Accounting for Managers

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Congratulations on making it to your second month of work at Maryland Creative Solutions, LLC (MCS)! The senior partner, Frank Marinara, has been very satisfied with your work so far in your role as economic analyst. He is so satisfied that he is considering promoting you to the role of senior analyst to oversee major projects in economics, finance, and accounting. However, before you are recommended for promotion, Frank wants to challenge you by assigning you to a corporate accounting project that MCS has been awarded after winning a competitive bid. He sets up a virtual meeting with you to discuss the details.

 

Calendar Invite

Location: Virtual Meeting

Meeting Organizer: Frank Marinara

Transcript

“I wanted to meet today about assigning you with a corporate accounting project. Accounting is a critical function of any business and we are responsible for providing our clients with valid and reliable advice on their accounting practices. This skill set is very important in mergers and acquisitions because our clients need to know how to analyze and evaluate financial statements.

"I’m handing down this assignment from our First managing director, Elisa Izuki, who heads the accounting projects group in MCS. She has asked for a complete review and ratio analysis of the quarterly and annual financial statements for one of our clients, Choice Hotels International.

"This client is trying to identify areas of improvement in their operations and explore options to reduce their debt. Your examination of their three most recent quarters and two most recent years will be very helpful.

"You’ll use their 10-Q and 10-K reports to get this done. I recommend you analyze the 10-K financial reports using accounting and finance ratios. An examination of their balance sheet will also help them manage their assets. Keep in mind that compliance with established accounting standards will be essential for the success of this project.

"Integrity, honesty, and transparency are important factors to consider as you conduct your financial statement review and analysis.

"I’ll send over the steps to completing the project for your clarity, please read them carefully and submit all deliverables.That’s it for now, please reach out should you have any questions.

"Have a good one, bye."

You're excited to build on your work in applied economics and become a key member of MCS. You'll start by researching the basic principles of accounting and financial statements before you dive into the client's financial reports. Click Step 1 to get started!

When you submit your project, your work will be evaluated using the competencies listed below. You can use the list below to self-check your work before submission.

· 1.3: Provide sufficient, correctly cited support that substantiates the writer’s ideas.  

· 1.6: Follow conventions of Standard Written English.  

· 1.7: Create neat and professional looking documents appropriate for the project or presentation.    

· 3.1: Identify numerical or mathematical information that is relevant in a problem or situation.

· 3.2: Employ mathematical or statistical operations and data analysis techniques to arrive at a correct or optimal solution.

· 3.3: Analyze mathematical or statistical information, or the results of quantitative inquiry and manipulation of data.

· 3.4: Employ software applications and analytic tools to analyze, visualize, and present data to inform decision-making.

· 5.1: Develop constructive resolutions for ethical dilemmas based on application of ethical theories, principles and models.

· 10.2: Analyze financial statements to evaluate and optimize organizational performance.

Step 1: Review Financial Statements

MCS provides consulting services for clients to help them identify areas of improvement in their operations, explore options to reduce their debt, and apply the lessons learned in future business decisions. To provide these services, it is important to understand the principles of accounting.

Dialogue with Frank Marinara

“Accounting is the recording of business financial transactions and then summarizing, analyzing, and reporting these transactions,” Frank tells you. “To understand how financial transactions are recorded, you must first understand the chart of accounts and the double-entry accounting system. And from these concepts, you can then understand the accounting equation, which is integral to good accounting practices.”

“Speaking of good practices,” Frank adds, “disciplined journal entries are what make for keeping good books. Two specific types of accounts, accounts receivables and accounts payable are also worth a close look. While you’re at it, you should know a bit about accounting conventions and standards in the United States.”

After you have developed an understanding of these accounting principles, advance your knowledge of the most common financial statements, such as the income statement, balance sheet, and statement of cash flows.

Now that you have a good understanding of the most common financial statements, Frank and Elisa would like you to complete your review based on the quarterly (10-Q) and annual (10-K) financial statements for Choice Hotels International (NYSE: CHH) as reported to the Securities Exchange Commission (SEC). They need your expert analysis of Choice Hotels’ performance over the most recent two-year financial period and suggest you begin by obtaining the three most recent 10-Q reports and two most recent 10-K reports found on the SEC website.

