ACCOUNTING & FINANCE

SUBDOMAIN 319.2 – INFORMATION TOOLS

Competency 319.1.2: Ratios – The graduate determines the financial condition of a firm
using financial ratios and other financial data.
Competency 319.2.1: Technology Tools – The graduate uses information technology
tools for specified business purposes.

Objectives:
319.1.2-04: Determine a firm’s financial condition by calculating and benchmarking
specified ratios against other companies in the industry.
319.2.1-01: Use the Internet to gather information on a specified business topic.
319.2.1-02: Produce business letters or memorandums using a word processing
application.
319.2.1-03: Develop a spreadsheet report that solves a business problem.

Introduction:

Company G operates a small chain of wholly owned home centers selling to consumers and
contractors. Sales volume varies among the individual stores and ranges between $11
million and $20 million per year. The company is organized as a corporation and does not
operate as a sub-chapter S corporation.

Given:

Consolidated financial statements for Company G are shown on the attached “Statement
Analysis Template.”

•  Sales volume shown is net sales.
•  During Year 12 60% of net sales were on a credit basis.
•  Inventory is stated at cost on a first-in, first-out basis.
•  Depreciation expense totaled $1,875,000 for Year 12 and $1,644,000 for Year 11.
•  Depreciation expense is not shown as a separate item on the income statements but
is included in store operating expense and general and administrative expense.
•  Depreciable assets are depreciated using the straight-line method over the estimated
useful life of the assets.
?  The market value for the company common stock at the end of Year 11 was
$3.50/share and at the end of Year 12 it was $5.75/share.

For this task, you will use financial statements and pertinent industry data to interpret
Company G’s financial condition. The required ratios have been calculated for Year 11 and
are shown on the attached “Statement Analysis Template.”

Ratios gathered from financial statements that were submitted to banks and other financing
institutions by a large number of home centers are also included on the template. The
industry ratios included on the template were generated from statements submitted by
stores with annual sales between $10 million and $24 million.

As you develop your response, you should consider Company G trends by comparing Year
12 ratios to the same ratios for Year 11, consider what is depicted by the horizontal
analysis, and benchmark Company G’s performance and condition by comparing Year 12
ratios with the same ratios for the home center industry.

Task:

A.  Calculate each of the thirteen indicated ratios for Year 11 indicated in the attached
“Statement Analysis Template.” Complete the attached spreadsheet with this
information.

B.  Complete a horizontal analysis of the income statements using the attached spreadsheet
with this information.

Note: Round the percentages to the nearest hundredth of a percent, i.e. 6.84%.
Answers like 6.80% or rounded up to 7% are not acceptable.

C.  Complete a horizontal analysis of the balance sheets using the attached spreadsheet
with this information.

Note: Round the percentages to the nearest hundredth of a percent, i.e. 6.84%.
Answers like 6.80% or rounded up to 7% are not acceptable.

D.  Write a business memorandum to the CEO of Company G (suggested length of 2–3
pages) in which you:
1.  Explain for each ratio and trend whether the ratio or trend indicates a strength of the
company; a likely weakness, threat, or emerging problem; or a satisfactory condition
that management should not view as a strength or weakness.
2.  Justify your identification of each ratio or trend as a strength, weakness, or
satisfactory condition.
3.  Evaluate the Company G ratios and trends against the available ratios and trends for
the home center industry.
?  Include the URL where you found the information you have entered on the
template.

Note: Information on trends can be gathered through Internet research. Some suggested
websites are included in the Web Links section below. Please consider, however, that ratios
you find on the Internet are generally computed as of the current date so ratios on the task
might not match the numbers you see in your research. It is best to consider the data based
on the trends you see for the industry and how Company G is doing related to those trends.

E.  When you use sources, include all in-text citations and references in APA format.

Note: For definitions of terms commonly used in the rubric, see the attached Rubric Terms.

Note: When using outside sources to support ideas and elements in a paper or project, the
submission MUST include APA formatted in-text citations with a corresponding reference list
for any direct quotes or paraphrasing. It is not necessary to list sources that were consulted
if they have not been quoted or paraphrased in the text of the paper or project.

Note: No more than a combined total of 30% of a submission can be directly quoted or
closely paraphrased from outside sources, even if cited correctly. Here are some helpful APA
resources:

http://www.apastyle.org

http://www.citationmachine.net

http://owl.english.purdue.edu/owl/resource/560/01

References:

?  Horngren, C. T., & Harrison, W. T. (2009) Accounting (7th ed.). Upper Saddle River,
NJ: Prentice Hall. ISBN-13: 9780136072973.

selected project Air Arabia competitor air Asia

University Word Count – 6000 words
Maximum Permissible Limits – 6600 Words for the entire assignment which would include –
1. Ratio Analysis and Interpretations,
2. Sources of Finance and
3. Budgeting

1. Table of Contents – is as per the University’s guideline..
2. Executive Summary -[208 words]
3. Introduction Section – [146 words] –
• Industry Analysis – [136 words] –

Ratio Analysis and Financial Interpretations –
• Please calculate and present the ratio respectively for both organizations chosen within this assignment .
• When commencing this section , please provide a definition, rationale’ and purpose for each ratio.
• Each ratio needs to be interpreted between the chosen company to discuss what led to the changes that impacted the ratio values based on operational , transaction and management scenarios.
• Current Ratios are never expressed in percentages at all . like the way you have presented in the Graph , Values calculated the Table presented and the Graph do no match …something is wrong here in the current ratio section.
• Remember that each ratio would be supported with graph that represents the values for both organizations for the year 2013 and 2014.

Sources of Funds – occupies 33% of the overall grades.

