AMERICAN COLLEGE OF TECHNOLOGY

DEPARTMENT OF BUSINESS STUDIES

Individual assignment 2: for the course Financial and Managerial Accounting

Target group: MBA students

Requirements
➢ Legible and neat Page format will be rewarded.
➢ Strictly follow the instruction given below.
➢ The assignment paper is to be submitted on July 22, 2022.
➢ Clear and observable computation is required
➢ The project will be marked out of 25%.
➢ Doing this assignment negligently will reduce your point.

Instruction: Show your computation (NB. Neatness and clear presentations has its own
values)
1. The following information relates to highlight company. Prepare Financial Statement
Analysis as required below.

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 Highlight Company
Statement of Profit or loss
for Year Ending December 31, 2019-2021
2021 2020 2019
Sales 7,035,600.00 6,034,000.00 3,432,000.00
Cost of goods sold 5,875,992.00 5,528,000.00 2,864,000.00
Gross profit 1,159,608.00 506,000.00 568,000.00
Total operating expenses 666,960.00 636,948.00 377,572.00
EBIT 492,648.00 (130,948.00) 190,428.00
Interest expense 70,008.00 136,012.00 43,828.00
EBT 422,640.00 (266,960.00) 146,600.00
Taxes (40%) 169,056.00 (106,784.00) 58,640.00
Net income 253,584.00 (160,176.00) 87,960.00

Highlight Company
Statement of Positions
December 31, 2019-2021
2021 2020 2019
Cash 85,632.00 7,282.00 57,600.00
Accounts receivable 878,000.00 632,160.00 351,200.00
Inventories 1,716,480.00 1,287,360.00 715,200.00
Total current assets 2,680,112.00 1,926,802.00 1,124,000.00
Gross fixed assets 1,197,160.00 1,202,950.00 491,000.00
Less accumulated
380,120.00 263,160.00 146,200.00
depreciation
Net fixed assets 817,040.00 939,790.00 344,800.00
Total assets 3,497,152.00 2,866,592.00 1,468,800.00
LIABILITIES AND EQUITY
Accounts payable 436,800.00 524,160.00 145,600.00
Notes payable 300,000.00 636,808.00 200,000.00
Accruals 408,000.00 489,600.00 136,000.00
Total current liabilities 1,144,800.00 1,650,568.00 481,600.00
Long-term debt 400,000.00 723,432.00 323,432.00
1,544,800.00 2,374,000.00 805,032.00
Common stock 1,721,176.00 460,000.00 460,000.00
Retained earnings 231,176.00 32,592.00 203,768.00
Total equity 1,952,352.00 492,592.00 663,768.00
Total liabilities and equity 3,497,152.00 2,866,592.00 1,468,800.00

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 Industry Average for three years
i. Current Ratio 2.74
ii. Acid-Test (Quick) 1.00
iii. Debt-to-Equity 1.33
iv. Debt-to-Total-Assets 0.50
v. Total Capitalization 0.35
vi. Interest Coverage 4.25
vii. Receivable Turnover 9.00
viii. Average Collection Period 40.55
ix. Inventory Turnover 6.10
x. Total Asset Turnover 2.60
xi. Gross Profit Margin 0.17
xii. Net Profit Margin 0.03
xiii. Return on assets 9.10
xiv. Return on Equity 0.18
xv. Return on Investment (Du Pont Approach)
xvi. Return on Equity (Du Pont Approach)

Required: Prepare the following analysis.

a) Ratio analysis with detailed interpretation of the results and internal and external
comparisons.
b) Common-size Analysis
c) Index Analyses
2. Consider the following account balances for the Soyer Corporation:
Soyer Corporation Beginning of 2011 End of 2011
Direct materials inventory 65,000 34,000
Work-in-process inventory 83,000 72,000
Finished goods inventory 123,000 102,000
Purchases of direct materials 128,000
Direct manufacturing labor 106,000
Manufacturing overhead cost 137,000
Sales commission cost 62,000
Sales Revenue 600,000
Salary expense 34,000
Interest expense 10,250
Tax expense (30% of EBT)
I. Prepare schedule for
(a) Raw material used
(b) the cost of goods manufactured
(c) Cost of goods sold
II. Prepare the income statement for 2011 (don’t forget to compute Gross Profit, EBIT,
EBT and EAT).