After you have completed your review of Choice Hotels’ financial reports, you will need to continue your analysis by identifying trends or patterns, if any, in the client’s financial performance. You will do that by calculating the percentage change in key financial figures from one quarter to the next and from one year to the next.

To complete your assignment for Elisa and Frank, perform the following tasks during Week 4:

· Download the Project 2 Excel Workbook that MCS developed in house, read the instructions page carefully, and review the three recent Choice Hotels’ 10-Q reports and two recent 10-K reports found on the SEC website. Links to each respective report are also embedded within the Project 2 Excel Workbook.

· Record data from the 10-Q and 10-K reports by completing the Income Statement, Balance Sheet, and Cash Flows worksheets within the Project 2 Excel Workbook.

· Calculate the percentage change in the appropriate columns on each worksheet and highlight significant changes of ±25 percent in the income statement categories of total revenues, total operating expenses, and net income in the Income Statement worksheet.

· Answer the questions in the Income Statement, Balance Sheet, and Cash Flow worksheets within the Project 2 Excel Workbook.

· Submit your Project 2 Excel Workbook for feedback to the submission folder located in the final step of this project.

Now that you have completed Step 1, proceed to Step 2, where you will evaluate areas of improvement in the operations of Choice Hotels, based on  your review of their financial statements.

 

Step 2: Evaluate Business Performance Using Ratio Analysis

MCS also provides their clients with an overall evaluation of the health of their business by applying techniques such as financial ratio analysis to corporate data. Frank explains to you that a ratio analysis will need to be completed in order to help Choice Hotels identify areas of improvement in their operations and explore options to reduce their debt.

A ratio analysis is an analytical tool for understanding financial results and trends over time and for providing key indicators of organizational performance. Typically, ratios are calculated by using data from the income statement, balance sheet and statement of cash flows portions of the 10-K financial report. MCS uses a customized worksheet to report ratio calculations, results, analysis, and recommendations for most clients.

Financial ratios are used for many types of businesses in various industries. For a hospitality business such as Choice Hotels, you have selected a set of financial accounting ratios as most appropriate for the client.

Your ratio calculations should be completed in the Business Performance Ratios worksheet in the Project 2 Excel Workbook. To help you complete the worksheet, you may need to review Calculating Cash Flows, Special Considerations for Merchandising Companies, and Accounting for Cash.

Complete the workbook with data from the 10-Q and 10-K reports and calculate the percent change in the appropriate column. You will also need to answer a few questions in the worksheet to help Choice Hotels identify areas of improvement in their operations and explore options to reduce their debt.

When you have finished, submit the workbook to the submission folder located in the final step of this project.

Now that you have completed Step 2, proceed to Step 3, where you will examine Choice Hotels’ balance sheet.

Step 3: Analyze the Balance Sheet

MCS provides clients with professional advice on managing their assets by performing an in-depth study of their balance sheet. Frank stops by your office to give a few pointers:

Dialogue with Frank Marinara

“Choice Hotels would like us to look at their balance sheet and provide them with guidance on what they should or should not do to better manage their assets.

“Balance sheet ratios like the fixed-asset turnover ratio are commonly used in the valuation of inventory,” he adds. Other balance sheet ratios include working capital.”

For this assignment, you will use the same Project 2 Excel Workbook as in the previous steps. Complete the workbook with data from the 10-K reports you used in Step 1 and calculate the percent change in the appropriate column. You will also need to answer a few questions in the worksheet to help Choice Hotels identify areas of improvement in asset management.

When you have finished, post the workbook to the submission folder located in the final step of this project. To stay on target, aim to complete this step during Week 4.

Now that you have completed Step 3, proceed to Step 4, where you will discuss accounting ethics.

Step 4: Participate in Discussion of Accounting Ethics

Choice Hotels requires high levels of integrity, honesty, and transparency in the development of financial reports. They must ensure compliance with the standards articulated by international bodies like the Financial Accounting Standards Board, Generally Accepted Accounting Principles (GAAP), and the International Financial Reporting Standards (IFRS) Board.

