Financial statement and Analysis

User Generated

ybyb82

Business Finance

Description

Client One – Chester, Inc. (Financial Statements and Analysis). Please carefully read the attached document and answer all the questions.

Unformatted Attachment Preview

Client One – Chester, Inc. (Financial Statements and Analysis) Chester, Inc. is a large, publicly traded client at S.N.H.U., LLC. Your task is to develop a comprehensive, professional report for the board of directors. To do this, you will use Chester, Inc.’s trial balance to compose comparative financial statements, analyze data, and interpret results. These financial statements must be in good form in accordance with Generally Accepted Accounting Principles (GAAP). Next, you will assess the performance of Chester, Inc. using the financial statements that you created, along with industry performance data and the financial statements of a competitor. In addition, Chester, Inc. is considering expanding into the global market. They would like you to highlight key areas of the financial statements you have prepared and identify how they would be reported differently if composed under International Financial Reporting Standards (IFRS) rather than GAAP. Background and Financial Information Chester, Inc. is a large, publicly traded client operating in athletic wear including clothing, shoes, and accessories. Direct competitors include Columbia Sportswear Company (COLM – NYSE) and Under Armour, Inc. (UA – NYSE). All of these companies operate in the textile-apparel clothing industry. Chester Inc. operates on a calendar year. Reference the Milestone One Chester Inc. Trial Balance Sheet for the past three years’ financials (2013, 2014, and 2015). Additional information: • • • • • Land with the land improvements were sold at book value (no gain or loss) in 2014. (Note: To evaluate the sale, use the following accounts: land, building and land improvements, and Other Noncurrent Assets) New equipment purchased with cash for $2,739,067 in 2014 New storage building purchased with cash for $135,000 in 2015 No investments have been sold or purchased in 2014 or 2015 There are currently 8,275,000 shares of common stock outstanding. No additional common stock has been sold or repurchased in any of the aforementioned years. Artifact One: Financial Statements and Analysis The first artifact that you will include in your portfolio is the comprehensive, professional report that you create for the board of directors of Chester, Inc. a large publicly traded client. The report should contain your findings with the financial statements package as an appendix (Excel attachment). Appendix: These sections should be completed first, before you write your report. Use the proper format for each section in accordance with Generally Accepted Accounting Principles (GAAP) and note and explain differences under International Financial Reporting Standards (IFRS) where appropriate: • • • • Income statement Balance sheet Statement of retained earnings Statement of cash flows (indirect method) Ratio analysis • • • Liquidity – minimum of three key ratios with supporting calculations with a minimum of three years of data Profitability – minimum of three key ratios with supporting calculations with a minimum of three years of data Solvency – minimum of three key ratios with supporting calculations with a minimum of three years of data Vertical and horizontal analysis • • Both vertical and horizontal for the income statement with a minimum of three years of data Both vertical and horizontal for the balance sheet with a minimum of three years of data Report of Findings and Recommendations: The report is the key section of this artifact and will be written after you complete the analysis in the sections in the appendix above. The report will demonstrate your understanding of financial statements, what they contain, what they mean, and how they are used in strategic decision making. The financial statements, ratios, and vertical/horizontal analysis should be analyzed and interpreted to assess and explain the performance of the organization. In your report, you must: • • Address all three key ratios in each ratio category. Include what each ratio indicates and how the organization performed against its key competitor and industry averages. Address all key findings in the vertical and horizontal analysis of the income statement and balance sheet. As a general rule, anything over 10% warrants addressing. Guidelines for Submission: All financial calculations should be complete. Your paper must be submitted as a four- to five-page Microsoft Word document with double spacing, 12-point Times New Roman font, one-inch margins, and two to three sources cited in APA format. Round all answers up to the nearest dollar value in any calculations.
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Attached.

Financial Statements and Analysis
Name
Course
Institution
Instructor
Date

To:

Chester Company Board of Directors, Chester

From:
Date: 20th June 2018
RE:

Financial Statements and Analysis
Chester Company is a corporation based in Chester and Warrington. The company is one

of the largest publicly traded consumer service companies that offer athletic wear such as shoes
clothing and accessories. The firm provided a trial balance for three years; 2013, 2014 which I
have used in the preparation of financial statements as well as calculation of ratios. I will
therefore highlight the vital areas that have been prepared in the financial statements as well as
compare the performance of the company to industry averages and one of its competitors. The
competition this case is Armor Inc. I will also discuss how the statements could be prepared
under International Financial Reporting Standards (IFRS).
Ratio Analysis
Different types of ratios are prepared to compare the performance of the company with
others in the same industry. If the ratios are properly calculated and interpreted, a firm finds
areas with gaps that need to be filed and where additional research is needed. They show if the
firm is heading in the right direction or changes need to be implemented. The ratios calculated
here are liquidity ratios, profitability rat as well as solvency ratios (Larson, Chiappetta, 2001).
The information below shows performance of the company in comparison to its competitor
Armor Corporation.

Liquidity Ratios
Liquidity ratios indicate the firm’s ability to meet its short term obligations when they fall
due more specifically using the current assets. Is is shown using the current and quick ratio. The
recommended current ratio is 2:1 (Larson et al. 2001). Chester's current ratio reduced from 2013
to 2015 moving from 2.41in 2013 to 1.74 in 2014. The quick ration of the company was...


Anonymous
Really helped me to better understand my coursework. Super recommended.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Related Tags