Financial Accounting Assignment Sample
Measuring Cash Flows
The calculation methods done for common-size income statements provide an effective scenario of the different performance that was being presented for the companies. All the then companies are from different industries and the methods of working process is different as well. In this case, the measurement of the income statement will help in finalizing the different ways through which all the companies may be compared and the most suitable company would need to be taken into consideration.
Commercial Airline
Transactions |
Amount |
NET SALES |
100 |
COST OF GOODS |
79.32 |
GROSS PROFIT |
20.68 |
R & D EXPENDITURES |
0 |
SELL GEN & ADMIN EXP |
19.38 |
INC BEF DEP & AMORT |
1.3 |
DEPRECIATION & AMORT |
0 |
NON-OPERATING INC |
0.64 |
INTEREST EXPENSE |
1.67 |
INCOME BEFORE TAX |
-0.27 |
PROV FOR INC TAXES |
-0.09 |
MINORITY INT (INC) |
0.04 |
INVEST GAINS/LOSSES |
0 |
OTHER INCOME |
0.1 |
NET INC BEF EX ITEMS |
0.41 |
EX ITEMS & DISC OPS |
0.35 |
NET INCOME |
0.76 |
Commercial Banking
Transactions |
Amount |
NET SALES |
100 |
COST OF GOODS |
11.11 |
GROSS PROFIT |
88.89 |
R & D EXPENDITURES |
0 |
SELL GEN & ADMIN EXP |
20.17 |
INC BEF DEP & AMORT |
68.72 |
DEPRECIATION & AMORT |
1.18 |
NON-OPERATING INC |
-19.23 |
INTEREST EXPENSE |
18.33 |
INCOME BEFORE TAX |
29.98 |
PROV FOR INC TAXES |
9.98 |
MINORITY INT (INC) |
0 |
INVEST GAINS/LOSSES |
0 |
OTHER INCOME |
0 |
NET INC BEF EX ITEMS |
20 |
EX ITEMS & DISC OPS |
0 |
NET INCOME |
20 |
Computer Software
Transactions |
Amount |
NET SALES |
100 |
COST OF GOODS |
36.62 |
GROSS PROFIT |
63.62 |
R & D EXPENDITURES |
0 |
SELL GEN & ADMIN EXP |
39.91 |
INC BEF DEP & AMORT |
23.47 |
DEPRECIATION & AMORT |
0 |
NON-OPERATING INC |
1.98 |
INTEREST EXPENSE |
0.99 |
INCOME BEFORE TAX |
24.47 |
PROV FOR INC TAXES |
7.72 |
MINORITY INT (INC) |
0 |
INVEST GAINS/LOSSES |
0 |
OTHER INCOME |
0 |
NET INC BEF EX ITEMS |
16.75 |
EX ITEMS & DISC OPS |
-1.85 |
NET INCOME |
14.9 |
Integrated Oil and Gas
Transactions |
Amount |
NET SALES |
100 |
COST OF GOODS |
49.78 |
GROSS PROFIT |
50.22 |
R & D EXPENDITURES |
0.32 |
SELL GEN & ADMIN EXP |
25.13 |
INC BEF DEP & AMORT |
24.77 |
DEPRECIATION & AMORT |
3.11 |
NON-OPERATING INC |
-5.09 |
INTEREST EXPENSE |
0.18 |
INCOME BEFORE TAX |
16.39 |
PROV FOR INC TAXES |
6.53 |
MINORITY INT (INC) |
0 |
INVEST GAINS/LOSSES |
0 |
OTHER INCOME |
0 |
NET INC BEF EX ITEMS |
9.86 |
EX ITEMS & DISC OPS |
0 |
NET INCOME |
9.86 |
IT Service Provider
Transactions |
Amount |
NET SALES |
100 |
COST OF GOODS |
52.77 |
GROSS PROFIT |
47.23 |
R & D EXPENDITURES |
0 |
SELL GEN & ADMIN EXP |
14.54 |
INC BEF DEP & AMORT |
32.69 |
DEPRECIATION & AMORT |
4.5 |
NON-OPERATING INC |
1.84 |
INTEREST EXPENSE |
0 |
INCOME BEFORE TAX |
30.04 |
PROV FOR INC TAXES |
4.18 |
MINORITY INT (INC) |
0.07 |
INVEST GAINS/LOSSES |
0.21 |
OTHER INCOME |
-0.21 |
NET INC BEF EX ITEMS |
25.78 |
EX ITEMS & DISC OPS |
0.21 |
NET INCOME |
25.99 |
Liquor Producer and Distributor
Transactions |
Amount |
NET SALES |
100 |
COST OF GOODS |
43.81 |
GROSS PROFIT |
56.19 |
R & D EXPENDITURES |
14.61 |
SELL GEN & ADMIN EXP |
16.01 |
INC BEF DEP & AMORT |
25.58 |
DEPRECIATION & AMORT |
0 |
NON-OPERATING INC |
2.15 |
INTEREST EXPENSE |
0.09 |
INCOME BEFORE TAX |
27.64 |
PROV FOR INC TAXES |
8.12 |
MINORITY INT (INC) |
0 |
INVEST GAINS/LOSSES |
0 |
OTHER INCOME |
0 |
NET INC BEF EX ITEMS |
19.51 |
EX ITEMS & DISC OPS |
0 |
NET INCOME |
19.51 |
Mobile Phone Service Provider
Transactions |
Amount |
NET SALES |
100 |
COST OF GOODS |
23.2 |
GROSS PROFIT |
76.8 |
R & D EXPENDITURES |
20.01 |
SELL GEN & ADMIN EXP |
35.77 |
INC BEF DEP & AMORT |
21.03 |
DEPRECIATION & AMORT |
