios, such as net profit margin, return on assets (ROA), and return on equity (ROE), provide insights into how effectively the company generates profits relative to sales, assets, and shareholders' equity. Liquidity ratios, like the current ratio and quick ratio, indicate the company's ability to meet short-term obligations. An effective abstract captures major findings, such as strong profit margins or liquidity concerns, that influence the stakeholders' understanding of the company's financial integrity.

For example, if the company exhibits a declining profit margin over the past fiscal years but maintains a healthy current ratio, the abstract would highlight this contrast, signaling areas of concern despite apparent liquidity strength.

Computations: Key Ratios and Their Significance

In the financial analysis, specific ratios are calculated from financial statements to quantify financial performance. These include liquidity ratios such as the current ratio (current assets divided by current liabilities) and quick ratio, as well as profitability ratios like net profit margin (net income divided by revenue), ROA, and ROE. These calculations are derived from the company's financial data tabulated in the workbook's Financial Analysis section.

Presenting these figures in tables or graphical formats allows for easier interpretation. For instance, a bar chart illustrating the trend of ROE over several years can immediately highlight improvements or regressions. Each ratio's inclusion is based on its relevance: liquidity ratios assess short-term solvency; profitability ratios measure efficiency and return to shareholders; and the ratios collectively highlight operational strengths or vulnerabilities.

Comparison: Analyzing Financial Ratios Against Benchmarks

Evaluation involves comparing the current ratios with the company's past performance and industry averages. This comparison reveals consistent growth, stability, or deterioration in financial health. For example, if the current ratio is significantly below the industry average, it may suggest liquidity concerns or operational inefficiencies.

Identifying aberrant figures—such as an exceptionally high debt-to-equity ratio—prompt further investigation into potential risks like over-leverage. This comparison not only pinpoints weaknesses but also contextualizes deviations, enabling better risk assessment and strategic planning.

Conclusion: Drawing Evidence-Based Insights

Based on the computed ratios and their comparisons, informed conclusions can be formulated. For instance, if profitability ratios show steady growth while liquidity ratios decline below industry levels, the firm might be risking liquidity for profitability. Conversely, consistent ratios aligned with industry averages may indicate a healthy financial position.

Providing justification involves referencing specific ratios, historical data, and industry benchmarks. Strategic recommendations may include improving liquidity through better working capital management or enhancing profitability via cost reductions.

Overall, the ratio analysis not only identifies financial issues but also supports strategic decision-making, aligning with the course competency of identifying issues in financial reporting.

Conclusion

In summary, the ratio analysis report is a vital tool that synthesizes financial data into actionable insights. By effectively summarizing profitability and liquidity, performing detailed computations, conducting comparative analysis, and presenting well-supported conclusions, financial professionals can better understand and communicate the company's financial status, facilitating informed decision-making and strategic planning.

References

  • Brigham, E. F., & Houston, J. F. (2019). Fundamentals of Financial Management (14th ed.). Cengage Learning.
  • Gibson, C. H. (2019). Financial Reporting and Analysis (14th ed.). Cengage Learning.
  • Higgins, R. C. (2018). Analysis for Financial Management (11th ed.). McGraw-Hill Education.
  • Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2020). Financial Statement Analysis (12th ed.). McGraw-Hill Education.
  • Slack, R., & Parent, W. (2018). Financial Statement Analysis: A Practitioner's Guide. Routledge.
  • Ross, S. A., Westerfield, R. W., & Jaffe, J. (2019). Corporate Finance (12th ed.). McGraw-Hill Education.
  • Penman, S. H. (2018). Financial Statement Analysis and Security Valuation. McGraw-Hill Education.
  • Fraser, L. M., & Ormiston, A. (2019). Understanding Financial Statements (11th ed.). Pearson.
  • White, G. I., Sondhi, A. C., & Fried, D. (2019). The Analysis and Use of Financial Statements. Wiley.
  • Penman, S. (2013). Financial Statement Analysis and Security Valuation (5th ed.). McGraw-Hill Education.

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