Accounting Question

ACC 691 Module Four Assignment Guidelines and Rubric

Scenario

You are a due diligence analyst at a bank. One of your clients, Decker Manufacturing, recently applied for a loan. Your supervisor has asked you to review their financial statements from the past five years to determine if there are any red flags needing further examination. You must analyze the statements using horizontal and vertical analysis on the income statement and the balance sheet for the previous five years, with “Year 1” as the first year of the analysis. Your supervisor has asked you to prepare a financial statement analysis and summarize the data and potential red flags using Excel.

The skills practiced in this assignment will help to support your work in Project Two

Directions

Using the template provided in the What to Submit section, prepare a financial statement analysis that provides data analysis on the organization and a summary of the results.

Specifically, you must address the following rubric criteria:

Calculate a balance sheet horizontal analysis for the data.

Calculate a balance sheet vertical analysis for the data.

Calculate an income statement horizontal analysis for the data.

Describe potential red flag indicators using the results of the analysis.

Balance Sheet Horizontal Analyses
Year 5
Year 4
Year 3
Year 2
[Insert analysis here.]
Year 1
Balance Sheet Vertical Analyses
Year 5
Year 4
Year 3
Year 2
[Insert analysis here.]
Year 1
Income Statement Horizontal Analyses
Year 5
Year 4
Year 3
Year 2
[Insert analysis here.]
Year 1
Income Statement Vertical Analyses
Year 5
Year 4
Year 3
Year 2
[Insert analysis here.]
Year 1
Indicators
[Insert text here.]
[Insert text here.]
[Insert text here.]
[Insert text here.]
[Insert text here.]
Fraud
[Insert text here.]
[Insert text here.]
[Insert text here.]
[Insert text here.]
[Insert text here.]
Balance Sheet
As of Dec. 31
Assets
Current assets
Cash and cash equivalents
Accounts receivable
Less: allowance for doubtful accounts
Inventories
Prepaid expenses
Other current assets
Total current assets
Property, plant, and equipment
Less: accumulated depreciation
Intangible assets
Total assets
Liabilities
Current liabilities
Accounts payable
Salaries and wages payable
Income taxes payable
Unearned revenue
Other current liabilities
Total current liabilities
Bonds payable
Deferred income taxes
Total liabilities
Stockholders’ equity
Common stock and APIC-CS
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity
Year 5
Year 4
Year 3
Year 2
Year 1
57,500
84,080
2,790
75,000
37,000
13,600
264,390
507,000
131,000
22,500
662,890
54,000
78,690
2,745
69,600
26,800
13,800
240,145
518,000
135,000
23,000
646,145
28,500
74,850
2,675
64,200
22,000
14,000
200,875
496,000
128,000
13,000
581,875
21,000
69,300
2,650
58,500
18,000
15,200
179,350
470,000
122,000
13,500
540,850
15,000
63,200
2,600
52,000
14,000
15,400
157,000
430,000
105,000
14,000
496,000
55,000
10,750
6,750
56,000
7,250
135,750
281,000
17,650
434,400
46,800
10,200
8,950
42,000
8,100
116,050
290,000
17,100
423,150
42,500
9,800
4,825
28,000
7,400
92,525
174,000
16,950
283,475
38,000
9,200
5,975
16,000
5,200
74,375
155,000
16,400
245,775
34,000
7,500
5,650
10,000
5,600
62,750
160,000
16,000
238,750
120,000
108,490
228,490
662,890
120,000
102,995
222,995
646,145
200,000
98,400
298,400
581,875
200,000
95,075
295,075
540,850
175,000
82,250
257,250
496,000
Income Statement
For year ended Dec. 31
Gross sales
Less: sales returns and allowances
Net sales
Cost of goods sold
Gross margin
Operating expenses
Selling expenses
Administration expenses
Research and development expenses
Depreciation and amortization expense
Other operating expenses
Total operating expenses
Operating income
Net interest expense (income)
Gains (losses) on sales of PP&E
Income before income taxes
Income tax expense (benefit)
Net income (loss)
Year 5
Year 4
Year 3
Year 2
Year 1
328,000 315,000 290,000 275,000 250,000
49,800
46,000
38,000
32,000
26,000
278,200 269,000 252,000 243,000 224,000
146,000 139,500 133,000 125,000 115,000
132,200 129,500 119,000 118,000 109,000
32,100
27,400
19,700
19,200
13,400
111,800
20,400
2,400
9,000
27,000
6,750
20,250
28,800
23,200
7,200
19,400
13,650
92,250
37,250
2,650
1,200
35,800
8,950
26,850
29,400
24,200
18,200
17,500
7,600
96,900
22,100
2,800
19,300
4,825
14,475
26,200
23,700
17,000
16,100
6,400
89,400
28,600
3,200
(1,500)
23,900
5,975
17,925
26,000
22,000
16,000
15,000
6,000
85,000
24,000
3,500
2,100
22,600
5,650
16,950