0 |
NON-OPERATING INC |
5.94 |
INTEREST EXPENSE |
0 |
INCOME BEFORE TAX |
38.71 |
PROV FOR INC TAXES |
11.57 |
MINORITY INT (INC) |
0 |
INVEST GAINS/LOSSES |
0 |
OTHER INCOME |
0 |
NET INC BEF EX ITEMS |
27.14 |
EX ITEMS & DISC OPS |
0 |
NET INCOME |
27.14 |
Pharmaceutical Preparations
Transactions |
Amount |
NET SALES |
100 |
COST OF GOODS |
17.03 |
GROSS PROFIT |
82.97 |
R & D EXPENDITURES |
17.18 |
SELL GEN & ADMIN EXP |
33.02 |
INC BEF DEP & AMORT |
32.77 |
DEPRECIATION & AMORT |
0 |
NON-OPERATING INC |
5.94 |
INTEREST EXPENSE |
0 |
INCOME BEFORE TAX |
38.71 |
PROV FOR INC TAXES |
11.57 |
MINORITY INT (INC) |
0 |
INVEST GAINS/LOSSES |
0 |
OTHER INCOME |
0 |
NET INC BEF EX ITEMS |
27.14 |
EX ITEMS & DISC OPS |
0 |
NET INCOME |
27.14 |
Retail Grocery Stores
Transactions |
Amount |
NET SALES |
100 |
COST OF GOODS |
68.43 |
GROSS PROFIT |
31.57 |
R & D EXPENDITURES |
0 |
SELL GEN & ADMIN EXP |
15.56 |
INC BEF DEP & AMORT |
16.01 |
DEPRECIATION & AMORT |
4.26 |
NON-OPERATING INC |
-1.61 |
INTEREST EXPENSE |
0.9 |
INCOME BEFORE TAX |
9.24 |
PROV FOR INC TAXES |
3.4 |
MINORITY INT (INC) |
0 |
INVEST GAINS/LOSSES |
0 |
OTHER INCOME |
0 |
NET INC BEF EX ITEMS |
5.84 |
EX ITEMS & DISC OPS |
0 |
NET INCOME |
5.84 |
Semiconductor Manufacturer
Transactions |
Amount |
NET SALES |
100 |
COST OF GOODS |
58.46 |
GROSS PROFIT |
41.54 |
R & D EXPENDITURES |
0 |
SELL GEN & ADMIN EXP |
57.69 |
INC BEF DEP & AMORT |
-16.14 |
DEPRECIATION & AMORT |
16.72 |
NON-OPERATING INC |
22.45 |
INTEREST EXPENSE |
2.37 |
INCOME BEFORE TAX |
-12.78 |
PROV FOR INC TAXES |
8.17 |
MINORITY INT (INC) |
0.99 |
INVEST GAINS/LOSSES |
0 |
OTHER INCOME |
0 |
NET INC BEF EX ITEMS |
-21.94 |
EX ITEMS & DISC OPS |
-3.83 |
NET INCOME |
-25.78 |
As per the above-analyzed information that has been performed and provided with efficient data about the consolidated income statement provides the information about the performances of the different companies. In this case, the company that has the most effective cash flow record for the year is Pharmaceutical Preparations whose total net profit is 27.14. Income before tax was calculated as 38.71. The second-best income of the company is IT service provider whose total net profit was recorded as 25.99. In this context, it can be said that Pharmaceuticals preparation is more effective than any other company and has been performing effectively.
Analyzing and Interpreting Financial Statements
In analyzing the consolidated balance sheet of the years, it was found that the Commercial banking records are much better than those of the other nine companies. The total current assets and liabilities that were recorded are 85.59 and 77.86. Both the amounts are much more than the other companies are and are making it effective to perform and make the works as per the needs of the customers. The amounts will be more than the others will, as it works in leading and receiving monetary services from the customers. The close competitor of commercial banking is the pharmaceuticals operations whose total current assets and liabilities are 71.34 and 23.98.
The ratio calculations that have been provided in the company give an effective account of the different performance factors for the companies. In this case, the most appropriate ratio analysis that has been performed is the IT service provider industry which gives an effective account of the different performances the company does. All the ratios that have been calculated in the company are on the higher side. This makes it effective to declare that the IT service providers are more to the point. Choose 'Assignment Help' for more.
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