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BUS-A 202 ANNUAL REPORT PROJECT INSTRUCTIONS PART 3 SCENARIO: For this part of the project, you will instruct your employees to use specific accounts/numbers to calculate 12 groups of ratios (see below)

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BUS-A 202 ANNUAL REPORT PROJECT INSTRUCTIONS PART 3

SCENARIO: For this part of the project, you will instruct your employees to use specific accounts/numbers to calculate 12 groups of ratios (see below).  You should explain to them that they must analyze the numbers and tell you why the company’s numbers are lacking/growing without bias or opinions. So, they will first show a ratio calculation for the most recent and the two prior years.  Then, they will explain in a paragraph an analysis of the numbers and the reason for the trend(s).  Thus, there will be 12 sets of ratio calculations and 12 paragraphs.

Profitability Ratios

Net Profit Margin Percentage (page 747)

Return on Total Assets (page 748)

Return on Equity (page 748)

Liquidity Ratios

Working Capital (page 741)

Current Ratio (page 741)

Acid­test (Quick) Ratio (page 742)

Accounts Receivables Turnover (page 742)

Average Collection Period (page 742)

Inventory Turnover (page 743)

Average Sale Period (page 743)

Solvency Ratios

Debt to Equity Ratio (page 745)

Times­Interest­Earned Ratio (page 745)

 

This analysis will be done in a Word document using the following file designation: Annual Report Project_YOUR LAST NAME_YOUR FIRST NAME.docx (again CAPS matter).

 

1. Ratio Calculation
   1. Each of the above ratios need to be calculated for the most recent and the two prior years.
   2. You must first show the general equation of the ratio using Word’s equation editor (Refer to video on Canvas under modules showing how to use this)
   3. You must next show the numbers you used to calculate the ratio using Word’s equation editor
      1. This includes averages –  you would show something like

100 /((200 + 300)/2)

This shows the proper order of operations. It is displayed using the “Linear” option

1. 4. Finally you must show the ratio (the answer). All ratios must be displayed to two decimal places. All profitability ratios and the debt ratio should be expressed as percentages to two decimal places.
   5. Here is an example of exactly how the ratio calculations should be formatted:

 

Current Assets Current Ratio                       =              Current Liabilities
2009	2008	2007
$764,318     $357,953	$786,927     $341,545	$836,582     $460,047
2.14	2.30	1.82

Note that all eleven ratios must be calculated. You may have to go back to your financial statements from Part 1 to locate numbers to use. If they do not directly indicate credit sales for the AR ratios assume all sales were on credit.

2. Ratio Analysis
   1. After calculating each ratio you must write at least one paragraph explaining what the answer you calculated means. Look at the trend from year to year. You need to use outside sources to support your assumptions. These sources should be from scholarly journals, the financial statements, and from the course textbook. You must cite these sources correctly using APA.
   2. Do NOT simply restate the numbers and calculate differences. Make the assumption your readers can understand the data and do math. You want to show WHY things happened. In the above example you could expand on how their current ratio increased in three years because they paid down debt and did not take on new long­term liabilities.

RUBRIC

Each part of this project is graded on a rubric.  For part three, there are four components worth a total of 50 points.  The criteria for receiving the maximum points are:

1. Student followed all instructions (10 points)
2. All ratios used correct formula, correct numbers and were shown using the Equation Editor (15 points)
3. Analysis contained detailed information, outside sources and was well written.  Did not include restatement of numbers or math (15 points)
4. The assignment was presented in a professional manner with no grammatical or spelling errors (10 points)