Assignment 1 Financial Statements
1
This is the only simulation-associated weekly assignment that you will be required to
complete as an individual, not as a team. When you start to work with your team, each one
of you will put on and take off a variety of management hats—sometimes wearing more than
one at the same time. However, the one hat that you must always wear, whether you want to or
not, is the one marked “financial manager”.
In fact, once you have a system that produces “timely and accurate” (accounting lingo) financial
statements, one of your primary business management functions begins: Understanding and
interpreting the data that you actually have.
The process of analyzing your financial information is thankless and unattractive. The best way
to start—in fact, the only way to start—is to dive right in. You need to follow three steps in this
process:
1. Understand how your statements are formulated. What is their structure? What is their
composition? How do they work together?
2. Use your information to perform calculations.
3. Use those calculations to perform an analysis that takes the “temperature” of your
usiness.
For this week, we are going to start with Step #1. The following information represents the first
period of my GoVentureCEO business, AirPro. These are the primary financial statements (i.e.,
Balance Sheet and Income Statement) that were calculated after my saved decision-making
activities. As you can see, I didn’t do anything during Period 1—I was keeping an eye on you.
Also notice that they are VERY simplistic, as indicated in the Finance section of the simulation.
AirPro, Inc.
Balance Sheet
Period “1” Financial Information
($ Thousands)
Assets
Cu
ent Assets
Cash $975
Inventory 0
Total cu
ent assets 1,000
Property, Plant, and Equipment 50
Net plant and equipment 50
Total Assets $1,025
Liabilities
Cu
ent liabilities $0
Total cu
ent liabilities 0
Long-term liabilities 0
Total long-term liabilities 0
Total liabilities $0
Equity
Retained Earnings (Net Profit) ($25)
Capital from shares sold 0
Startup Capital 1,050
Total liabilities and equity $1,025
Assignment 1 Financial Statements
2
AirPro, Inc.
Income Statement
Period “1” Financial Information
Revenue $0
Cost of goods Sold 0
Other Income 0
Subtotal $0
Operating Expenses
General and Administrative $25,000 $25,000
Human Resources 0
Manufacturing 0
Sales & Marketing 0
Operations 0
Management 0
Benefits and Programs 0
Hiring Costs 0
Severance Costs 0
Training Costs 0
Turnover Costs 0
Expired Units 0
Loan Interest Payments 0
Sales & Marketing
Advertising-Brand 0
Advertising-Price Discount 0
Sales Promotion 0
Research & Development
Taste 0
Health 0
Change costs to Update Inventory 0
Other
Expansion to other te
itories 0
Market Research Reports 0
Miscellaneous Expenses 0
Legal 0
Subtotal $25,000
Net Profit (Loss) ($25,000)
Assignment 1 Financial Statements
3
Of course, your numbers will vary from mine (you will have decisions that produce different
numbers), but the format and processes are the same: The Income Statement provides
information on net profit or net loss; the Balance Sheet provides information on the company’s
financial position.
There is a third statement called the Cash Flow Statement, which is very important because it
eferences the uses and sources of your cash. However, the simulation Cash Flow Statement
provides summary information, which is not relevant to this assignment. For the moment, just
know that the Cash Flow Statement tells you how your company specifically spent and received
its cash over the past financial period.
Assignment 1:
Your assignment is to create a set of two financial statements—Balance Sheet and Income
Statement—based on the information you have generated at the end of your individual/solo
practice or team practice simulation. Although the simulation has ended, you will still be able to
access the financial statement information. Sounds simple, right? Maybe. But this assignment
has a couple of extra requirements. DO NOT copy and paste information from GoVentureCEO!
Read the first requirement to know why.
Your final assignment product should have the following requirements:
1. Two financial statements based on the information you produced for your week of solo
practice. I expect the statements to be presented in good form, as is shown in the
eadings. If, after you have completed the readings, you still aren’t sure of what that
means, do some research and find out or ask questions. Remember, you are now in
charge of a business, and your financial statements should look professional.
