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ACBUS302A – Internship Assessment 3 – Case study Accounting 28/7/2021
ACBUS302A Internship – Accounting Case Study
Assessment Event 3 – Simulated Project - Due: Week 12 Weighting: 50%
CASE STUDY ONE - CASH FLOWS AND FINANCIAL STATEMENTS AT SUNSET BOARDS LTD
Sunset t Boards Ltd is a small company that manufactures and sells surfboards on the Gold Coast.
Justin Marks, the founder of the company, is in charge of the design and sale of the surfboards, but
his background is in surfing, not business. As a result, the company's financial records are not well
maintained. The initial investment in Sunset Boards was provided by Justin and his friends and
family.
Because the initial investment was relatively small, and the company has made surfboards only for
its own store, the investors haven't required detailed financial statements from Justin. But thanks to
word of mouth among professional surfers, sales have picked up recently, and Justin is considering a
major expansion. His plans include opening another surfboard store in Tweed Heads, as well as
supplying his own
and of boards,“Jusboards”, to other sellers. Justin' s expansion plans require a
significant investment, which he plans to finance with a combination of additional funds from
outsiders plus some money bo
owed from banks. Naturally, the new investors and creditors require
more organized and detailed financial statements than Justin has previously prepared. At the urging
of his investors, Justin has hi red financial analyst Annabel Wolfe to evaluate the performance of the
company over the past year.
After going over the old bank statements, sales receipts, tax returns and other records, Annabel has
assembled the following information:
20XX $ 20XX + 1 $
Cost of goods sold XXXXXXXXXX
Cash XXXXXXXXXX
Depreciation XXXXXXXXXX
Interest expense XXXXXXXXXX
Selling and administrative XXXXXXXXXX
Accounts payable XXXXXXXXXX
Net non-cu
ent assets XXXXXXXXXX
Sales XXXXXXXXXX
Accounts receivable XXXXXXXXXX
Notes payable XXXXXXXXXX
Non-cu
ent debt XXXXXXXXXX
Inventory XXXXXXXXXX
New equity XXXXXXXXXX
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ACBUS302A – Internship Assessment 3 – Case study Accounting 28/7/2021
You are Annabel’s assistant and she has asked you to prepare the following:
1. An Income statement for 20XX and 200XX+1.
2. A Balance Sheet for 20XX and 20XX+1.
3. Cash Flows from Operating activities for both years.
4. Cash flows from Assets for 200XX+1.
5. Cash flow from Creditors for 200XX+1.
6. Cash flow to Equity holders (Shareholders) for 200XX+1.
7. How would you describe Sunset Boards’ cash flows for 20XX? Write a
ief description.
8. In light of your discussion in the previous question, what do you think about Justin’s
expansion plans? Make comments on the key factors involved here?
CASE STUDY TWO – RATIO ANALSIS AT S&S AIR LTD
Chris Guthrie hired by S&S Air Ltd, to assist the company with it’s financial planning and to evaluate
the company’s performance. Chris graduated from university five years ago with a finance degree.
He has been employed in the finance department of an ASX200 company since then.
S&S Air was founded 10 years ago by friends Mark Sexton and Todd Story. The company has
manufactured and sold light aeroplanes over this period, and the company’s products have received
good reviews for safety and reliability.
The company has a niche market in that it sells primarily to individuals who own and fly their own
aeroplanes. The company has two models; the Birdie, which sells for $53,000, and the Eagle, which
sells for $78,000.
Although the company manufactures aircraft, it’s operations are different from commercial aircraft
companies. S&S Air builds aircraft to order. By using prefa
icated parts, the company can complete
the manufacture of an airplane in only five weeks. The company also receives a deposit on each
order, as well as another partial payment before the order is complete (for security reasons). In
contrast, a commercial airplane may take one-and-a half to two years to manufacture once the
order has been placed.
Mark and Todd have provided the following financial statements below (Income Statement &
Balance Sheet).
Chris has gathered the industry rations for the light airplane manufacturing industry (also below).
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ACBUS302A – Internship Assessment 3 – Case study Accounting 28/7/2021
TO COMPLETE:
1. Using the financial statements provided for S&S Air, calculate each of the financial ratios (as
set out on the Ratio handout below); for S&S Air – so they can be compared with the Ratio
table below.
2. Mark and Todd agree that a ratio analysis can provide a measure of the company’s
performance. They have chosen Boeing as an aspirant company. Would you choose Boeing
as an aspirant company? Why or why not?
3. There are other aircraft manufacturers S&S Air could use as aspirant companies. Discuss
whether it is appropriate to use any of the following companies as such: Bombadier;
Em
aer; Ci
us Design Corporation and Cessna Aircraft Company?
4. Compare the performance of S&S Air to the industry. For each ratio, comment on why it
might be viewed as positive or negative, relative to the industry; and why you believe that is
the case?
5. Choose ONE of the four companies listed above (in Q3), and download their financial
eports. Perform the same ratio calculations on the company you have chosen with the
ones you performed for S&S Air. Compare the differences and comment on the key
differences and important factors? Why do you believe these differences would exist?
6. Suppose you create an inventory ratio calculated as inventory divided by cu
ent liabilities.
How do you think S&S Air’s ratio would compare to the industry average?
7. Discuss with Mark and Todd the relative value of your results and the limitations of ratio
analysis (either overall of in this specific case).
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ACBUS302A – Internship Assessment 3 – Case study Accounting 28/7/2021
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ACBUS302A – Internship Assessment 3 – Case study Accounting 28/7/2021
KEY FINANCIAL RATIOS TO BE USED, LISTED BELOW:
Note: It is best to categorise the financial ratios into the 5 KEY categories as listed below on the key
atios handout.
They are:
- Short-term or Liquidity ratios
- Long-term solvency or Financial leverage ratios (Capital structure measures)
- Asset utilisation or Turnover ratios
- Profitability ratios
- Market value ratios.
See ratio’s overpage to calculate.
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ACBUS302A – Internship Assessment 3 – Case study Accounting 28/7/2021
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ACBUS302A – Internship Assessment 3 – Case study Accounting 28/7/2021
Marking criteria and ru
ic are provided in the Assessment appendix – simulated project.
Upload this assessment on the turnitin link avaible on the Moodle.
ACBUS302A Internship – Accounting Case Study
Assessment Event 3 – Simulated Project - Due: Week 12 Weighting: 50%