Sheet 1 Name Instructions: This Exam Must Be Completed In

Sheet1nameinstructions This Exam Must Be Either Completed In Excel A

This exam requires you to analyze financial statements by preparing vertical and horizontal analyses, ratio computations, and a statement of cash flows based on provided comparative balance sheets and income statements for the year 2012. You must show your work for ratio calculations for partial credit. Additionally, you are tasked with journal entries related to job order costing, and analyzing a different company's financial data for preparation of cash flow statements and transaction records.

Paper For Above instruction

This comprehensive financial analysis and recording exercise aims to deepen understanding of financial statement analysis, ratio computations, cash flow statements, and job costing procedures, vital skills in managerial finance and accounting. The assignment involves synthesizing multiple aspects of financial data, illustrating proficiency in various analytical tools and accounting entries, crucial for responsible financial management and reporting.

Start with the first component: performing a vertical analysis on the balance sheet and income statement for 2011 and 2012. Vertical analysis entails expressing each item as a percentage of a base figure—total assets for the balance sheet and sales revenue for the income statement—allowing for comparison across periods and with industry benchmarks. For 2011, total assets serve as the baseline for balance sheet items, and sales revenue as the baseline for income statement items. Repeat the process for 2012, focusing on the shaded cells designated for percentages.

Next, conduct a horizontal analysis for 2012, assessing the year-over-year change of each account compared to 2011. This involves calculating the dollar amount difference and the percentage change for each line item on both statements, providing insight into growth trends and operational shifts over the year.

Following the analyses, compute critical financial ratios for 2012 to evaluate liquidity, efficiency, profitability, and solvency. Ratios such as the current ratio, quick ratio, receivables turnover, inventory turnover, profit margin, asset turnover, return on assets, and return on equity will be calculated, each accompanied by a brief explanation of what it indicates about the company's financial health. For example, the current ratio measures liquidity by comparing current assets to current liabilities, while the P/E ratio assesses market expectations relative to earnings.

Subsequently, prepare a statement of cash flows for 2012 using the indirect method, starting with net income, then adjusting for non-cash items, working capital changes, investing, and financing activities. This section illustrates how operational cash flow, investing activities such as equipment purchases and disposals, and financing activities like debt repayment and stock issuance impact overall cash position.

In addition, the assignment includes journal entries related to a job order costing system for Radical Jets. Record transactions such as the purchase of materials, requisition to production, labor costs, factory overhead application, job completion, and sale of specific jobs. Also, determine the ending balances of raw materials, work-in-process, and finished goods inventories based on given data.

Separate from this, analyze the Kazaam Company’s 2011 financial statements and transactions. Prepare a comprehensive statement of cash flows using the indirect method, detailing operating activities, investing, and financing transactions based on information about equipment sales, purchases, borrowing, issuing stock, dividends, and related income statement impacts. Pay close attention to adjustments for non-cash transactions, such as depreciation and gains/losses on asset disposals, demonstrating understanding of cash flow reconciliation.

Throughout this project, focus on demonstrating thorough understanding of financial analysis, journal entries, and cash flow statement preparation. Show all calculations clearly, providing explanations of what each ratio or change indicates about the company's financial status and operational effectiveness. This exercise not only enhances technical skills but also improves your capacity to interpret financial statements critically, an essential competence for accounting and financial management professionals.

References

• Brigham, E. F., & Houston, J. F. (2019). Fundamentals of Financial Management (15th ed.). Cengage Learning.
• Gibson, C. H. (2018). Financial Reporting & Analysis (14th ed.). Cengage Learning.
• Higgins, R. C. (2018). Analysis for Financial Management (12th ed.). McGraw-Hill Education.
• Horngren, C. T., Sundem, G. L., & Elliott, J. A. (2019). Introduction to Financial Accounting (11th ed.). Pearson.
• Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2019). Financial Statement Analysis (12th ed.). McGraw-Hill Education.
• Penman, S. H. (2012). Financial Statement Analysis and Security Valuation (5th ed.). McGraw-Hill Education.
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2019). Corporate Finance (12th ed.). McGraw-Hill Education.
• White, G. I., Sondhi, A. C., & Fried, D. (2018). The Analysis and Use of Financial Statements (3rd ed.). Wiley.
• Investopedia. (2023). Financial Ratios, Analysis, and Interpretation. Retrieved from https://www.investopedia.com
• AccountingTools. (2023). Cash Flow Statement, Indirect Method. Retrieved from https://www.accountingtools.com