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ACCT220 - Financial Analysis Portfolio Project Directions & Rubric This Assessment is worth 20% of your overall grade Students will be able to meet the following outcomes: Course Outcomes Appraise financial statements to determine the financial strengths and weaknesses of a business using ratio analysis and present recommendations to peers. Construct and apply Pro Forma statements and other budgets to plan and forecast using appropriate software. Prepare and interpret the cash flow statement relative to the decision-making process. Program Outcomes Interpret and apply generally accepted accounting principles (GAAP)to analyze, record, and report financial information. Develop accounting reports for internal and external users. Analyze and interpret financial statement information to assist users in the management decision-making process. Select and utilize appropriate technology to complete accounting functions. Differentiate between ethical and unethical decisions. Institutional Outcomes Relational Learning - Transfer knowledge, skills and behaviors acquired through formal and informal learning and life experiences to new situations. Thinking Abilities - Employ strategies for reflection on learning and practice to adjust learning processes for continual improvement. Quantitative and Scientific Reasoning - Follow established methods of inquiry and mathematical reasoning to form conclusions and make decisions. Community and Career - Participate in social, academic, and professional communities for individual growth and to function as a citizen of a multicultural world. Deadline Deliverable items for the Portfolio Project are due throughout the course. The table below lists due dates and briefly describes what work is required. However, to fully understand the work that is required each week, carefully read the detailed directions in each week's Activities folders. Assignment Overview & Deadlines Deadline Activity Grading Due by the end of Week 4 at 11:59 pm, ET. Part 1 - Construct Comparative Multistep Income Statements and Classified Balance Sheets for 2010 and 2011. Then take these statements and use them to create a Statement of Cash Flows for 2011. 100 Points Due by the end of Week 5 at 11:59 pm, ET. Part 2 - Complete 5 Ratio Analyses and interpret your results. Then communicate them in a report to management. Describe the strengths and weaknesses of the company based on your evaluation of the financial statements and ratios. 100 Points Due by the end of Week 6 at 11:59 pm, ET. Due by the end of Week 7.5 at 11:59 pm, ET. Part 3 - Construct a Pro Forma Income statement. Part 3- 60 Points Part 4 - Reflect on what you have learned from the project. Part 4- 40 Points Please upload your Portfolio Project to your ePortfolio. You need to download and print out the following items to get started: ITEM o o o A Supplement This spreadsheet will give you the account balances for Week 4 The Ratios to calculate in Week 5 The management assumptions to use to complete the Pro Forma income statement in Week 6. Directions Scenario: You have been hired as a financial analyst at Morgan Corporation. Your responsibilities are to assist in the construction and interpretation of the financial statements and communicate on the overall results of the company. You will be reporting to the senior management team of Morgan. During your first few weeks with the company, you have heard about big plans for a new product line. In the past, Morgan has always sold sporting goods and equipment. However, management wants to begin selling clothing and other apparel items starting this year. Morgan is expecting you to accomplish three specific items in the near future: 1. Create comparative financial statements for 2010 and 2011. 2. Perform select ratio analysis on these financial statements. 3. Take assumptions from management for this new clothing line and construct a Pro Forma Income Statement for 2012. Basically, you want to give management an idea of what the company could look like after 2012 from a sales and profit perspective if their assumptions prove correct. Remember that pro forma statements forecast the future. 