Unit $14$ Management Report and Financial Statements

Three months of business transactions for Mi Casa have now been completed. At this time the owner's need to report the results of operations to Mi Casa's bank manager. Obtain a sample set of financial statements from your faculty to use as a guide when preparing your report.

Prepare a complete set of financial statements for the three month period ending December $31,20$XX in professional format.

Write a management letter to Sarah and Matthew to take to their banker outlining your work and your recommendations for future changes. $($not in your Excel working papers$)$

The management letter and complete financial statements will summarize the relevant information that the owners need and will also satisfy the information needs of Mi Casa's bank.

When preparing the Management Report for Sarah and Matthew to insert at the beginning of the financial statements include:

outline what you did for the compan'

describe briefly your opinion in a professional constructive manner, what you found in the first three months of operations. Profit or Loss?

make recommendations to the company to help them operate more efficiently.

make suggestions for changes that may make it easier for them to run their company or easier to disclose the information that will be required quarterly and annually by their bank.

Ratio Analysis $-$ ratio analysis is done to evaluate the operational success of the business and to keep expenses in check and keep the company within its debt covenants with its Bank. Ratio analysis was covered in Finance $1$ in chapter $3.$ Calculate the current ratio, debt ratio, profit margin and return on equity and briefly comment on these ratios so the owners can use this information when they talk to their bank manager.

FINANCIAL STATEMENTS

When preparing the Income Statement for the three month ending December $31,20$XX include:

A multi$-$step income statement showing cost of goods sold and gross profit export to excel

Gains and losses or any unusual items in separate sections

Earnings per share calculate

When preparing a classified Balance Sheet as of December $31,20$xx:

Classify balance sheet accounts in excel

Combine like accounts and only include totals on the balance sheet $($ex: add the petty cash account and the bank account together and report it on the balance sheet as Cash$)$

When preparing Statement of Retained Earnings for the three month ending December $31,20$XX$,$ show changes in all of the equity accounts on the balance sheet create in excel

When preparing the Statement of Changes in Cash Flow for the three months ending December $31,20$XX$.$ Go to Sage, Reports, Financials download from Sage