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Part 3
SUCCESS SYSTEMS
Trial Balance
30-Nov
Debit Credit
Cash $48,052
Accounts receivable 12,618
Computer supplies 2,545
Part 2
Title: Reporting in Action 1
QA_Ori:
Polaris reports ($ thousands):
Title: Reporting in Action 2
QA_Ori:
Polaris reports ($ thousands):
Title: Reporting in Action 3
QA_Ori:
($ thousands):
Title: Reporting in Action 4
QA_Ori:
Polaris employed less financial leverage as of December 31, 2011, when 59.3%
Title: Reporting in Action 5
QA_Ori:
Title: Comparative Analysis 1
QA_Ori:
Polaris ($ thousands)
Title: Comparative Analysis 2
QA_Ori:
Arctic Cat ($ thousands)
Title: Comparative Analysis 3
QA_Ori:
Reporting in Action Polaris has the higher degree of financial leverage. Polaris’
debt ratio is markedly higher for the current year than that of Arctic Cat (59.3%
Title: Ethics Challenge
QA_Ori:
This case involves a conflict between the need for efficiency and the need for
The assistant manager’s explanation about the head manager not arriving until 3
o’clock suggests that the head manager doesn’t know about the proposed
It is possible that the assistant manager does not understand the potential for
fraud and abuse if this shortcut is used. If the relationship between you and the
If the assistant manager insists, you may want to work as instructed to get an
idea of whether the shortcut is being abused by the assistant manager and
Title: Communicating in Practice
QA_Ori:
MEMORANDUM
To: Lila Corentine
From:
Subject: Financial statements explanation
Date:
The four major financial statements and their purposes are:
Income statement describes a company’s revenues and expenses along with
Statement of owner’s equity explains changes in equity due to net income (or
Statement of cash flows identifies cash inflows (receipts) and outflows
These financial statements are linked to each other across time. Specifically, a
balance sheet reports an organization’s financial position at a point in time. The
income statement, statement of owner’s equity, and statement of cash flows
report on performance over a period of time. These three statements link balance
sheets from the beginning to the end of a reporting period. That is, they explain
how the financial position of an organization changes from one point to another.
Title: Taking It to the Net 1
QA_Ori:
The prior three years’ net income or (loss) for Amazon are ($ millions):
2011 = $631
Title: Taking It to the Net 2
QA_Ori:
The three years net cash provided by operations follows ($ millions):
Title: Taking It to the Net 3
QA_Ori:
In 2011, Amazon had net income of $631 million and operating cash flows of
The reason its cash balance only increased by $1,492 million in 2011 was
because of cash outflows of $1,930 million for its investing activities and $482
Title: Teamwork in Action
QA_Ori:
The following sample solution gives a summary outline of what a minimum report
needs to include. Assume a team member selects assets:
Category: Assets
a. Increases (decreases) in assets are debits (credits) to asset accounts. Debit
b. Owner investment of $10,000 cash in business.
c. Assets = Liabilities + Owner, Capital – Withdrawals + Revenues – Expenses
Owner investments have no effect on the income statement, but they do
d. Paid rent expense with $2,000 cash.
e. Assets = Liabilities + Owner, Capital – Withdrawals + Revenues – Expenses
Title: Entrepreneurial Decision
QA_Ori:
There are several issues that Misa and Jennifer should consider. Those
considerations include the following three issues (among others):
If they choose to contribute their own funds for the expansion, they will be
If they can pay the interest and loan payments, it can be to their advantage to
Title: Entrepreneurial Decision 1
QA_Ori:
MARTIN MUSIC SERVICES
Balance Sheet
31-Dec-13
Assets Liabilities
Cash $3,600 Accounts payable $2,200
Title: Entrepreneurial Decision 2
QA_Ori:
*Ending balance is used per instructions.
Title: Entrepreneurial Decision 3
QA_Ori:
The prospects of a bank loan are likely to be good. (i) The debt ratio indicates
Note: The loan does carry some risk—fueling this risk are (i) poor
recordkeeping, (ii) lack of information on growth potential, and (iii) a much
higher pro forma debt ratio—that is, if the loan is granted, the debt ratio will
jump to 43%, computed as:
($17,800 + $30,000) / ($80,700 + $30,000).
Title: Hitting the road
QA_Ori:
Findings will vary. It is advisable that the instructor obtain a few classified
sections from newspapers that were published over the period of the assignment.
Title: Global Decision 1
QA_Ori: An analysis of return on assets suggests that Polaris (18.5%) yields
Title: Global Decision 2
QA_Ori: An analysis of the debt ratio suggests that Polaris (59.3%) presents
the greatest risk, while Arctic Cat (32.9%) presents the least risk. KTM’s debt
Title: Global Decision 3
QA_Ori:
In this case, there is no clear answer based on these two ratios alone. Polaris
has a relatively higher return on assets but also the highest debt ratio of the
