Assignment 1. Review below Financial Statements in light of the Business Context provided and present the most relevant insights to Senior Management You are a Senior Financial Analyst of Company A. Every month, after the accounting close, you have to present the financial performance of Company A to Senior Management You pull all of the required information from the ERP system already on an Income Statement format. You only have to create the formulas and provide your insights into the financial performance for that particular month and year-to-date. In this particular month, the Income Statements were prepared by one of your colleagues and your task is to review the report and provide the insights Company A Business Context Company A sells software to its customers on a recurring subscription model. The software is considered to be an easy 'off-the-shelf product with little to no implementation or initial set up needed. The other revenue is comprised mostly by IT consulting services provided to existing customers with Company A's own personnel. The industry greatly values the company's ability to retain its customers year over year and show steady growth of recurring revenues. Review this simplified financial statement prpared by your colleague for the most recently closed fiscal period of June and complete the tasks at the bottom of the page. You can assume there are no errors with budget, prior year or actual data. They were all extracted from the ERP system. June Budget % Year to Date Budget % Actual % Prior Year % Actual % Prior Year % in thousands USD Revenue $75.000 82.6% S95,000 88.4% S546,000 85.2% Recurring Revenue Other Revenue $99,750 88.4% $ $15,750 13.6% $ $520,000 85.2% S90,000 14.8% S480,000 78296 S150,000 23.896 S630,000 100.0% $15,750 17.4% $90.750 100.0% $94,500 14.8% $15,000 13.6% $110.000 100.0% S640,500 100.0% $610.000 100.0% S115,500 100.0% -21.4% Actual Over/(Under) % 5.0% -1.896 3.3% Cost of Good Sold $37.538 32.5% S247,500 272.7% S208,163 32.5% $198.000 32.5% Labor Bad Debt Expenses Depreciation & Amortization $42.900 47.3% $10.000 11.0% S5,000 5.5% 1.79 $2.000 $5,000 S35,750 32.5% $2,000 1.8% $5,000 4.5% S67,250 61.1% 4.39% $20,000 22.0% $30,000 33.196 S332,500 366.4% 52.8% $12,000 1.9% $30,000 4.7% S390,337 60.9% $12,000 2.0% $30,000 4.99% $370,000 60.7% $32.850 36.29 $70.963 61.4% Gross Margin GM% 36.2% 61.4% 81.196 80.9% 60.7% Overhead 17.39% $20.000 18.2% $120,000 19.0% $120.000 19.796 Salary & Commission Legal - litigation reserve Other $20.000 22.0% S3.000 3.39% S5.000 5.59 $20,000 $3,000 $5,000 2.6% 2.9% $3,000 2.7% $5,000 4.5% $18,000 $30,000 $120,000 18.7% $18,000 2.8% $30,000 4.7% S18,000 S30,000 3.096 4 99% 4.39% 4.8% Overhead 19.0% Salary & Commission Legal - litigation reserve Other $20.000 22.0% S3,000 3.396 $5,000 5.59% $20.000 17.3% $3,000 2.6% $120,000 18.7% $18,000 2.8% 2.9% $20,000 18.2% $3,000 2.796 5,000 4.5% $500 0.5% S120,000 $18,000 $30,000 $3,000 $5,000 4.396 4.8% S30,000 4.7% S500 0.896 S500 0.4% 0.5% $3,000 0.5% $120,000 19.7% $18,000 3.09 $30,000 4.99 $3,000 0.596 $199,000 32.6% S69.650 11.4% $129,350 21.296 21.296 $4,350 4.896 Interests Net Income Before Tax Tax Net income after Tax Net Income after tax % $42,463 38.8% S38,750 35.2% $13.563 12.3% 25.696 9.09 $1.523 1.79% S161,500 S56,525 S104,975 $14,862 12.9% $219,337 34.2% $76,768 12.0% S142,569 22.3% 22.3% S2.828 3.196 $27.601 23.9% 16.796 S25,188 22.9% 22.996 22.9% 23.9% 16.7% 1 Find 6 calculation errors in the statement. Highlight the cells with errors in yellow and fix the errors. Provide key financial analysis insights for Senior Management in the following areas: 2 Is the overall financial performance of Company A improving or deteriorating so far this year? How do you know? 3 What is the main driver behind Company A's expense performance? 4 How is revenue mix tied to expense performance? 5 What are the top 3 deep dives you 1. Deep dive into why recommend conducting? 2. Deep dive into why ... 