accounting work sheet

Part Two (30 Points – 5 points for each ratio)

Required Ratio Calculations – Both current and prior years, % increase/decrease from prior year and any additional averages or calculations.

1. Current Ratio

2. Quick Ratio (Acid-Test)

3. Inventory Turnover

4. Days to Sell the Inventory

5. Return on Assets

6. Debt Ratio

Calculations for all ratios should include detail calculations showing all numbers used. They should include the calculation of the ratio for both the current and prior year, as well as the % increase/decrease from the prior year. All work should be shown in detail, including average year calculations and any additional work that needed to be performed as well as results of those calculations. Your work should be neat and easy to follow. Highlight the numbers you use on the report.

Part Three – (10 Points) – Analysis of Inventory Ratios

This should be a detailed analysis of the turnover and days ratio related to inventory based on the knowledge you acquired as a result of this project. You should by now understand enough of what drives the inventory life span on average for this company.

1. Standard: You develop based on knowledge of the company. What would you expect for this product, customers, logistics, manufacturing, distribution or many other factors? State the days you predict and your reason and analysis of this prediction.

2. What were the results in terms of both turnover and days?

3. Were the results good/bad/average/expected?

4. Why do you think your answer to #3 was the case? This should include an analysis of why you believe the actual ratio was different/same than the standard you developed, not just it was bad because it was lower than expected. State the reasons you think that – you must justify your reasoning.

5. Did sales increase or decrease from the prior year? By what %?

6. Did gross profit increase or decrease? By what %?

7. Did days to sell the average inventory increase or decrease? By what %?

8. Which do you think is more important for them to focus their efforts on improving and why?

9. Which of these do you think is more realistic based on the current economy and why?

Instructions: Submit this document with the title page, the four parts of the financial statement, which includes the income statement, balance sheet, statement of stockholder’s equity and the cash flow report. You should also include part one of the assignment. The answers to items #1 thru #4 should contain a thorough analysis of the inventory turnover/days ratios including your original prediction and the final results.