Advance financial accounting-Financial Projections project

ACCT 411 Group Project: Consolidated Financial Statement Analysis Due before midnight on Thursday, May 4, 2023

(40 points)

Overview In this class, we learned that a company may invest in another company as part of a strategic business decision. When the level of ownership exceeds 50%, consolidated reporting is required because the parent company effectively has control of the subsidiary company. As we have seen, the consolidation process complicates the financial statement preparation process. Another significant consequence of consolidation is the effect it has on financial ratios. In this project, I would like you to assume you are working in the accounting department at Firm ABC. ABC currently owns a 45% interest in XYZ Corp. The CEO of ABC is considering acquiring the remaining 55% interest at the beginning of 2026 but is concerned about the reporting consequences. Before committing to anything, the CEO would like to see how consolidated reporting would change certain financial ratios. The CEO attempted to prepare a projected consolidation, but they made several mistakes. Your group has been tasked with fixing the errors and preparing a report that outlines how the acquisition would impact financial ratios for 2026. Data/Resources Provided • FinancialProjections_Class (Excel spreadsheet):

o ABC Financial Ratios for years 2023, 2024, and 2025 o ABC Projected Financials for year ended 2026 (assuming no control is established) o ABC Projected Financials for year ended 2026 & XYZ Projected Financial Statements

for year ended 2026 (assuming control is established) • Report Template (Microsoft Word)

Deliverables 1. FinancialProjections_Answers (Excel Spreadsheet)

o Complete the table in the “ABC Financial Ratios” tab. o Correct the consolidation worksheet in “ABC Projections – Control”.

2. Written report - you can use the template provided or create your own! (PDF) o The report should be 3 pages max. o The report should include the following content:

 Title page which clearly identifies authors (i.e., group members)  Comparison and discussion of ratios for ABC (unconsolidated) vs ABC

(consolidated) with respect to liquidity, solvency, and profitability.