ACC321 Term Project: Part 4 - Ratio Analysis

Compute the following ratios from the Financial Statements provided:

GAAP IFRS

a. Current 1.89

b. Quick 1.13

c. Debt to Assets

d. Return on Assets 30.0%

e. Return on Equity 66.0%

f.Profit Margin 10.0%

g.Gross Margin

h. Asset Turnover 3.02

Required:Discuss why the financial statements and ratios differ under the two standards of accounting.

Best Value Hardware Best Value Hardware

U.S. GAAP Balance Sheet IFRS Balance Sheet

12/31/2016 12/31/2016

Assets Assets

Current Assets Noncurrent Assets

Cash and Cash Equivalents 925,690 Total Noncurrent Assets 5,724,393

Inventories (LIFO) 1,821,300

Prepaid Expenses and Other Current Assets 34,667 Current Assets

Accounts Receivable 1,850,000 Inventories (FIFO) 1,976,250

Total Current Assets 4,631,657 Prepaid Expenses and Other Current Assets 34,667

Cash and Cash Equivalents 925,960

Total Property, Net 4,320,545 Accounts Receivable 1,850,000

Other Assets 356,193 Total Current Assets 4,786,877

Total Assets 10,511,270

Total Assets 9,308,395

Liabilities and Stockholders' Equity

Liabilities and Stockholders' Equity Total Stockholders' Equity 5,513,050

Current Liabilities 2,448,920 Liabilities

Noncurrent Liabilities 2,449,300

Noncurrent Liabilities 2,399,300 Current Liabilities 2,448,920

Total Liabilities 4,848,220 Total Liabilities 4,998,220

Stockholders' Equity 4,460,175 Total Liabilities and Stockholders' Equity 10,511,270

Total Liabilities and Stockholders' Equity 9,308,395

Best Value Hardware Best Value Hardware

U.S. GAAP STATEMENT OF INCOME IFRS STATEMENT OF INCOME

FOR THE YEAR ENDED 12/31/16 FOR THE YEAR ENDED 12/31/16

Sales and other revenue 28,104,000 Sales and other revenue 28,104,000

Cost of goods sold -17589200 Cost of goods sold (17,000,000)

Gross profit on sales 10,514,800 Gross profit on sales 11,104,000

Operating and administrative expenses: Operating and administrative expenses:

Insurance 404,833 Insurance 404,833

Property tax 505,000 Property tax 505,000

Depreciation 247,455 Depreciation 240,435

Other Operating expenses 5,876,510 Other Operating expenses 5,876,510

Total operating and administrative expenses 7,033,798 Total operating and administrative expenses 7,026,778

Operating profit 3,481,002 Operating profit 4,077,222

Other income (expense): (299,000) Other income (expense): 608,850

Income before income taxes 3,481,002 Income before income taxes 4,686,072

Income taxes (539,300) Income taxes (539,300)

Net income (loss) 2,941,702 Net income (loss) 4,146,772