ACC 318 Module Six Assignment Template

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Southern New Hampshire University *

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318

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Accounting

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Jan 9, 2024

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docx

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ACC 318 Module Six Assignment Template Complete this template by replacing the bracketed text with the relevant information. Calculations 1. Calculate the current ratio for fiscal years 2025 and 2026. 2025: 12,500+132,000+125,500+50,000=320,000 Current Assets 91,000+61,500+6,000 =158,500 Current Liabilities 320,000/158,500=2.0189 2026: 18,200+148,000+131,800+105,000=403,000 Current Assets 79,000+76,000+9,000=164,000 Current Liabilities 403,000/164,000=2.4573 2. Calculate the acid test (quick ratio) for fiscal years 2025 and 2026. 2025 125,500/158,500=0.79 2026 131,800/164,000=0.80 3. Calculate the inventory turnover for the fiscal year 2026. 50,000+105,000=155,000/2=77,500 Average Inventory 1,530,000/77,500=19.74 4. Calculate the return on assets for fiscal years 2025 and 2026. (Assume that total assets were $1,688,500 at 3/31/24.) 2025 1,688,500+1,740,500=3,429,000/2=1,714,500 Average Total Assets 297,000/1,714,500=0.17 2026 1,740,500+1,852,000=3,592,500/2=1,796,250 Average Total Assets 366,000/1,796,250=0.20 Percentage Changes 1. Calculate the percentage change in sales from the fiscal year 2025 to 2026. (2026 Sales-2025 Sales)/2025 Salesx100= Percentage Change in Sales 3,000,000-2,700,000=300,000/2,700,000=0.1111x100=11.11
11% Increase 2. Calculate the percentage change in cost of goods sold from the fiscal year 2025 to 2026. 2026 COGS-2025 COGS)/2025 COGSx100=Percentage Change in COGS 1,530,000- 1,425,000=105,000/1,425,000=0.0736x100=7.3684 7% Increase 3. Calculate the percentage change in gross margin from the fiscal year 2025 to 2026. (2026 Gross Margin-2025 Gross Margin)/2025 Gross Marginx100=Percentage Change in Gross Margin 1,470,000-1,275,000=195,000/1,275,000=0.1529x100=15.2941 15% Increase 4. Calculate the percentage change in net income after taxes from the fiscal year 2025 to 2026. 2026 Net Income-2025 Net Income)/2025 Net Incomex100=Percentage Change in Net Income 366,000- 297,000=69,000/297,000=0.2323x100=23.2323 23% Increase Financial Decisions and Factors 1. Describe at least one additional financial report or analysis that might be helpful to the commercial loan officer of Topeka National Bank in evaluating Daniel Brown’s request for a time extension on Bradburn’s notes. Another additional financial report that might be helpful to the commercial loan officer of Topeka National Bank in evaluating Daniel Brown 's request is the statement of cash flows for 2025 and 2026 because the statements would analyze the cash inflows and outflows for the company as well as explain the reason of increase or decrease in cash for each year. Another additional analysis ratio that might be helpful is the cash debt coverage for the years 2025 and 2026 because it measures the company’s ability to repay its total liabilities in the given year from its operations. 2. Explain whether Bradburn’s desire to finance the plant expansion from internally generated funds is realistic. Assume that the percentage changes experienced in fiscal year 2026 as compared with fiscal year 2025 for sales, cost of goods sold, and operating expenses will be repeated in each of the next two years. Consider the following question to guide your response: A. What will the percentage changes for sales, cost of goods sold, and operating expenses look like in each of the next two years? B. How does the percentage change for sales, cost of goods sold, and operating expenses affect Bradburn’s ability to finance the plant expansion from internally generated funds? As long as sales increase at a rate of 11 %, cost of goods sold increase at a rate of 7 %, operating expenses increase at the same rate of 10 % , the depreciation remains constant at $ 102,500 ,
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