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:

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.