Huckle’s Piano Service Accounting Assignment
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages
Huckle’s Piano Service Accounting Assignment
Financial Review – Instructions
Assignment #2: Huckle’s Piano Service Dudley Huckle repairs a variety of keyboard instruments from his shop in Belleville, ON. He started out on his own two years ago after buying the business of his mentor, Ludwig Mozart. The business employs 6 piano repair techs, plus Dudley. Currently, they tune and fix pianos in eastern Ontario, but Dudley believes the business can grow if he hires some new employees and opens a new office closer to Toronto. His services are sold to the major music shops in the area and, although he occasionally tunes pianos for individuals, he wants to focus on his B2B business. Dudley’s accountant has just finished the Current Year (actual) financial statements, so Dudley now has two full years of actual results to compare with each other. Because he knows that it is important to plan and budget for the future, Dudley has also prepared a Plan for next year. This incorporates Dudley’s idea to hire new staff and open a new office. He wants to increase his return on equity, so he is planning to finance this expansion by simply getting another loan from his bank. Approximately 75% of Dudley’s sales are on credit. 25% are cash sales. 65% of Dudley’s purchases are on credit At the beginning of the year, Dudley rented much of his equipment and tools. He has since bought out some of Mozart’s assets at auction, and plans to buy more equipment since he feels that renting is really expensive. Required: 1. Using Excel formulas, complete the missing information, ie the coloured cells, in the attached worksheet (totals, Income Taxes, % differences between years and plans, etc). 2. Perform a horizontal analysis comparing the Actual amounts for the current year to last year’s results, and also to the Planned amounts for next year. Discuss any items you think are unusual, unrealistic, good, bad, or otherwise interesting 3. Calculate the financial ratios indicated in the coloured cells. Comment on the company’s performance in the areas of profitabillity, efficiency, liquidity, and leverage. What do you think of Dudley’s plan to expand, and how he intends to finance it? Marks will be awarded as noted in the yellow cells. Save your completed Excel file, ensuring your name is included in the file name. Submit the completed Excel file via Blackboard before the end of the day Wednesday March 9. Hints: 1) Last year was the first year of operations, so some of last year’s ratios require a slightly different calculation. These have been provided for you. 2) Cash Flow From Operations is one of the required calculations. To calculate this number, take Net Income and add back the Depreciation expense, to arrive at Net Income before Depreciation (“NIBD”). Then calculate any increase or decrease in Working Capital from the beginning to the end of the period. (Working Capital for this purpose is Receivables plus Inventory, minus Current Liabilities). An increase in Working Capital should be deducted from NIBD, and a decrease in Working Capital should be added to NIBD, in order to arrive at Cash Flow From Operations.
Student Name Student Number Dudley Huckle repairs a variety of keyboard instruments from his shop in Belleville, ON. He started out on his own two years ago after buying the business of his mentor, Ludwig Mozart. The business employs 6 piano repair techs, plus Dudley. Currently, they tune and fix pianos in eastern Ontario, but Dudley believes the business can grow if he hires some new employees and opens a new office closer to Toronto. The Actual results from his first two years in operation are shown below, plus Dudley’s plan for next year, which includes an expansion of the business. Financial Compare your Actual results to last year’s Actual results, and Compare this year’s actual results to Next Year’s Plan As at: Actual results: Next year % Change: GRADE Date This year Last year Increase or (Decrease) % Plan Next year Plan vs This Yr Actual Balance sheet Cash $ 28,138 $ 48,375 $ 73,217 Receivables 127,500 42,000 102,610 Inventory 53,125 43,000 40,625 Total current assets Long-term Assets Property, Plant, Equip 370,625 215,625 547,500 Other assets 25,000 18,750 26,250 Total assets Current liabilities $ 130,201 $ 49,000 $ 180,049 Long term liabilities 265,625 118,750 394,687 Equity 208,562 200,000 215,466 Total liabilities and equity Income statement Sales Revenue $ 906,250 $ 859,375 $ 1,208,000 Cost of goods sold 171,875 153,125 237,500 Gross profit (0.5 marks) 0.5 marks 0.5 Operating Expenses: Salaries 352,375 346,875 469,833 Rent/occupancy 89,375 84,225 115,000 Equipment Rental 18,100 34,375 9,520 Marketing and Sales 42,375 40,625 75,250 Travel 43,125 34,375 61,000 Office expenses 87,500 84,375 98,250 Other operating expenses 15,610 21,875 18,400 Depreciation 62,500 37,500 93,250 Operating Income (EBIT) Interest/financing fees 13,342 3,750 21,875 Income Before Tax (EBT) (0.5 marks) 0.5 marks 0.5 Income Taxes (=15% of positive EBT) Net income (0.5 marks) 0.5 marks 0.5 Cash Flow from Operations (0.5 marks) 0.5 marks 0.5 Financial ratios (3 marks) This year Last year Potential Questions Next Year Plan Gross margin – Are your products properly priced to cover your operating costs? Operating Margin – Does the business make an adequate return before financing costs and taxes? 1 mark 1 Net margin – Is this an adequate & sustainable amount of profitability? Return on Equity 15.53% – Are your shareholders receiving an adequate return on their investment in the company? Return on Assets 8.45% – Are the assets generating a reasonable level of sales? 1 mark 1 Average Collection Period (in days) 11.9 – Are your collecting your revenues in a timely manner? Average Days in Inventory 51.2 – Is the turnover too high or low? Current Ratio – Does your business have enough liquidity to cover your short term liabilities? Quick ratio – Does your business have enough cash to meet any short term liabilities that may be due soon? 1 mark 1 Debt to Equity Ratio – Does the business use debt responsibly to enhance shareholder wealth or does it borrow excessively? Financial Comment on the results that you see above Commentary What actions should management prioritize? (5 marks) Enter your comments after Horizontal analysis here: 1 mark 1 Enter your analysis of profitability ratios here: 1 mark 1 Enter your analysis of efficiency ratios here: 1 mark 1 Enter your analysis of liquidity ratios here: 1 mark 1 Enter your analysis of leverage ratios here: 1 mark 1 See “Hints” section in Instructions 10 marks total 10
Huckle’s Piano Service Accounting Assignment
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. 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Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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Huckle’s Piano Service Accounting Assignment