4. You are encouraged to be creative. However, be sure to follow good financial statement format. Refer to your textbook for samples for using proper formats to create financial statements. Deliverable Descriptions: These three expectations from management are the foundation of your Portfolio Project. You will submit these in three separate submissions. You will receive feedback and corrections after each week. Part 1: Construct Comparative Multistep Income Statements and Balance Sheets (Due Week 4) You will take various account balance information from Morgan for the past 2 years, interpret the accounts, and then construct Comparative Multistep Income Statements and Classified Balance Sheets for 2010 and 2011. You will then take these statements and use them to create a Statement of Cash Flows for 2011. This should be handed in as an excel spreadsheet(s). See attached Rubric for grading criteria Part 2: Five Ratios and Interpret your results (Due in Week 5) You will take the completed financial statements from Week 4 and perform ratio analyses on Profit Margin, Current Ratio, Receivables Turnover, Inventory Turnover, and Return on Assets. After completing the 5 ratios interpret your results and communicate them in a report to management. Describe the strengths and weaknesses of the company based on your evaluation of the financial statements and ratios. By the end of Week 5, you will have a good understanding of the overall finances and trends of this company over the past 2 years. The report should be a word document. The ratio analysis may be done and handed in as an excel spreadsheet. See attached Rubric for grading criteria Part 3: Create a Pro Forma Income Statement (Due in Week 6) Using the 2011 Income Statement you completed, take the current year 2012 assumptions from management to construct a Pro Forma Income Statement in Excel. o Your goal here is to show management what the Income Statement for 2012 will look like based on these assumptions. After completing your Pro Forma Income Statement, you will compose a final report to management in Word. Discuss the anticipated results of the company in 2012. See attached Rubric for grading criteria. Part 4: Reflection (Due in Week 6) Reflecting on this process develop and attach a reflection with a minimum of 300 words explaining what you learned from completing this project the past few weeks. Assess whether financial statements and ratios are easier to understand because of this assignment See attached Rubric for grading criteria. In Week 7.5, you will upload your Portfolio Project to your ePortfolio. ACCT220 - Portfolio Project Rubric (Week 4 - Comparative Multistep Income Statements and Balance Sheets) Criteria Exceeds Expectations Meets Expectations Needs Improvement 2010 20-18 Points 17-14 Points 13-0 Points Student submits 2010 Balance Sheet with all correct accounts and balances. Assets equal Liabilities and Equity. Statement follows proper format and is neat. Student submits 2010 Balance Sheet with 1-5 incorrect accounts or balances. Assets equal Liabilities and Equity. Statement follows some proper format and is neat. 20-18 Points 17-14 Points Student submits 2011 Balance Sheet with all correct accounts and balances. Assets equal Liabilities and Equity. Statement follows proper format and is neat. Student submits 2011 Balance Sheet with 1-5 incorrect accounts or balances. Assets equal Liabilities and Equity. Statement follows some proper format and is neat. 2010 15-14 Points 13-11 Points Income Stateme nt 15 pts. Student submits 2010 Income Statement with all correct accounts and balances. Statement arrives at proper Net Income. Statement follows proper format and is neat. Student submits 2010 Income Statement with 1-5 incorrect accounts or balances. Statement does not arrive at proper Net Income. Statement follows some proper format and is neat. 2011 15-14 Points 13-11 Points Income Stateme nt 15 pts. Student submits 2011 Income Statement with all correct accounts and balances. Statement arrives at proper Net Income. Statement follows proper format and is neat. Student submits 2011 Income Statement with 1-5 incorrect accounts or balances. Statement does not arrive at proper Net Income. Statement follows some proper format and is neat. 2011 30-27 Points 26-21 Points Stateme nt of Cash Flows Student submits 2011 Statement of Cash Flows with all correct accounts and balances. Statement arrives at proper increase or decrease in cash flow. Statement contains three sections (Operations, Investing, and Financing), and follows proper Student submits 2011 Statement of Cash Flows with 1-5 incorrect entries for accounts and balances. Statement does not arrives at proper increase or decrease in cash flow. Statement contains three sections (Operations, Investing, and Financing), and follows some proper format and is neat. Balance Sheet 20 pts. 2011 Balance Sheet 20 pts. 30 pts. Student does not submit a 2010 Balance Sheet, or is submitted with multiple errors, out of balance, and does not follow good format. 13-0 Points Student does not submit a 2011 Balance Sheet, or is submitted with multiple errors, out of balance, and does not follow good format. 10-0 Points Student does not submit a 2010 Income Statement, or is submitted with multiple errors, arrives at incorrect Net Income, and does not follow good format. 10-0 Points Student does not submit a 2011 Income Statement, or is submitted with multiple errors, arrives at incorrect Net Income, and does not follow good format. 