FINANCE ACCOUNTING

AC1420: Project

Page 1

PROJECT DESCRIPTION

Course Objectives Tested:

1. Produce a balance sheet for a company that distinguishes between current and non-

current assets and liabilities.

2. Create a balance sheet from a trial balance.

3. Create a comparison of net income based on different methods of inventory accounting.

4. Analyze a statement of cash flows and show where each line item can be found or

calculated from the other financial statements.

5. Prepare a full analysis of key financial ratios for a company and state conclusions about

the financial strength of the company compared to industry ratios.

PROJECT SUBMISSION P LAN

Project

Part

Description/Requirements of Project

Part

Evaluation Criteria

1 Title: Creating a Balance Sheet and

Evaluating Inventory

You will be provided with financial

information about a fictional company.

You will have to determine what

information is relevant for Project Parts 1

and 2.

Task 1: Create a balance sheet from a

trial balance for a given scenario. Make

sure you classify the accounts

appropriately as current or non-current.

Click here to download the trial balance.

AC1420: Project

Page 2

Project

Part

Description/Requirements of Project

Part

Evaluation Criteria

Task 2: Perform inventory valuations

using LIFO, FIFO, and weighted average

methods based on the following

information. Explain the impact of each

method on the cost of goods sold and

ending inventory.

The company imports microwaves from a

supplier in China for the US market. At

the end of the first quarter, 100

microwaves are in stock. The company

purchased a total of 400 microwaves

during the quarter at various prices:

January: 100 units @ $75

February: 250 units @ $83

March: 50 units @ $87

The company had no inventory at the

beginning of the quarter.

Task 3: If the company’s goal is to

maximize net income, which evaluation

method will you use and why?

Use the ITT Tech Virtual Library to

support your answer with facts.

Submission Requirements:

Click here to download the Task 1

template for calculation.

AC1420: Project

Page 3

Project

Part

Description/Requirements of Project

Part

Evaluation Criteria

Click here to download the Task 2

template for calculation.

Assigned: Week 3

Due: Week 3

Grading Weight: 15%

2 Title: Calculating and Analyzing Ratios

Based on the financial information

provided, calculate the following ratios

and explain their purpose:

Current Ratio

Inventory Turnover Ratio

Accounts Receivable Turnover Ratio

Debt to Equity Ratio

Return on Assets Ratio

Asset Turnover Ratio

Return on Equity Ratio

Profit Margin Ratio

Price-Earnings Ratio

Dividend Yield Ratio

Click here to download the financial

statements.

Note: When a balance sheet amount is

related to an income statement amount

in computing a ratio, the balance sheet

amount should be an average of that

Criteria Points

Assigned

Points

Earned

Did you

calculate the

10 ratios (8

points for

each)?

80%

Criteria Points

Assigned

Points

Earned

Did you

explain which

ratios could

be used by a

bank lending

officer and

why?

20%

AC1420: Project

Page 4

Project

Part

Description/Requirements of Project

Part

Evaluation Criteria

period. The average is calculated by

adding the ending balances of this year

and last year and dividing the result by 2.

Describe how a bank lending officer

might use ratio analysis. Select five ratios

that would be most useful for the

purpose and explain the rationale for

your selection.

Submission Requirements: Submit your

answers in a Microsoft (MS) Word file.

Font: Arial, 12 point, double-spaced

Assigned: Week 5

Due: Week 5

Grading Weight: 15%