Please read my detailed comment and feedback in the document enclosed as it is not meeting the University’s exact requirements.

Budgeting Section {33% of the Assignment } – Here the University is asking a generic question about budgeting . The discussion presented is too short and not worth 33% grades , therefore your content could range across different industry segments but not necessarily for the chosen company .
It would need to discuss the necessity and relevance of budgeting as a 1)process, 2)various approach, 3)role of technology in budgeting, 4)performance management as a measurement tool in corporations , 5)merits, relevance and demerits, 6)ideal budgeting – is there one? , 7)alternative budgeting exercises or a 8)suit worthy budgeting practice that remains apt in the uncertain economic current modern times and ever changing business climate and 9)can we ever live without budgets in the future?

Conclusions , References and Annexure – Apart from what has been presented and placed, the annexure section must contain Ratio Calculation Worksheet for Emirates and Etihad across all the six ratios for the years 2013 and 2014.

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RESEARCH PROJECT PROPOSAL Template

• This proposal should not exceed 2,500 words in length, excluding references; and project schedule table. Note: extensive background information is not required

• Wording in red is included either for purely illustrative purposes (i.e. to help you think about your own choice of words) or offering guidance. You should delete or overwrite these guidelines with your own words, and change the font from red to black.
A. Research Proposal

Student Name:

Student ID:

Provisional Topic Title:

Proposal structurally approved by workshop tutor: Yes/No
(Your workshop tutor may wish to check that you had done sufficient work on the proposal and that it is of “fit state” to be forwarded to your supervisor)

1. Aims/objectives/Research Questions:
Provide a brief introduction/context to your topic; state your aims, objectives and plausible research questions (500 words)

2. Methodology:
Explain how you are going to answer your research questions i.e. explain your methodology and methods, justify the methods to be employed and critically review the methodology/approaches you are intending to take (700 words)

3. Brief Literature Review:
Explain how your research fits into existing published work. Do this by locating and critically reviewing about 10-12 sources of information (references) connected to the work you propose to do and show how your research aims/questions intend to fill any gap or extend knowledge. Refer to your research methods module and compare and contrast this information with what you intend to do and with your research approach. Approximately 8-10 of these references must be academic publications, from refereed journals which will be found in our online databases such as Ebsco. Do not use books in this section. Refer to examples in the workshops. (1000 words)

4. Resources you need/Access to primary and secondary data:
Explain what resources you will need, what resources you have access to, and what access to organisations have you secured for the primary data (300 words)

5. Project Schedule
Use the template below and fill in the due dates so that you and your supervisor can map out your journey. Allocate 4-6 weeks each for stages 1 and 3. It is recommended that you prepare the final draft one month prior to the submission date as your supervisor may wish to review it. You are encouraged to meet with your supervisor regularly to gain feedback at stages 1 to 3, each supervisor will advise you on their preferred supervision pattern.

6. References
Please make sure you only include sources you have cited above and that each source fully complies with Harvard referencing requirements. The references should include at least 8-10 journal sources.

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Table of Contents
Introduction 6
Introduction of the Chosen Organization 6
Company Profile 6
Incorporation Date 6
Listings on Stock Exchange 7
Strategy 7
Vision 7
Mission 7
Guiding Principle 7
Quality Policy 7
Leading Brands & Products : 8
Geographical Presence 8
Research and Development Investments 8
Outsourcing Policy 8
Marketing & Distribution Strategies 8
Mergers & Acquisitions 9
Employee Strengths 9
Awards and Recognitions 9
Corporate Social Responsibilities Initiative 10
Taxes and Fines : 10
Penalties imposed by Government 10
Legal suits filed for and against the Organization 10
Management and Leadership Team 11
Dividend paid by Airtel 11
Vision 2020 11
SWOT Analysis 11
Introduction of the Competitor Organization : 13
Company Profile 13
Incorporation Date 13
Listings on Stock Exchange 13
Strategy 13
Vision 13
Mission : 13
Guiding Principle 14
Quality Policy 14
Leading Brands & Products : 14
Geographical Presence 14
Research and Development Investments 14
Outsourcing Policy 15
Marketing & Distribution Strategies 15
Mergers & Acquisitions 15
Employee Strengths 15
Awards & Recognitions 16
Corporate Social Responsibilities Initiative 16
Taxes and Fines : 16
Penalties imposed by Government 16
Legal suits filed for and against the Organization 17
Management and Leadership Team 17
Dividend paid by Idea 17
Vision 2020 18
SWOT Analysis 18
Industry Analysis 18
Ratio Analysis & Financial Performance 19
1. Current Ratio 19
2. Asset Turnover Ratio 20
3. Operating Profit Margin Ratio 21
4. Gearing Ratio 22
5. Interest Coverage Ratio 22
6. Return on Capital Employed Ratio (ROCE) 23
Financing 24
External Sources of Financing 24
Internal Sources of Financing 25
Budgeting 26
Conclusion 28
References 29
Appendices 36
1. Balance Sheet of Airtel 36
2. Statement of Profit and Loss of Airtel 37
3. Cash Flow Statement of Airtel 38
4. Balance Sheet of Idea 39
5. Statement of Profit and Loss Statement for Idea 40
6. Cash Flow Statement of Idea 41
7. Formula and Working Calculation of Current Ratio 43
8. Formula and Working Calculation of Asset Turnover Ratio 44
9. Formula and Working Calculation of Operating Profit Margin Ratio 45
10. Formula and Working Calculation of Gearing Ratio 46
11. Formula and Working Calculation of Interest Coverage Ratio 47
12. Formula and Working Calculation of Return on Capital Employed Ratio 48
13. Working Calculation of Net Assets of Airtel and its 20% Value 49