For this 6?8 page Final Project (Not including the title page, abstract if included or reference page),you will create 1) the Financial Highlights, 2) the Presidents Letter to the Stockholders, and 3) the Management Discussion and Analysis reports that would be contained in a company?s annual report to the shareholders.

This sheet provides the answers to the PRACTICE Problem based on the Rainbow Paint Company Data The sheet titled "Detail Computations" gives the specific ratio computations. Ratio 1 Working capital 2 Current ratio 3 Quick ratio 4 Accounts receivable turnover 5 Number of days' sales in receivables 6 Inventory turnover 7 Number of days' sales in inventory 8 Ratio of fixed assets to long-term liabilities 9 Ratio of liabilities to stockholders' equity 10 Number of times interest charges earned 11 Number of times preferred dividends earned 12 Ratio of net sales to assets 13 Rate earned on total assets 14 Rate earned on stockholders' equity 15 Rate earned on common stockholders' equity 16 Earnings per share on common stock 17 Price-earnings ratio 18 Dividends per share of common stock 19 Dividend yield Solution $750,000.00 2 1 13.33 Times 27.38 Days 5.67 64.41 Days 1.73 1.04 6.19 Times 6.13 Times 1.43 6.98% 13.59% 3.93% $4.10 6.1 $0.90 3.60% Rainbow Paint Co. Comparative Income Statement For the Years Ended December 31, 2013 and 2012 Rainbow Paint Co.'s comparative financial statements for the years ending December 31, 2013 and 2012 are as follows. The market price of Rainbow Paint Co.'s common stock was $30 on December 31, 1999 and $25 on December 31, 2013. 2013 2012 Sales $5,125,000 $3,257,600 Sales returns and allowances 125,000 57,600 Net sales $5,000,000 $3,200,000 Cost of goods sold 3,400,000 2,080,000 Gross profit $1,600,000 $1,120,000 Selling expenses $650,000 $464,000 Administrative expenses 325,000 224,000 Total operating expenses $975,000 $688,000 Income from operations $625,000 $432,000 Other income 25,000 19,200 $650,000 $451,200 Other expense (interest) 105,000 64,000 Income before income tax $545,000 $387,200 Income tax expense 300,000 176,000 Net income $245,000 $211,200 Rainbow Paint Co. Comparative Retained Earnings Statement For the Years Ended December 31, 2013 and 2012 Retained earnings, January 1 Add net income for year Total Deduct dividends: On preferred stock On common stock Total Retained earnings, December 31 2013 $723,000 245,000 $968,000 2012 $581,800 211,200 $793,000 $40,000 45,000 $85,000 $883,000 $40,000 30,000 $70,000 $723,000 Instructions Determine the following measures for 2013: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders' equity 10.Number of times interest charges earned 11.Number of times preferred dividends earned 12.Ratio of net sales to assets 13.Rate earned on total assets 14.Rate earned on stockholders' equity 15.Rate earned on common stockholders' equity 16. Earnings per share on common stock 17. Price-earnings ratio 18. Dividends per share of common stock 19. Dividend yield This column contains the CORRECTED ratios. Formulas in cells. Refigured Formulas $ $ $ 750,000.00 current assets - current liabilities 2.00 current assets/current liabilities 1.00 cash + short term investments +AR / current liabilities 13.33 net sales/average gross receivables 27.38 Gross receivables/(annual net sales /365) 27.375 Cost of Goods Sold/Average inventory 5.67 64.41 (Ending inventory / cost of goods sold) X 365 64.41176 1.73 fixed assets/ long term liabilities 1.04 liabilities/stockholders equity 6.19 Income before taxes and interest charges /interest charges 6.13 Net income available to Preferred Stockholders/annual Preferred Dividends Requirement 1.43 net sales/average total assets 6.98% net income/average total assets 0.163333 13.59% net income/ average stockholders equity 3.93% net income less preferred dividends (common stock) / average common stockholders equit 4.10 net income less preferred dividends (common stock)/ Shares of common stock 6.10 market price per share of common stock/ earnings per share of common stock 0.90 dividends on common stock /# of shares of common stock 3.60% dividends per share of common stock/ market price per share of common stock 5000 # shares of preferred stock 50000 # of common stock shares Rainbow Paint Co. Comparative Balance Sheet December 31, 2013 and 2012 0.32 required return on the stock Assets Current assets: Cash Marketable securities Accounts receivable (net) Inventories Prepaid expenses Total current assets Long-term investments Property, plant, and equipment (net) 2013 2012 $175,000 150,000 425,000 720,000 30,000 $1,500,000 