Reference the Milestone One Chester Inc. Trial Balance spreadsheet for the past three years’ financials (2013, 2014, and 2015). Additional information:
Land with the land improvements were sold at book value (no gain or loss) in 2014. (Note: To evaluate the sale, use the following accounts: land, building and land improvements, and Other Noncurrent Assets)
New equipment purchased with cash for $2,739,067 in 2014
New storage building purchased with cash for $135,000 in 2015
No investments have been sold or purchased in 2014 or 2015 There are currently 8,275,000 shares of common stock outstanding. No additional common stock has been sold or repurchased in any of the aforementioned years.
Appendix: These sections should be completed first, before you write your report. Use the proper format for each section in accordance with Generally Accepted Accounting Principles (GAAP) and note and explain differences under International Financial Reporting Standards (IFRS) where appropriate:
- Income statement
- Balance sheet
- Statement of retained earnings
- Statement of cash flows (indirect method)
Ratio analysis o Liquidity – minimum of three key ratios with supporting calculations with a minimum of three years of data o Profitability – minimum of three key ratios with supporting calculations with a minimum of three years of data
o Solvency – minimum of three key ratios with supporting calculations with a minimum of three years of data
Vertical and horizontal analysis o Both vertical and horizontal for the income statement with a minimum of three years of data o Both vertical and horizontal for the balance sheet with a minimum of three years of data
Report of Findings and Recommendations: The report is the key section of this artifact and will be written after you complete the analysis in the sections in the appendix above. The report will demonstrate your understanding of financial statements, what they contain, what they mean, and how they are used in strategic decision making.
The financial statements, ratios, and vertical/horizontal analysis should be analyzed and interpreted in order to assess and explain the performance of the organization. In your report, you must:
Address all three key ratios in each ratio category. Include what each ratio indicates and how the organization performed against its key competitor and industry averages.
Address all key findings in the vertical and horizontal analysis of the income statement and balance sheet. As a general rule, anything over 10% warrants addressing.
Guidelines for Submission: All financial calculations should be complete.
Four- to five-page Microsoft Word document with double spacing, 12-point Times New Roman font, one-inch margins, and two to three sources cited in APA format. Round all answers up to the nearest dollar value in any calculations.