20-0 Points Student submits 2011 Statement of Cash Flows with multiple incorrect entries for accounts and balances. Statement does not arrives at proper increase or decrease in cash flow. Statement does not contain three sections (Operations, Investing, and Financing). Does not follow proper Earned Points format and is neat. Instructor Comments: format. ACCT220 - Portfolio Project Rubric (Week 5 - Five Ratio Interpretation and Word Report) Criteria Profit Margin Ratio 2010 & 2011 16 pts. Current Ratio 2010 & 2011 16 pts. Receivables Turnover 2010 & 2011 16 pts. Inventory Turnover 2010 & 2011 16 pts. Return on Assets 2010 & 2011 16 pts. 300 + Word Report on Financial Statements and Ratios Proper Issues Identified Exceeds Expectations Needs Improvement 16-15 Points Student uses correct components (numbers) in calculations. Ratios calculated properly. 14-12 Points Student uses (1-2) incorrect component in calculating Ratios, or does not calculate formulas correctly. 11-0 Points Student does not submit, or uses incorrect components, and does not calculate formulas correctly. 16-15 Points Student uses correct components (numbers) in calculations. Ratios calculated properly. 16-15 Points Student uses correct components (numbers) in calculations. Turnover calculated properly. 14-12 Points Student uses (1-2) incorrect component in calculating Ratios, or does not calculate formulas correctly. 14-12 Points Student uses (1-2) incorrect component in calculating Turnover, or does not calculate formulas correctly. 11-0 Points Student does not submit, or uses incorrect components, and does not calculate formulas correctly. 16-15 Points Student uses correct components (numbers) in calculations. Turnover calculated properly. 14-12 Points Student uses (1-2) incorrect component in calculating Turnover or does not calculate formulas correctly. 11-0 Points Student does not submit, or uses incorrect components, and does not calculate Turnover correctly. 16-15 Points Student uses correct components (numbers) in calculations. Return calculated properly. 14-12 Points Student uses (1-2) incorrect component in calculating Return or does not calculate formulas correctly. 11-0 Points Student does not submit, or uses incorrect components, and does not calculate Return correctly. 15-14 Points Student successfully describes trend of financial statements, and shows understanding of what each of the 5 Ratios are indicating about the financial statements. Word count 300+. 13-11 Points Student has described the trend of financial statements, and shows understanding of 14 of the 5 Ratios and what they are indicating about the financial statements. Word count 300. 10-0 Points Student does not submit or does not successfully describe trend of financial statements, and does not show understanding of the 5 Ratios and what they are indicating about the financial statements. Word count less than 300. 5-4 Points Used proper grammar, spelling and punctuation. Report is neat and has professional look with 0-2 errors. 3-2 Points Some grammar and spelling errors (3-5). However, Report is neat and has professional look. 1-0 Points Student does not submit, or contains multiple grammar and spelling errors (more than 5). Report is not professional in setup. 15 pts. Grammar, spelling and punctuation for 300 + Word Meets Expectations 11-0 Points Student does not submit, or uses incorrect components, and does not calculate Turnover correctly. Earned Points Report 5 pts. Instructor Comments: ACCT220 - Portfolio Project Rubric (Week 6 - Pro Forma Income Statement and Reflection) Criteria 2012 Pro Forma Income Statement 60 pts. 300 + Word Report on Pro Forma Income Statement and 2012 expected performance 15 pts. Grammar, spelling and punctuation for 300 + Word Report on Pro Forma Income Statement Exceeds Expectations Meets Expectations 60-54 Points Student submits 2012 Pro Forma Income Statement with all correct accounts and balances based on management assumptions. Statement arrives at proper Net Income. Statement follows proper format and is neat. 15-14 Points Student successfully describes trend of financial statements, and shows proper direction for profits. Student describes possible risks to this 2012 plan. Word count 300+. 53-42 Points Student submits 2012 Pro Forma Income Statement with 1-3 incorrect accounts or balances. Statement does not arrive at proper Net Income. Statement follows proper format and is neat. 41-0 Points Student does not submit a 2012 Pro Forma Income Statement, or is submitted with multiple errors, arrives at incorrect Net Income, and does not follow good format. 13-11 Points Student successfully describes trend of financial statements, and shows proper direction for profits. Student does not get into describing possible risks to this 2012 plan. Word count 300+. 