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. Construct a 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.

I have already performed Part 1 and attached everything from the beginning along with what you will need to complete Part 2. Atem A-2 is the beginning of what was calculated for the new cashflow, which is what was used to calculate the balance sheet, income statement and comparative cashflow.

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).

I need Part 2 done. I have attached the Excel Spreadsheets. Please go into the spreadsheet and click onto WK5 and you will see the directions. It is self explanatory

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.

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? 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