Part 1 is not the correct assignment. For Part 2 you will need to take Gross Profit/COGS to get the % markup to compare to Part 2b. For Part 3, you will need to take Total Liabilities/Total Assets to get the % capital structure to compare to Part 3b. If the % capital structure is greater than the 50% given in part b, the company would be more leveraged than the average. MT217M1: Explain how financial managers use financial calculators, Microsoft Excel, and financial statements to measure the financial performance of a business entity. PC-1.1: Engage in a team setting with professional integrity and respect. Understanding the classification and definitions of financial statement accounts is a fundamental requirement in assessing business management. Assessment of financial data provides the quantitative measures allowing managers to use past and present data to make effective decisions. Directions In Part 1 of this Assessment, you will define and classify accounts into an Income Statement or Balance Sheet. In Parts 2 and 3 you will assume the role of a financial manager who has been tasked to report to senior management in an upcoming finance meeting. Senior management is particularly interested in learning the performance of the company in two particular areas. The first focus of your discussion with management, Part 2 of this Assessment, relates to the markup on Cost of Goods Sold (COGS). The second focus of your discussion with management, Part 3 of this Assessment, relates to capital structure. Part 1 To properly measure financial statements managers must know account definitions and classifications. Using the accounts below, define each and classify each as an Income Statement or Balance Sheet account. 1. Cash 2. Notes payable/Short term debt 3. Inventory 4. Property, plant, and equipment 5. Long term note-debt 6. Stockholder’s equity 7. Interest and taxes 8. Sales 9. Cost of Goods Sold 10. Selling and general administrative expenses 11. Gross profit 12. Earnings before interest and taxes 13. Net income 14. Accounts receivable15. Accounts payable Before you move on to Part 2 and Part 3 below, you must first complete the following Excel Spreadsheet. You must complete the Income Statement tab and the Balance Sheet tab. Then, answer the following questions in Part 2 and Part 3 below. Part 2 After completing the Income Statement, you should be able to measure a company’s COGS and its effect on the Gross Profit Margin (GPM). Based on your assessment of the firm’s Income Statement, you are to report to senior management on these key components: a. What is the markup on COGS? b. Compare this company’s markup to a COGS Industry Standard of 70%. What is the result? c. Explain how the difference in this company’s markup and industry markup rates affect profitability, or levels of the GPM? Part 3 After completing the Balance Sheet in the Excel Spreadsheet hyperlinked above, you should be able to measure a company’s capital structure. Based on your assessment of the firm’s Balance Sheet, you are to report to senior management on these key components: a. What is the nature of this company’s capital structure? Include percentages in your commentary? b. Compare this capitalization structure percent to an industry standard of 50%. What is the result? c. To what extent is this company ‘leveraged’? Minimum Submission Requirements
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