2. This simulation puts everything on a Cash basis, and I think that’s too easy. For this
assignment, I want you to divide your Cash in half, and place one of those halves
into an account called Accounts Receivable. Leave the other half in Cash. You
will need to create the account called Accounts Receivable on your assignment—check
Course Materials for proper format. This will make #3 more interesting.
3. In a maximum of two paragraphs, tells me what these two financial statements are
saying to you. Single out specific Income Statement accounts, both revenue and
expense, to explain the activity in your solo practice from week one. The same thing is
equired for your Balance Sheet. Since you don’t have a lot of activity yet, you should
e able to fit your comments into a couple of paragraphs. BE THOROUGH! It’s your job
to convince me that you know what you are talking about. As a reminder, do not ignore
my requirement for #2—there is a reason I put it there.
Take the time to thoroughly review your completed financial statements; I am looking for
specific things in your response. Submit your completed assignment in word format to the
Canvas upload link.
As a reminder, this is an individual, not team, assignment. Your information must be based on
your solo or team practice information, which you are still able to access.
Exercise 3:
Component Percentages and Financial Ratios
Name Date
BSG Footwear Company – Year 10 Your Company – Year 11
Income Statement XXXXXXXXXX’s ) Income Statement ( 000’s )
$ % $ %
Sales:
Internet 1,103,017 Pr. @ 81.88 90,315 20.88
Wholesale 6,247,142 Pr. @ 50.38 314,731 72.75
Pvt. Label 800,000 Pr. @ 34.50 27,600 6.38
Total Sales 8,150,159 Pr. @ 53.08 avg. 432, XXXXXXXXXX
Cost of Pairs Sold 228,053 52.71
Gross Margin 204,593 47.29
Expenses:
Warehouse 41, XXXXXXXXXX
Marketing 80,944 18.71
Admin. 15,002 XXXXXXXXXX
Total Expenses XXXXXXXXXX,276 31.73 137,276 31.73
Operating Profit < Loss > 67,317 15.56
Interest Income < Expense > < 10,174 > 2.35
Other Income < Expense > XXXXXXXXXX XXXXXXXXXX
Pre-Tax Profit < Loss > 57,143 13.21
Income Taxes 17,143 3.96
Net Profit < Loss > 40,000 9.25
Other Information
Shares Outstanding 20,000,000
Earnings Per Share 2.00
Dividends Per Share 1.00
BSG Footwear Company – Year 10 Your Company – Year 11
Balance Sheet ( 000’s ) Balance Sheet ( 000’s )
$ % $ %
Assets
Cash 6,074 1.77
Accounts Receivable 85,583 24.99
Inventory 6,121 1.79
Total Cu
ent Assets 97,778 28.55
Net Plant Investment 244,710 71.45
Construction in Progress XXXXXXXXXX XXXXXXXXXX
Production Improvement
Options on Order XXXXXXXXXX XXXXXXXXXX
Total Fixed Assets 244,710 71.45
Total Assets 342, XXXXXXXXXX
Liabilities
Accounts Payable 19,388 5.66
1 Year Bank Loan Payable XXXXXXXXXX XXXXXXXXXX
Cu
ent Portion L.T. Loan 15,900 4.64
Overdraft Loan Payable XXXXXXXXXX XXXXXXXXXX
Total Cu
ent Liabilities 35,288 10.30
Long Term Loan 97,200 28.38
Total Liabilities 132,488 38.68
Shareholder Equity
Common Stock 20,000 5.84
Additional Capital 110,000 32.12
Retained Earnings 80,000 23.36
Total Shareholder Equity 210,000 61.32
Total Liabilities and Equity 342, XXXXXXXXXX
BSG Footwear Company – Year 10 Your Company – Year 11
Cash Flow Statement ( 000’s ) Cash Flow Statement ( 000’s )
Beginning Cash Balance XXXXXXXXXX
Cash Inflows
Receipts from Sales 421,433
Bank Loan 1 Year XXXXXXXXXX
Bank Loan 5 Year