# ACC 561 Week 3 Ratio Analysis

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ACC 561 Week 3 Ratio Analysis

Purpose of Assignment

This week’s focus is on the preparation of financial reports for internal users, such as managers. This case study applies the concepts of managerial accounting, through comparative and ratio analysis, and requires students to identify financial data needed by managers for decision making.

Resources

Ratio Analysis Grading Guide

Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Committee (SEC)

Scenario Worksheet Tutorial help on Excel and Word functions can be found on the Microsoft Office website. There are also additional tutorials via the web offering support for Office products.

Assignment Steps

Scenario: You are a loan officer for White Sands Bank of Taos. Paul Jason, president of P. Jason Corporation, has just left your office. He is interested in an 8-year loan to expand the company’s operations. The borrowed funds would be used to purchase new equipment. As evidence of the company’s debt-worthiness, Jason provided you with facts (available in the attached Scenario Worksheet). Jason is a very insistent (some would say pushy) man. When you told him you would need additional information before making your decision, he acted offended and said, “What more could you possibly want to know?” You responded you would, at minimum, need complete, audited financial statements.

Develop a minimum 700-word examination of the financial statements and include the following:

Explain why you would want the financial statements to be audited.

Discuss the implications of the ratios provided for the lending decision you are to make. That is, does the information paint a favorable picture? Are these ratios relevant to the decision? State why or why not.

Evaluate trends in the performance of P. Jason Corporation. Identify each performance measure as favorable or unfavorable and explain the significance of each.

List three other ratios you would want to calculate for P. Jason Corporation, and in your own words explain in detail why you would use each.

As the loan officer, what else would you do to gain a better understanding of Paul Jason’s, and the Corporation’s financial picture and why?

Based on your analysis of P. Jason Corporation, will you recommend approval for the requested loan? Provide specific details to support your decision.

Format the assignment according to APA guidelines.