Calendar Invite

Event: MCS Special Retreat: Ethics in Focus

Location: Executive Room

Meeting Organizer: Elisa Izuki

The managing director, Elisa Izuki, would like you and your team of MCS consultants to develop an appreciation for ethical accounting standards and the need for objectivity in your analysis. With that in mind, she invites all the consultants working on the Choice Hotels project to an offsite company retreat. During the retreat, a considerable amount of time is devoted to a discussion of topics related to accounting ethics.

Assuming you and your colleagues are attending the retreat, go to the Accounting Ethics Discussion, and complete the following tasks:

· Discuss why integrity, honesty, and transparency are essential in financial reporting. Give credit to any sources or real world examples you use to support your statements.

· GAAP are the general rules, regulations, and guidelines that accountants in the United States follow to ensure their practices are legal and ethical. Explain to your colleagues why GAAP is so useful. Give credit to any sources or real world examples you use to support your statements.

· Later in the week, after you are back in your office, you have a follow-up discussion with your MCS colleagues in an effort to summarize the key lessons you have learned from your discussion on ethics in finance and accounting at the past weekend’s retreat. Respond to your colleagues' original discussion posts and give credit to any sources you use to support your statements.

During Week 5, submit one original posting of at least 250 words in the Accounting Ethics Discussion by Saturday and post two responses of at least 50 words each to other discussion participants by Tuesday. See MBA discussion guidelines.

When you have finished Step 4, proceed to Step 5, where you will present your recent findings in an executive summary and PowerPoint presentation.

Step 5: Prepare Executive Summary and PowerPoint Presentation

INBOX (1 NEW EMAIL)

From: Frank Marinara, MCS Senior Partner

To: You

Now that you’re at the end of your project with Choice Hotels, please prepare an executive summary based on your analysis and recommendations from the previous steps. This executive summary, along with citations for any sources you use, should be about one page in length. Within your executive summary, you may also want to include an optional reflection on what you could have done better on the Choice Hotels project and how you plan to improve on future projects.

In addition, I’d like you to prepare a brief PowerPoint presentation highlighting your analysis and recommendations to help Choice Hotels identify areas of improvement in their operations and explore options to reduce their debt. Post your executive summary and PowerPoint presentation in the submission folder located in the final step of this project.

The executive summary and PowerPoint presentation should demonstrate your ability to think critically. This is your chance to be recognized for your knowledge in the accounting and finance field.

Thanks for your continued efforts.

Best,

Frank

Complete your executive summary and PowerPoint presentation in Week 5 using this Project 2 PowerPoint template.

When you have completed Step 5, proceed to Step 6, where you will submit all work for Project 2.

Step 6: Submit Your Work

Take note of the recommended delivery dates in the table below.

Recommended Project Delivery

	Submission week	Deliverable	File-naming protocol/Submission instructions
Step 1	Week 4	Financial statements worksheets	lastname_firstname_financial_statements_worksheets.xlx
Step 2	Week 4	Business performance ratios worksheet	lastname_firstname_business_ performance_ratios_worksheet.xlx
Step 3	Week 4	Balance sheet ratios worksheet	lastname_firstname_balance_sheet _ratios_worksheet.xlx
Step 4	Week 5	Accounting ethics discussion	Submit discussion post in the Accounting Ethics Discussion section in Step 4.
Step 5	Week 5	Executive summary and PowerPoint	· lastname_firstname_executive_summary.docx · lastname_firstname_executive_powerpoint.ppt

ALWAYS DO YOUR BEST @ MCS

When you submit your project, your work will be evaluated using the competencies listed below. You can use the list below to self-check your work before submission.

· 1.3: Provide sufficient, correctly cited support that substantiates the writer’s ideas.  

· 1.6: Follow conventions of Standard Written English.  

· 1.7: Create neat and professional looking documents appropriate for the project or presentation.    

· 3.1: Identify numerical or mathematical information that is relevant in a problem or situation.

· 3.2: Employ mathematical or statistical operations and data analysis techniques to arrive at a correct or optimal solution.

· 3.3: Analyze mathematical or statistical information, or the results of quantitative inquiry and manipulation of data.

· 3.4: Employ software applications and analytic tools to analyze, visualize, and present data to inform decision-making.

· 5.1: Develop constructive resolutions for ethical dilemmas based on application of ethical theories, principles and models.

· 10.2: Analyze financial statements to evaluate and optimize organizational performance.