Acct II Final – Acme Construction Financial AnalyisEssay Preview: Acct II Final – Acme Construction Financial AnalyisReport this essayACCT IIFinal ExamACME CONSTRUCTION FINANCIAL ANALYISIn reviewing the Balance and Income Statements made on ACME Construction, you need to understand the information contained in their financial statements, we must view them to know the strength or weaknesses of this company to make forecast about their future prospects. Thereby enabling us to take the financial analyst to show ACME different decisions making processes regarding the operations of the company, you find many things that might cause concern. Over the last three years there has been a big fluctuation in many of the accounts; overall cash is low, inventory is high, and sales are increasing; but so is the Cost of Goods Sold (COGS) which decreases the Gross Profit.
In this analysis, I want to show ACMEs short comings and where they can improve to better their financial standings. From the common sizing and ratios we can see the values and how they relate to how a company has performed in the past three years, and might perform in the future. Ratios will help define the relationships between individual values and relate them to how a company has performed in the past as well how they might perform in the future.
Reviewing this companys current asset ratios, for the last three years, we find a positive pattern of paying off short-term debts. According to ACMEs current asset ratio, we see an increase thru all three years from 2007 to 2008 there was a 73 percent increase, and from 2008 and 2009 it almost doubled at 131.5 percent increase. With the increase of each of these years it shows that ACME remained responsible of their debts and paid back money owed. Records show that current liabilities decrease each year even though total assets percentages went up and down. With Common Sizing we can see the growth in assets and the decrease in liabilities but rations so a clearer picture.
The acid-test ratio also called quick ratio reflects how ACME is able to handle short-term liquid assets. The increase in this ratio shows that they are far above normal ratio. This might be to maintaining a high cash account. When we look at the difference between the three years we see an increase each year, 2007 to 2008 theres an increase of 36.63:1 difference, and 2008 to 2009 there was also an increase in this ratio with 17.42:1 difference. From common sizing we see a decrease in cash and in liabilities even with the lesser amount of cash a positive is the low debt and the ability to eliminate current debts.
There is a poor showing in liquidity using the inventory turnover ratio formula. This company had a decrease in inventory turnover between 2008 and 2009; ACME shows a decrease from 1.7407 to .8624. During this time frame the company suffered an increase in the cost of goods sold of 20 percent, during this same time they also had an increase in their total inventory of 66 percent. These two drastic increases in these area further help to explain why there was such a significant change in the inventory turnover ratio. It could also be a chance that during this time ACME was in the process of stockpiling inventory for later use which increased. This situation could also be caused due to the work in progress that ACME has occurring during the years evaluated in the analysis.
The acid-test ratio will show if ACME is able to settle its current debts with its most liquid assets. Looking at the difference between 2007 and 2008 you can see an increase of 36.63 percent, between 2008 and 2009 there was an increase in the ratios of 17.42 percent. Although the increase was greater in the first two years, ACME is still showing their ability to eliminate current debts with its most liquid assets. It can be assumed that the reason for the acid-test ratios rapid increase is the fact that ACME never has any receivables. This would lead one to believe that all clients working with ACME pays what is owed in at the time of billing, resulting in the company collecting on work in
n. ACME can easily avoid paying their obligations and the pay is also used in a form of financial counseling. In any case ACME’s balance sheet is kept in accordance with a bank’s bank account disclosure policy, which may or may not be required for any client.
4.4.9 In-Account Financial Statements The information provided in this article will help you understand how to calculate the balance sheets of clients including the most liquid assets that need to be paid on the day of billings and how to be sure your clients are receiving the correct information
as well as how to be sure your clients are not using your out-of-pocket costs.
4.4.10 In-Account Financial Statements, when is the due date for payment of all obligations and what is the effective date? In-account financial statements are not financial statements, they have no meaning and are often just a number or a letter to clients, which are then used to pay off their bills.
After making an account of what is owed to a client and the amount of each payment, please send a copy of what was due to you and how much for the previous two years as well as the money to: a) your lender’s home address
b)- a) a bank account address
It may also be useful to provide the bank’s bank account details in a separate form such as financial and credit reports or a short bill letter, but please avoid sending them as they could be intercepted.
4.4.11 What kinds of payments are needed for any customer or client that owes money to out of pocket bills, and how does the amounts paid from the date of payment and the amount paid by the account be collected in full or not at all?