3-2 Points Some grammar and spelling errors (3-5). However, Report is neat and has professional look. 10-0 Points Student does not submit or does not successfully describe trend of financial statements, and does not show proper direction for profits. Student does not get into describing possible risks to this 2012 plan. Word count less than 300. 17-14 Points Student is unclear when describing concepts learned from this assignment. Student does not assess whether financial statements and ratios are easier to understand as a result of this assignment. 13-0 Points Student does not submit at all, or student does not specifically describe concepts learned from this assignment. 5-4 Points Used proper grammar, spelling and punctuation. Report is neat and has professional look with 0-2 errors. Needs Improvement 1-0 Points Student does not submit, or contains multiple grammar and spelling errors (more than 5). Report is not professional in set-up. 5 pts. 300 + Word Reflection on Portfolio Project 20 pts. 20-18 Points Student specifically describes concepts learned from this assignment. Student assesses whether financial statements and ratios are easier to understand as a result of this assignment. Instructor Comments: Earned Points BRYANT & STRATTON COLLEGE ACCT220 - FINANCIAL ANALYSIS PORTFOLIO PROJECT Introduction Page Click Below to Access the spreadsheet you are looking for: Week 4 This spreadsheet will give you the account balances for Week 4. Week 5 The Ratios to calculate in Week 5. Week 6 The management assumptions to use to complete the Pro Forma income statemen o Forma income statement in Week 6. BRYANT & STRATTON COLLEGE ACCT220 FINANCIAL ANALYSIS PORTFOLIO PROJECT Click here to get back to the Introduction Page WEEK 4 ARRANGE THE FOLLOWING FINANCIAL INFORMATION INTO THE FOLLOWING: 1) Comparative Balance Sheets for 2010 vs. 2011. 2) Comparative Income Statements for 2010 vs. 2011. 3) Construct the 2011 Statement of Cash Flows using items 1 and 2. 2010 BALANCE Selling and Adminstrative Expenses Interest Expense Accounts Receivable (net) Taxes Notes Payable Capital paid in excess of par Cost of Goods Sold Cash Common Stock, $1 par value Sales Plant and Equipment Accumulated Depreciation Depreciation Expense Retained Earnings Bonds Payable, 2016 Accounts Payable Operating Income Accrued Expenses Investments Inventory Prepaid Expenses 650,000 54,000 350,000 91,000 200,000 500,000 2,300,000 120,000 250,000 3,600,000 2,500,000 850,000 90,000 665,000 700,000 375,000 560,000 80,000 150,000 450,000 50,000 2011 BALANCE 600,000 52,000 425,000 58,000 175,000 ### 2,250,000 95,000 ### 3,300,000 2,800,000 950,000 100,000 905,000 ### 475,000 350,000 60,000 100,000 550,000 45,000 BRYANT & STRATTON COLLEGE ACCT220 FINANCIAL ANALYSIS PORTFOLIO PROJECT Click here to get back to the Introduction Page WEEK 5 Calculate the 5 Financial Ratios below for BOTH 2010 AND 2011. Word Report on Financial Statements and Ratios 1) Profit Margin 2010 2011 2) Current Ratio 2010 2011 3) Receivables Turnover 2010 2011 4) Inventory Turnover 2010 2011 5) Return on Assets 2010 2011 Write a minimum of a 300 word report on your findings. Discuss the trends you see on the Financial Statements. What do you see happening with Sales, Profits, Inventory, Cash, and Receivables from 2010 to 2011. When you compare the 2010 vs. 2011 financial ratios above, which ones are trending up, and which ones are trending down? You may be creative with this report. BRYANT & STRATTON COLLEGE ACCT220 FINANCIAL ANALYSIS PORTFOLIO PROJECT Click here to get back to the Introduction Page WEEK 6 You will need your final 2011 Income Statement from Week 4 for this assignment. Use your 2011 Income Statement as your base, and then make the adjustments listed below in order to construct a 2012 Pro Forma Income Statement. Pro Forma Income Statement for 2012 includes the following Management assumptions. 1) Sales for existing business will remain at $3,300,000, but add $500,000 for new clothing line. Pro Forma Income 2) Cost of Goods Sold for existing business will remain at $2,250,000. Add $300,000 Statement to Cost of Goods Sold for new clothing line. 3) Selling and Administrative Expenses will increase by 15% with new line. 4) Assume Interest will be $50,000 in 2012. 5) Assume Taxes will be 30% of Earnings Before Taxes for 2012. Write a minimum of a 300 word report on your findings. Discuss the trends you see on the 2011 vs. 2012 Income Statements. How much does profits increase as a result of adding the assumed clothing Word Report on Pro line sales. Does it all seem worth it? What risks do you see with the company if sales that Forma management is assuming here are not achieved? You may be creative with this report. Write a minimum of a 300 word Reflection telling me what you learned from this 3 week assignment. Word Reflection on Are financial statements easier to create and interpret as a result of this assignment? Portfolio Project Can you better see how financial ratios can illustrate the financial condition of the company