ACC 308 Milestone One
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Feb 20, 2024
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ACC 308 Milestone One
Andrew Munoz
Southern New Hampshire University
Based on the financial ratios from 2016 to 2017, the company exhibits strong liquidity as evidenced by the Current Ratio and Quick Ratio. Both ratios are well above the standard threshold of 1, with an increase from 5.18 to 5.78 in the Current Ratio and from 4.60 to 5.74 in the Quick Ratio. This indicates the company has significantly more current assets than liabilities,
signifying a strong buffer to cover short-term obligations.
The Accounts Receivable (A/R) Turnover has slightly increased from 5.53 to 5.91. This improvement suggests the company is becoming more efficient in collecting receivables, leading
to better cash flow management.
The Inventory Turnover ratio has markedly decreased from 107.19 in 2016 to 40.97 in 2017. A contributing factor to this change could be the recent shipment of $3,000 worth of ingredients received under FOB shipping point terms on 12/29/17, which was recorded before year-end. This addition to inventory, just before the close of the fiscal year, may have temporarily inflated the inventory balance, reducing the turnover ratio. While this does indicate a
slower rate of inventory movement, it's important to consider the timing of such transactions and their immediate impact on year-end figures. Management should assess whether this is a timing issue or a trend indicative of decreased sales efficiency or potential overstocking.
Profitability ratios like Gross Margin, Return on Sales (ROS), and Return on Equity (ROE) have seen some shifts. The Gross Margin decreased marginally from 66% to 65%, and ROE saw a significant drop from 160% to 125%. The high ROE in 2016 may be due to exceptional items or one-off gains, and the decrease in 2017 suggests a normalization of returns. ROS increased slightly, which implies that the company has managed to convert sales into profits more effectively.
Return on Assets (ROA) has decreased from 108% to 101%, indicating a slight decline in
how effectively the company is using its assets to generate profit.
Comparing financial ratios over time highlights the company's operational trends. The consistent liquidity suggests a strong cash position, but the inventory turnover rate’s decline could signal potential cash flow issues if unsold inventory continues to rise. It is essential to examine why inventory isn't turning over as quickly — whether due to market demand or purchasing practices.
The slight decrease in Gross Margin could be due to increased costs of goods sold or lowered pricing to stimulate sales. In contrast, the increase in ROS suggests that the company has kept its operating expenses in check.
The decrease in ROE and ROA indicates that the company might be over-capitalized or that assets are not being used as efficiently as they could be. It could also reflect an increased equity base following retained earnings from previous years.
The impact of different compounding periods and interest rates on the future value of money is significant. More frequent compounding periods at the same interest rate will result in a
higher future value due to the effect of compounding interest. For instance, monthly compounding will yield a higher future value than annual compounding. Similarly, higher interest rates will increase the future value of money, enhancing the company's investment returns over time.
Our accounting practices adhere to the relevant financial reporting regulations and standards, ensuring transparency and accuracy. For example, the consistent decline in ROE and ROA is reported honestly, reflecting our commitment to ethical reporting. Such transparency
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Related Questions
Based on this analysis how would I assess the financial stability and operational efficiency of this company?
Ratio and Ratio Formula
(in thousands)
2015
2014
2013
Current Industry Average
Liquidity
Current Ratio =Current Asset / Current Liability
9,900/6,300
1.57
1.61
1.62
1.63
Acid Test Ratio or Quick Ratio = (Cash + Marketable securities + Accounts receivable)/Current liabilities
(400+300+3,200)/6,300
0.62
0.64
0.63
0.68
Solvency
Times Interest Earned =Earnings before interest & taxes/interest expense, gross
(7,060+900)/900
8.84
8.55
8.5
8.45
Profitability
Profit margin on sales = net income/sales
7,060/30,500
14%
13.20%
12.10%
13.00%
Productivity
Asset turnover = sales/avg total assets
30,500/6,000+5,400)/2)
1.85
1.84
1.83
1.84
Inventory turnover = COGS/avg inv
17,600/ (6,000+5,400)/2)
3.09
3.17
3.21
3.18
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Using the financial ratios calculated from the 2012 annual report of a given company, assess the short-term liquidity, operating efficiency, capital structure, long-term solvency and profitability of the company.
