Financial and Managerial Accounting
Financial Statement Analysis
Learning Objectives for Course
1. Acquire a comprehensive understanding of the principles used to prepare and
present financial statements.
2. Relevant application of knowledge to read and understand financial statements
and to observe the effects of routine business transactions on them.
3. Develop quantitative skills necessary to read, interpret and perform the
calculations for the accounting reports involved in cost control and profit
4. Evaluate and identify financial strengths and weaknesses of a business through
appropriate conceptual analysis.
5. Analyse information and knowledge effectively in order to develop meaning to
solve complex problems and make decisions ;
Guidelines for assignment
? This is an individual assignment
? Ground your answer in relevant theory
? Plagiarism and reproduction of someone else’s work as your own will be
? Make use of references, where appropriate – Use Harvard or APA referencing
? Late submission are not accepted
? Structural elements should include an introduction, main body, and a conclusion
? Word count guidance : part 1 – N/A. Business report wordage should be 2000
? Type of assignment: Excel Assessed Work Folder and Business Report
? Learning Outcome Assessed: 1,2,3,4
? Submit one single document and not lots of different files.
Part 1 – Financial Analysis
The condensed financial statements of Soule Company for the years 2013 and 2014
are presented below.
Cash and cash equivalents
Accounts receivable (net)
Total current assets
Property, plant, and equipment
Intangibles and other assets
Total liabilities and stockholders’ equity
£ 330 £ 360
£ 900 £ 810
For the Years Ended December 31
Costs and expenses
Cost of goods sold
Selling and administrative expenses
Total costs and expenses
Income before income taxes
Income tax expense
Compute the following ratios for 2014 and 2013.
(a) Current ratio.
(b) Inventory turnover. (Inventory on 12/31/12 was £326.)
(c) Profit margin ratio.
(d) Return on assets. (Assets on 12/31/12 were £2,100.)
(e) Return on common stockholders’ equity. (Stockholders’ equity on 12/31/12 was
(f) Debt to total assets ratio.
(g) Times interest earned.
Critically evaluate your ratio calculations and conclude on the current state of the
Word count 500 (+/- 10%)
£ 364 £ 213
Part 2 – Performance Evaluation
Evaluate the financial performance of a company of your choosing using the knowledge
and technical skills that you have gained during the course so far. Provide a theoretical
explanation of any ratio analysis. No need to recalculate ratios, often the financial
reports provides these.
Attach the company financial statements as an appendix to your statement as reference
to your work.
Present your findings in a Management Business Report wordage should be 1500