250,000 2,093,000 $125,000 50,000 325,000 480,000 20,000 $1,000,000 225,000 1,948,000 Total assets Liabilities Current liabilities Long-term liabilities: Mortgage note payable, 10%, due 2009 $3,843,000 $3,173,000 $750,000 $650,000 Bonds payable, 8%, due 2012 Total long-term liabilities Total liabilities Stockholders' Equity Preferred 8% stock, $100 par Common stock, $10 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 800,000 $1,210,000 $1,960,000 $800,000 $800,000 $1,450,000 $500,000 500,000 883,000 $1,883,000 $3,843,000 $500,000 500,000 723,000 $1,723,000 $3,173,000 50000 50000 Shares of Common Stock eps market value/common share $410,000 - 205000.00 0.04 ty Unit 4 [AC499: Bachelor's Capstone in Accounting] Unit 4 Practice Activity: Financial Report Analysis - Rainbow Paint Co. Note: This is a practice activity to be performed before completing the Assignment for this unit. Also, this is the data to be used as the basis for your Unit 9 Final Project. The solutions for the Unit 4 Practice activity are located here. Rainbow Paint Co.'s comparative financial statements for the years ending December 31, 2013 and 2012 are as follows. The market price of Rainbow Paint Co.'s common stock was $30 on December 31, 1999 and $25 on December 31, 2013. Rainbow Paint Co. Comparative Income Statement For the Years Ended December 31, 2013 and 2012 Sales Sales returns and allowances Net sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Income from operations Other income Income before Interest & Taxes 650,000 Other expense (interest) Income before income tax Income tax expense Net income 2013 $ 5,125,000 125,000 $ 5,000,000 3,400,000 $ 1,600,000 650,000 325,000 $ 975,000 $ 625,000 25,000 $ 105,000 545,000 300,000 $ 245,000 ======== $ Rainbow Paint Co. Comparative Retained Earnings Statement For the Years Ended December 31, 2013 and 2012 2013 Retained earnings, January 1 $ 723,000 Add net income for year 245,000 Total $ 968,000 Deduct dividends: $ 40,000 On preferred stock 45,000 On common stock $ 85,000 Total Retained earnings, December 31 $ 883,000 ======== 2012 $ 3,257,600 57,600 $ 3,200,000 2,080,000 $ 1,120,000 464,000 224,000 $ 688,000 $ 432,000 19,200 $ 451,200 64,000 387,200 176,000 $ 211,200 ======== $ $ $ $ 2012 581,800 211,200 793,000 40,000 30,000 $ 70,000 $ 723,000 ======== Unit 4 [AC499: Bachelor's Capstone in Accounting] Rainbow Paint C0, Comparative Balance Sheet December 31, 2013 and 2012 Assets Current assets: Cash Marketable securities Accounts receivable (net) Inventories Prepaid expenses Total current assets Long-term investments Property, plant, and equipment (net) Total assets Liabilities Current liabilities Long-term liabilities: Mortgage note payable, 10%, due 2016 Bonds payable, 8%, due 2017 Total long-term liabilities Total liabilities Stockholders' Equity Preferred 8% stock, $100 par Common stock, $10 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 2013 $ 175,000 150,000 425,000 720,000 30,000 $ 1,500,000 250,000 2,093,000 $ 3,843,000 ======== $ $ 750,000 $ $ 410,000 800,000 $ 1,210,000 $ 1,960,000 $ 500,000 500,000 883,000 $ 1,883,000 $ 3,843,000 ======== Instructions: Determine the following measures for 2013: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 2012 125,000 50,000 325,000 480,000 20,000 $ 1,000,000 225,000 1,948,000 $ 3,173,000 ======== 650,000 $ 800,000 $ 800,000 $ 1,450,000 $ 500,000 500,000 723,000 $ 1,723,000 $ 3,173,000 ========= Unit 4 [AC499: Bachelor's Capstone in Accounting] 9. Ratio of liabilities to stockholders' equity 10. Number of times interest charges earned 11. Number of times preferred dividends earned 12. Ratio of net sales to assets 13. Rate earned on total assets 14. Rate earned on stockholders' equity 15. Rate earned on common stockholders' equity 16. Earnings per share on common stock 17. Price-earnings ratio 18. Dividends per share of common stock 19. Dividend yield [AC499: Bachelor's Capstone in Accounting] Unit 9 Final Project: Preparing Annual Report Documents For this 6-8 page Final Project (Not including the title page, abstract if included or reference page), you will create 1) the Financial Highlights, 2) the Presidents Letter to the Stockholders, and 3) the Management Discussion and Analysis reports that would be contained in a company's annual report to the shareholders. Note: During Units 2, 3, and 4 you developed data for \"Quixote Company.\" But in Unit 4, you also had a Practice Assignment based on the \"Rainbow Paint Company.