ACCOUNTING REPORT
steve912
4.pptxFinancial Statement Analysis Project
Accounts Receivable and Inventories
A Company’s Operating Cycle
Next step of the project is to analyze the company’s operating cycle
Operating cycle is the period of time from the purchases of inventory to cash collections of the credit sales.
Operating cycle provides indication of how long the company’s fund is tied up with accounts receivable and inventory, and how quickly the company can turnover accounts receivable and inventory.
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Accounts Receivable and Inventory Turnover
Accounts receivable turnover (# of times):
Inventory turnover (# of times):
Operating Cycle
Operating Cycle (in days):
Inventory Policy
In addition to the operating cycle, look up the notes to financial statements in 10-K and discuss the company’s inventory policy:
What costing method does the company use in recording its inventory? (i.e., FIFO, LIFO, Average Cost?)
Do the company’s competitors use the same costing method? (If you can identify one or two competitors)
If the company uses a costing method different from its competitor, does the company offer any explanation for its choice?
Report Your Contribution
As I have emphasized, every one is expected to contribute equally to the project, or he/she will be subject to grade reduction, or even be removed from the group.
In this write-up, other than completing the assigned tasks, each group member is also required to clearly state what you were in charge to help with the group work, and what part of the report you helped write up.
If you work individually, you may omit this requirement. Failing to report your contribution to the group work will be subject to a 5-point grade reduction on the project.
Submission of Your Work
Calculate and discuss your company’s operating cycle for the past 5 years (calculate it every year, of course!)
Discuss the company’s inventory policy
Report your contribution to the project (required)
Submit to Canvas a typed write-up by April 3rd for comment
While you will not lose credit for not submitting the write-up, I will not give feedback if it is late. Even though you are not submitting the write-up, you will still need to report your contribution, or you will receive a 5-point grade reduction.
Net Sales
(Beginning A/R + Ending A/R)/2
Cost of Goods Sold
(Beginning Inventory + Ending Inventory)
/2
365365
A/R TurnoverInventoryTurnover
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