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.


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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.


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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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