3. Deep dive into why Assignment 1. Review below Financial Statements in light of the Business Context provided and present the most relevant insights to Senior Management You are a Senior Financial Analyst of Company A. Every month, after the accounting close, you have to present the financial performance of Company A to Senior Management You pull all of the required information from the ERP system already on an Income Statement format. You only have to create the formulas and provide your insights into the financial performance for that particular month and year-to-date. In this particular month, the Income Statements were prepared by one of your colleagues and your task is to review the report and provide the insights Company A Business Context Company A sells software to its customers on a recurring subscription model. The software is considered to be an easy 'off-the-shelf product with little to no implementation or initial set up needed. The other revenue is comprised mostly by IT consulting services provided to existing customers with Company A's own personnel. The industry greatly values the company's ability to retain its customers year over year and show steady growth of recurring revenues. Review this simplified financial statement prpared by your colleague for the most recently closed fiscal period of June and complete the tasks at the bottom of the page. You can assume there are no errors with budget, prior year or actual data. They were all extracted from the ERP system. June Budget % Year to Date Budget % Actual % Prior Year % Actual % Prior Year % in thousands USD Revenue $75.000 82.6% S95,000 88.4% S546,000 85.2% Recurring Revenue Other Revenue $99,750 88.4% $ $15,750 13.6% $ $520,000 85.2% S90,000 14.8% S480,000 78296 S150,000 23.896 S630,000 100.0% $15,750 17.4% $90.750 100.0% $94,500 14.8% $15,000 13.6% $110.000 100.0% S640,500 100.0% $610.000 100.0% S115,500 100.0% -21.4% Actual Over/(Under) % 5.0% -1.896 3.3% Cost of Good Sold $37.538 32.5% S247,500 272.7% S208,163 32.5% $198.000 32.5% Labor Bad Debt Expenses Depreciation & Amortization $42.900 47.3% $10.000 11.0% S5,000 5.5% 1.79 $2.000 $5,000 S35,750 32.5% $2,000 1.8% $5,000 4.5% S67,250 61.1% 4.39% $20,000 22.0% $30,000 33.196 S332,500 366.4% 52.8% $12,000 1.9% $30,000 4.7% S390,337 60.9% $12,000 2.0% $30,000 4.99% $370,000 60.7% $32.850 36.29 $70.963 61.4% Gross Margin GM% 36.2% 61.4% 81.196 80.9% 60.7% Overhead 17.39% $20.000 18.2% $120,000 19.0% $120.000 19.796 Salary & Commission Legal - litigation reserve Other $20.000 22.0% S3.000 3.39% S5.000 5.59 $20,000 $3,000 $5,000 2.6% 2.9% $3,000 2.7% $5,000 4.5% $18,000 $30,000 $120,000 18.7% $18,000 2.8% $30,000 4.7% S18,000 S30,000 3.096 4 99% 4.39% 4.8% Overhead 19.0% Salary & Commission Legal - litigation reserve Other $20.000 22.0% S3,000 3.396 $5,000 5.59% $20.000 17.3% $3,000 2.6% $120,000 18.7% $18,000 2.8% 2.9% $20,000 18.2% $3,000 2.796 5,000 4.5% $500 0.5% S120,000 $18,000 $30,000 $3,000 $5,000 4.396 4.8% S30,000 4.7% S500 0.896 S500 0.4% 0.5% $3,000 0.5% $120,000 19.7% $18,000 3.09 $30,000 4.99 $3,000 0.596 $199,000 32.6% S69.650 11.4% $129,350 21.296 21.296 $4,350 4.896 Interests Net Income Before Tax Tax Net income after Tax Net Income after tax % $42,463 38.8% S38,750 35.2% $13.563 12.3% 25.696 9.09 $1.523 1.79% S161,500 S56,525 S104,975 $14,862 12.9% $219,337 34.2% $76,768 12.0% S142,569 22.3% 22.3% S2.828 3.196 $27.601 23.9% 16.796 S25,188 22.9% 22.996 22.9% 23.9% 16.7% 1 Find 6 calculation errors in the statement. Highlight the cells with errors in yellow and fix the errors. Provide key financial analysis insights for Senior Management in the following areas: 2 Is the overall financial performance of Company A improving or deteriorating so far this year? How do you know? 3 What is the main driver behind Company A's expense performance? 4 How is revenue mix tied to expense performance? 5 What are the top 3 deep dives you 1. Deep dive into why recommend conducting? 2. Deep dive into why ... 3. Deep dive into why