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.

About Your Signature Assignment

This signature assignment is designed to align with specific program student learning outcome(s) in your program. Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree. The signature assignments may be graded with an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for program improvements.

Assignment Steps

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

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.

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 the following facts:

	2017	2016
Current Ratio	3.1	2.1
Asset Turnover	2.8	2.2
Net Income	Up 32%	Down 8%
Earnings per Share	$3.30	$2.50

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 consistent with APA guidelines.

Click the Assignment Files tab to submit your assignment.

Additional Instructions

If you are using Excel to show your work, please ensure that your cells are formatted correctly. While you may not be able to apply APA formatting guidelines in Excel, you are expected to ensure that your content is wrapped within each cell you are using to answer the questions and that you format your spreadsheet in a manner that is presentable. If you have limited or no experience with Excel you can access the Excel Training Videos to brush up on your skills. Otherwise please use the Microsoft Word to answer the questions, explain your findings, and state your support for your conclusions.

Using Microsoft Word requires APA formatting. Resources have been provide for you in the classroom to help you with your assignments.

Please check your spelling and spacing, reference page should be included and a cover page provided for all Microsoft Word submissions. Excel submissions should include the proper headings and adequate formatting. Be sure to include your name in the title of your saved assignment so that it can be easily identified.