3 module assignments 1,2, and 3
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Assignment 3: Ratio Analysis
By the due date assigned solve the problem below, calculate the ratios, interpret the results against the industry average, and fill in the table on the worksheet. Then, provide an analysis of how those results can be used by the business to improve its performance. Turn in your completed work to theSubmissions Area through the end of the day.
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Balance Sheet as of December 31, 2010 |
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Gary and Company |
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Cash |
$45 |
Accounts payables |
$45 |
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Receivables |
66 |
Notes payables |
45 |
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Inventory |
159 |
Other current liabilities |
21 |
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Marketable securities |
33 |
Total current liabilities |
$111 |
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Total current assets |
$303 |
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Net fixed assets |
147 |
Long Term Liabilities |
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Total Assets |
$450 |
Long-term debt |
24 |
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Total Liabilities |
$135 |
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Owners Equity |
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Common stock |
$114 |
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Retained earnings |
201 |
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Total stockholders’ equity |
315 |
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Total liabilities and equity |
$450 |
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Income Statement Year 2010 |
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Net sales |
$795 |
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Cost of goods sold |
660 |
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Gross profit |
135 |
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Selling expenses |
73.5 |
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Depreciation |
12 |
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EBIT |
49.5 |
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Interest expense |
4.5 |
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EBT |
45 |
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Taxes (40%) |
18 |
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Net income |
27 |
1. Calculate the following ratios AND interpret the result against the industry average:
|
Ratio |
Your Answer |
Industry Average |
Your Interpretation |
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Profit margin on sales |
3% |
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Return on assets |
9% |
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Receivable turnover |
16X |
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Inventory turnover |
10X |
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Fixed asset turnover |
2X |
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Total asset turnover |
3X |
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Current ratio |
2X |
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Quick ratio |
1.5X |
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Times interest earned |
7X |
2. Analysis:
Give your interpretation of what the ratios calculations show and how the business can use this information to improve its performance. Justify all answers.
| Assignment 4 Grading Criteria | Maximum Points |
| Has correctly calculated the ratios. |
40 |
| Has correctly analyzed and interpreted the significance of the resulting ratios and suggested actions for improvement. |
40 |
| Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation |
20 |
| Total: |
100 |
M2 Assignment 2 Submission
By the due date assigned solve the following problem. Norma’s Cat Food of Shell Knob ships cat food throughout the country. Norma has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by two and one-half days. Furthermore, the cash management department of her bank has indicated to her that she can defer her payments on her accounts by one-half day without affecting suppliers. The bank has a remote disbursement center in Iowa.
- If the company has $5 million per day in collections and $3 million per day in disbursements, how many dollars will the cash management system free up? Justify your answers.
- If the company can earn 8 percent per annum on freed-up funds, how much will the income be? Justify your answers.
- If the annual cost of the new system is $800,000, should it be implemented? Explain why or why not.
Turn in your completed work to the Submissions Area through the end of the module.
| Assignment 2 Grading Criteria | Maximum Points |
| Correctly calculated that amount in dollars the cash management system will free up and justified the response. |
30 |
| Correctly calculated income and justified response. |
30 |
| Clearly explained if the new system should be implemented. |
30 |
| Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation. |
10 |
| Total: |
100 |
Assignment 2: LASA 1—The Time Value of Money
By the due date assigned submit a 4-5 page report based on the following problem:
Mary has been working for a university for almost 25 years and is now approaching retirement. She wants to address several financial issues before her retirement and has asked you to help her resolve the situations below. Her assignment to you is to provide a 4-5 page report, addressing each of the following issues separately. You are to show all your calculations and provide a detailed explanation for each issue.
Issue A:
For the last 19 years, Mary has been depositing $500 in her savings account , which has earned 5% per year, compounded annually and is expected to continue paying that amount. Mary will make one more $500 deposit one year from today. If Mary closes the account right after she makes the last deposit, how much will this account be worth at that time?
Issue B:
Mary has been working at the university for 25 years, with an excellent record of service. As a result, the board wants to reward her with a bonus to her retirement package. They are offering her $75,000 a year for 20 years, starting one year from her retirement date and each year for 19 years after that date. Mary would prefer a one-time payment the day after she retires. What would this amount be if the appropriate interest rate is 7%?
Issue C:
Mary’s replacement is unexpectedly hired away by another school, and Mary is asked to stay in her position for another three years. The board assumes the bonus should stay the same, but Mary knows the present value of her bonus will change. What would be the present value of her deferred annuity?
Issue D:
Mary wants to help pay for her granddaughter Beth’s education. She has decided to pay for half of the tuition costs at State University, which are now $11,000 per year. Tuition is expected to increase at a rate of 7% per year into the foreseeable future. Beth just had her 12th birthday. Beth plans to start college on her 18th birthday and finish in four years. Mary will make a deposit today and continue making deposits each year until Beth starts college. The account will earn 4% interest, compounded annually. How much must Mary’s deposits be each year in order to pay half of Beth’s tuition at the beginning of each school each year?
Turn in your completed work to the Submissions Area through the end of the module.
| Assignment 2 Grading Criteria | Maximum Points |
| Calculated the compounded interest over 20 years and evaluated the value of the savings account upon closing. (CO 1) |
32 |
| Calculated the bonus payout over 20 years vs. a one time payout with interest and distinguished which bonus option would be better for the client. (CO 1) |
32 |
| Calculated the present value of the bonus and analyzed the difference in bonus for the client. (CO 2) |
32 |
| Analyzed the tuition costs for the client and determined what the future costs will be and determined how these funds can be accumulated over time. (CO 4) |
60 |
| Written Components: Organization, usage and mechanics, APA elements, style |
44 |
| Total: |
200 |
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