\" The Final Project will be based on the Rainbow Paint Company Financial Statements and the ratios that you compute as practice. The Quixote Company has a limited amount of data; therefore, the Rainbow Paint Company data will offer an opportunity to create a more robust Annual Report to the Shareholders. Companies normally issue these reports to the stockholders and other interested parties. These reports summarize the company's operating activities for the past year and plans for the future. There are many variations in the order and form for presenting the major sections of the annual report. You should conduct independent research to find a variety of corporate annual reports to use as guides in the preparation of your Unit 9 Project. Each week you will be addressing a different aspect of accounting and the business planning process. In the Final Project, you will use information gained from the weekly Assignments, the \"Rainbow Paint Company\" Review/Practice data, along with information obtained through research. These reports will be completed in Microsoft W ord; a title page is required, but a running head is not necessary. An abstract is also not required. However, references will be required therefore, it is important that you use a proper title page and correct reference list formatting. See the APA Template uploaded in Doc Sharing for examples of a properly formatted title page and reference list. The KU W riting Center is also a great resource for help with all writing issues. In addition, the KU Business Center offers live tutoring and specific assignment guidance. W hen you review the examples of corporate annual reports that you select during your independent research, you will see that they can be very long and very complex. However, your Assignment is limited to only 6-8 pages (not including the title page and reference list). Therefore, you should focus on the three aspects required for the Final Project. You are expected to use creativity and ingenuity in developing your Final Project. As you will see in the example annual reports you find in your independent research efforts, there is no one perfect way to prepare corporate annual reports. However, the following information may help you as you complete your Unit 9 Project. [AC499: Bachelor's Capstone in Accounting] Assignment checklist Financial Highlights Presidents Letter to the Stockholders Management Discussion and Analysis Here are some of the basic criteria that will be used to assess your Final Project: - Project successfully presents every item in the Assignment checklist in every aspect. The Project correctly uses the Rainbow Company Data. The Project exhibits strong higher-order critical thinking and analysis. Sentences are clear, concise, and direct; tone is appropriate. Grammatical skills are strong with almost no errors. Correct use of APA format where appropriate. Unit 9 Final Project Assignment Grading Rubric: Project Grading Criteria Grade Excellent Effort Content, Focus, 29 - 33 Points Use of Possible Text/Research Your Content Score =___ Response successfully answers the assignment question(s) in every aspect. Acceptable Effort Unacceptable Effort 23 - 28 Points Possible 0 -22 Points Possible Response answers the assignment question(s) with only minor digressions. Uses Correct Rainbow Used Correct Rainbow Data Data. Response insufficiently answers the assignment question(s); insufficiently uses the text and other literature. Used wrong data. Analysis & 18 - 20 Points Critical Thinking Possible 14 - 17 Points Possible 0 - 13 Points Possible Response exhibits strong higher-order Your Analysis critical thinking and Score =___ analysis (e.g., evaluation). Response generally exhibits higher-order critical thinking and analysis (e.g. true analysis). Response exhibits simplistic or reductive thinking and analysis and demonstrates limited knowledge on the subject matter. 8 - 10 Points Possible 0 - 7 Points Possible Writing Style, Grammar, Spelling & 11 - 12 Points Possible [AC499: Bachelor's Capstone in Accounting] Format Your Writing Score =___ Sentences are clear, concise, and direct; tone is appropriate. Grammatical skills are strong with almost no errors. Correct use of APA format where appropriate. Additional Comments as Needed Less____ Deductions, Late penalty, other. Total Project Your Total Score Score =___/65_ Sentences are occasionally wordy or ambiguous; tone is too informal. Grammatical skills are adequate with few errors. Adequate use of APA format where appropriate. Sentences unclear, meaning impaired; tone inappropriate and/or inconsistent. Grammatical skills are inadequate for college level. Unacceptable use of APA format