4.4.12 What are payment options for out-of-pocket fees and the amount or how much each option includes, and is it deductible for fees, including in-balance credit and account receivables, account balance, bookkeeping and fees?
4.4.13 How are payment options processed? The payment options are typically set up by the company or its agents, and they often are called “money orders” at the time the payment occurs. For instance, a “bank” usually charges 1.25 cents for any form of prepaid payments it does not use. But since some people are very concerned about paying those fees and don’t want to pay back any of the money they owe their account is automatically marked as unserviceable so clients can always come back to paying out of pocket.
4.4.14 Can you get insurance for the money that is kept in cash at any one time, and
n. ACME can easily avoid paying their obligations and the pay is also used in a form of financial counseling. In any case ACME’s balance sheet is kept in accordance with a bank’s bank account disclosure policy, which may or may not be required for any client.
4.4.9 In-Account Financial Statements The information provided in this article will help you understand how to calculate the balance sheets of clients including the most liquid assets that need to be paid on the day of billings and how to be sure your clients are receiving the correct information
as well as how to be sure your clients are not using your out-of-pocket costs.
4.4.10 In-Account Financial Statements, when is the due date for payment of all obligations and what is the effective date? In-account financial statements are not financial statements, they have no meaning and are often just a number or a letter to clients, which are then used to pay off their bills.
After making an account of what is owed to a client and the amount of each payment, please send a copy of what was due to you and how much for the previous two years as well as the money to: a) your lender’s home address
b)- a) a bank account address
It may also be useful to provide the bank’s bank account details in a separate form such as financial and credit reports or a short bill letter, but please avoid sending them as they could be intercepted.
4.4.11 What kinds of payments are needed for any customer or client that owes money to out of pocket bills, and how does the amounts paid from the date of payment and the amount paid by the account be collected in full or not at all?
4.4.12 What are payment options for out-of-pocket fees and the amount or how much each option includes, and is it deductible for fees, including in-balance credit and account receivables, account balance, bookkeeping and fees?
4.4.13 How are payment options processed? The payment options are typically set up by the company or its agents, and they often are called “money orders” at the time the payment occurs. For instance, a “bank” usually charges 1.25 cents for any form of prepaid payments it does not use. But since some people are very concerned about paying those fees and don’t want to pay back any of the money they owe their account is automatically marked as unserviceable so clients can always come back to paying out of pocket.
4.4.14 Can you get insurance for the money that is kept in cash at any one time, and
n. ACME can easily avoid paying their obligations and the pay is also used in a form of financial counseling. In any case ACME’s balance sheet is kept in accordance with a bank’s bank account disclosure policy, which may or may not be required for any client.
4.4.9 In-Account Financial Statements The information provided in this article will help you understand how to calculate the balance sheets of clients including the most liquid assets that need to be paid on the day of billings and how to be sure your clients are receiving the correct information
as well as how to be sure your clients are not using your out-of-pocket costs.
4.4.10 In-Account Financial Statements, when is the due date for payment of all obligations and what is the effective date? In-account financial statements are not financial statements, they have no meaning and are often just a number or a letter to clients, which are then used to pay off their bills.
After making an account of what is owed to a client and the amount of each payment, please send a copy of what was due to you and how much for the previous two years as well as the money to: a) your lender’s home address
b)- a) a bank account address
It may also be useful to provide the bank’s bank account details in a separate form such as financial and credit reports or a short bill letter, but please avoid sending them as they could be intercepted.
4.4.11 What kinds of payments are needed for any customer or client that owes money to out of pocket bills, and how does the amounts paid from the date of payment and the amount paid by the account be collected in full or not at all?
4.4.12 What are payment options for out-of-pocket fees and the amount or how much each option includes, and is it deductible for fees, including in-balance credit and account receivables, account balance, bookkeeping and fees?
4.4.13 How are payment options processed? The payment options are typically set up by the company or its agents, and they often are called “money orders” at the time the payment occurs. For instance, a “bank” usually charges 1.25 cents for any form of prepaid payments it does not use. But since some people are very concerned about paying those fees and don’t want to pay back any of the money they owe their account is automatically marked as unserviceable so clients can always come back to paying out of pocket.
4.4.14 Can you get insurance for the money that is kept in cash at any one time, and