Cash Flow Statement Less: Increase in Current Assets and 10 Decrease in Current Liabilities Cash from Investing Activities \begin{tabular}{l|l} 22 & \\ 23 & Purchase of fixed assets (cash outflow) \\ 24 & \\ 25 & Net Cash outflow from Investing \\ 26 & \\ 27 & Cash from Financing Activities \\ \hline 28 & \end{tabular} Balance Sheet \begin{tabular}{|l|l|l|} \hline 1 & \multicolumn{1}{|l|}{ A } \\ \hline 2 & & \\ \hline 3 & & \\ \hline 4 & Current Ratio & Current Assets / Current Liabilities \\ \hline 5 & Acid Test Ratio (Quick Ratio) & cash + marketable securities + accounts receivable/ current liabilities \\ \hline 6 & Accounts Receivable Turnover Rate & Net Credit Sales / Average accounts receivable \\ \hline 7 & Receivable Days & 360 Days / Accounts Receivable turnover ratio \\ \hline 8 & Inventory turnover Ratio & Cost of Goods Sold/ Inventory \\ \hline 9 & Debt to Equity Ratio & Total Liabilities / Total Shareholder's Equity \\ \hline \end{tabular} Franklin Manufacturing Company: Analysis of Financial Statements Franklin Manufacturing Company is a medium sized corporation and is looking for additional funding from a financial institution in order to expand its business. The Senior Financial VP of the business has requested his accountant to conduct an analysis of the company based on financial statements in order to understand reasons for a possible loan rejection or an approval as well as an overall review of other potential steps to be taken in order to increase revenue. Case Objectives: You will calculate a series of financial ratios and perform basic financial statement analysis. Assignment Requirements: 1. Analyze the Cash Flow Statement 2. Analyze the Balance Sheet 3. Compute the following ratios: Current Ratio Acid Test Ratio Accounts Receivable Turnover Rate Receivable Days Inventory turnover Ratio Debt to Equity Ratio 4. Based on the above results, would you as a loan officer of the bank grant the loan request? You will also need to compare with the industry averages. Include reasonings as to why you would/would not grant the loan. The rationale will be from the ratio findings as well as the financial data. 5. What areas of improvement would you suggest to Senior VP of the business? This is where you will put on your accountant hat and include suggestions based on prior classes and your knowledge of accounting. Cash Flow Statement Less: Increase in Current Assets and 10 Decrease in Current Liabilities Cash from Investing Activities \begin{tabular}{l|l} 22 & \\ 23 & Purchase of fixed assets (cash outflow) \\ 24 & \\ 25 & Net Cash outflow from Investing \\ 26 & \\ 27 & Cash from Financing Activities \\ \hline 28 & \end{tabular} Balance Sheet \begin{tabular}{|l|l|l|} \hline 1 & \multicolumn{1}{|l|}{ A } \\ \hline 2 & & \\ \hline 3 & & \\ \hline 4 & Current Ratio & Current Assets / Current Liabilities \\ \hline 5 & Acid Test Ratio (Quick Ratio) & cash + marketable securities + accounts receivable/ current liabilities \\ \hline 6 & Accounts Receivable Turnover Rate & Net Credit Sales / Average accounts receivable \\ \hline 7 & Receivable Days & 360 Days / Accounts Receivable turnover ratio \\ \hline 8 & Inventory turnover Ratio & Cost of Goods Sold/ Inventory \\ \hline 9 & Debt to Equity Ratio & Total Liabilities / Total Shareholder's Equity \\ \hline \end{tabular} Franklin Manufacturing Company: Analysis of Financial Statements Franklin Manufacturing Company is a medium sized corporation and is looking for additional funding from a financial institution in order to expand its business. The Senior Financial VP of the business has requested his accountant to conduct an analysis of the company based on financial statements in order to understand reasons for a possible loan rejection or an approval as well as an overall review of other potential steps to be taken in order to increase revenue. Case Objectives: You will calculate a series of financial ratios and perform basic financial statement analysis. Assignment Requirements: 1. Analyze the Cash Flow Statement 2. Analyze the Balance Sheet 3. Compute the following ratios: Current Ratio Acid Test Ratio Accounts Receivable Turnover Rate Receivable Days Inventory turnover Ratio Debt to Equity Ratio 4. Based on the above results, would you as a loan officer of the bank grant the loan request? You will also need to compare with the industry averages. Include reasonings as to why you would/would not grant the loan. The rationale will be from the ratio findings as well as the financial data. 5. What areas of improvement would you suggest to Senior VP of the business? This is where you will put on your accountant hat and include suggestions based on prior classes and your knowledge of accounting