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Need to calculate for "THE YEAR" *2013* this ratio: •current ratio
•quick ratio
•cash ratio
•total debt ratio
•times interested ratio
•fixed assets turnover ratio
•inventory turnover
•net profit margin
•return on total assets
•return on stockholders equity
balance sheet 2013
assets
cash 44,494,000
short term investment 4,531,000
net receivable 12,948,000
inventory -------
other current assets 1,310,000
______________________________________
total current assets 23,283,00
long term investment 4,971,000
PPE 2,760,000
Goodwill 9,267,000
intangible assets 941,000
Accumulated amortization ------------
other assets 266,000
deferred long term assets charge -------
__________________________
total assets 41,488,000
liabilities
current liabilities
accounts payable 3,215,000
short/current long term debt 9,266,000
other current liabilities 158,000
________________-
total current liabilities 12,639,000
Long term debt 4,117,000
other liabilities 244,000
deferred long term liability charge 841,000…
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Based on table below , is your company doing better or worse than last year? Explain your answer.
2019
2018
Ratio Category
1. Current ratio
0.67
0.64
Liquidity
2. Quick ratio / Acid-test ratio
0.58
0.54
Liquidity
3. Accounts receivable turnover
27.12
n/a
Liquidity
4. Days' sales uncollected
17.70
9.40
Liquidity
5. Equity ratio
38%
38%
Solvency
6. Debt ratio
62%
62%
Solvency
7. Debt-to-equity ratio
1.63
1.66
Solvency
6. Gross Margin Ratio
13%
15%
Profitability
9. Profit margin ratio
10.00%
11.22%
Profitability
10. Total asset turnover
0.86
n/a
Liquidity
11. Return on total assets
9%
n/a
Profitability
12. Return on common stockholders' equity
23%
n/a
Profitability
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Solve this problem
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please give me answer in relatable
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Analyze the following ratios (Good/Not good, Undervalued/Overvalued, or just OK) based on the given industry averages.
Ratios
Annual Data
Industry Average
Interpretation
Current
5.7
4
Days Sales Outstanding
37 days
42 days
Total Debt to Total Capital
47.80%
32.60%
Times-Interest Earned
2.2
6
Profit Margin
6.10%
6.00%
Return on Invested Capital
10.03%
10.00%
Enterprise Value to EBITDA
0.87
1.12
Provide a decision for each analysis.
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Quantitative Problem 1: Beasley Industries' sales are expected to increase from $4 million in 2017 to $5 million in 2018, or by 25%. Its assets totaled $2 million at the end of 2017. Beasley is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2017, current liabilities are $720,000, consisting of $140,000 of accounts payable, $350,000 of notes payable, and $230,000 of accrued liabilities. Its profit margin is forecasted to be 4%, and its dividend payout ratio is 50%. Using the AFN equation, forecast the additional funds Beasley will need for the coming year. Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar
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Need help this question solution general accounting
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Q₁
Here is Finished Ltd.'s year-end statement of financial position as at December 31, 2016, which is the first year the
economy has been hyperinflationary. Use the figures provided to complete the sentence below.
Cash: 100
6 Debtors: 200
100
Share capital: 300 (contributed on January 1, 2014)
Price Indices
January 1, 2014
January 1, 2016
December 31, 2016
Average 2016
At December 31, 2016, cash was disclosed at an amount of
920
1,340
1,920
1,520
The statement of financial position will show a balance of
share capital.
143.28
126.32
Fill in the boxes by dragging and dropping the correct options from below and then select Submit.
A
B
252.63
200
B
Submit
A
for debtors and
286.57
378.95
C
с
626.09
429.85
for
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Don't use ai to answer I will report you answer.
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Central Bank has the following information (in $million).
2017
($ million)
2018
($ million)
Revenue
780
890
Net income
240
375
Assets
22,450
27,850
Equity
2,250
2,980
Which of the following statements about Central Bank is CORRECT?
Select one:
a.
From 2017 to 2018, its Return on Equity decreased, Return on Assets decreased, and Leverage Multiplier increased.
b.
From 2017 to 2018, its Return on Equity increased, Return on Assets increased, and Leverage Multiplier decreased.
c.
From 2017 to 2018, its Return on Equity increased, Return on Assets increased, and Leverage Multiplier increased.
d.
From 2017 to 2018, its Return on Equity increased, Return on Assets decreased, and Leverage Multiplier increased.
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Discuss what the liquidity ratios reveal about Starbucks financial health, including any description of trend analysis, benchmarks, standard measurements or other types of analysis used once the ratio amount is known.
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Accurate answer
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Calculate the Rate of Return on Assets (ROA) for 2011. Disaggregate ROA into the profit margin for ROA and total assets turnover components.
Calculate the Rate of Return on Common Stockholders’ Equity (ROCE) for 2011. Disaggregate ROCE into the profit margin for ROCE, total assets turnover and capital structure leverage components.
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