please follow the guidelines below.

The main problem for our group is: In the fierce competition in the automotive industry, why is Li Auto Incorporated still at the forefront?

My individual report should be focused on Balance Sheet. According to the balance sheet, the relevant questions are raised and analyzed by four analytical methods.

The ppt about the four analysis methods is attached below.

Group Project Report

To show proficiency and understanding of data analytics techniques, student teams will evaluate

data using the AMPS model, perform analysis, develop meaningful dashboards, and create a

formal presentation demonstrating the process and results to the class.

Each group will be responsible to look for its own case for in-depth analysis. Your team will

take on a role, such as the data analyst/auditor/business analyst, hired to provide

recommendations to an intended audience, such as the management team of a

business/organization, on an accounting, finance, or other business-related issue. A thorough

individual report is required. The report should not be more than eight pages (excluding cover

page, tables, graphs, appendix and references, if any), typed, double spaced, 10 to 12 pitch with

one-inch margins. You should cite at least one academic paper and one news article. Citation

format should follow American Psychological Association 7th edition. Final individual project

report is due two days after the presentation date (lecture 12/13). PPTs of the group

presentation are due two days before the scheduled presentation date. You should submit

the individual report through Turnitin on Blackboard (3 attempts). The similarity score has to

less than 15%. If using ChatGPT or other AI tools, please note where you use it and how you use

it in the Appendix (including the prompts and answers). (10 points)

Your report should follow the following framework.

1. Background Overview (5 points):

Summarize key facts about the business/organization. Describe key factors that affect

the organization’s performance as a profit-maximizing entity. If relevant, describe

important current events affecting the organization that might give rise to the issue.

State the role of your team, your client or audience, and the goal you want to achieve

through the project, or the big picture problem you are trying to address. Discuss why

addressing this issue is important to your organization. Your group can use the same

background but should use your own words to avoid plagiarism.

2. Ask the Question (10 points):

Your group should provide the problem statement (main question) to address the

issue of your choice. The other sub-questions should be helping you to address the

main question. These questions can be “What happened?” “Why it is happening?”

“What will happen in the future” “Given what will happen in the future, what should

we do now to optimize the performance?”

3. Master the Data (10 points):

a. Explain where and how you retrieve the data. You can use public data sources or

proprietary data sources.1 Otherwise, submit your original database. Consider data

sources discussed in Chapter 2. You only need to describe the data you will use in

your analysis.

1 If you use proprietary data sources, you need to share the original data with the instructor.

b. Explain how you have prepared the data

i. Clean it as needed to prepare for analysis

ii. Make sure data is loaded completely

iii. Make sure data doesn’t have missing information

c. Discuss any data quality issues in your dataset d. Must have calculated fields

e. Transform at least one non-numeric data into numeric data

f. Create at least one additional attribute

4. Perform the Analysis (40 points):

a. All 4 types of analytics (descriptive, diagnostic, predictive, and prescriptive).

b. Explain the rationales for each analytics. For example, the reasons for selecting

variables as independent variables in the regression.

c. Discuss any unexpected results and the reason for the unexpected results.

d. Discuss the main limitations of your analyses

5. Share the Story (25 points):

a. There should be at least 2 graphs/dashboards using Power BI, Tableau or Excel.

b. Concisely describe the recommended course of action and how your analyses provide

the main support for your recommendation.

Group Project Presentation:

Each group will have 18 minutes to present the case and 5 minutes for the Q&A section. The

PPT should not be more than 15 slides. Individual presentation skills (such as not reading from

notes, eye contacts with the audience, and how well you respond to questions raised by your

audience or instructor) will also be assessed and graded. All members MUST participate in

presentation. The dress code is business attire.

We will use role play format to do the presentation. Another team will be selected on the day of

presentation to be the intended audience, who needs to ask at least 3 meaningful questions during

the Q&A section. Students are expected to think from the perspective of the intended audience

and ask questions to the presenters. The qualified question(s) will count toward your class

participation points for the group.

,

Because learning changes everything.®

Chapter 9: Perform the Analysis:

Prescriptive Analytics

Introduction to Data Analytics for

Accounting, 2e

Richardson | Terrell | Teeter

© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

© McGraw Hill LLC.

Learning Objectives

9-1 Describe prescriptive analytics and how it relates to other

types of analytics.

9-2 Demonstrate the use of marginal/incremental analysis.

9-3 Analyze future cash flows using accounting rate of return,

payback, net present value, and internal rate of return calculations.

9-4 Describe how goal seek functions are used for prescriptive

analytics.

9-5 Describe the use of scenario analysis.

9-6 Explain how sensitivity analysis helps evaluate outcomes

based on inputs.

9-7 Define optimization and explain why it fits as a prescriptive

analytics technique.

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The A M P S Model

In the A M P S cycle, we’re now

going to continue to perform

the analysis. This time, we will

look at using prescriptive

analytics.

Exhibit 9.1 The A M P S Model

Access the text alternative for slide images.

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Learning Objective 9-1

Defining Prescriptive Analytics

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Definition of Prescriptive Analytics

Prescriptive analytics as analysis performed which

identifies the best possible options given constraints or

changing conditions. Some would call this an optimization.

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Prescriptive analytics is useful to identify option given constraints.

What type of constraints

might a company face?

• Firms don’t receive

unlimited capital

resources, so they must

optimize based on the

resources they have

available.

What type of changing

conditions might a

company face?

• Consumer preferences, tax

laws, interest rates, levels

of risk, exchange rates,

demand for employees and

their expertise, etc.

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What is the difference between predictive and prescriptive analytics?

While both predictive and prescriptive analytics forecast

future outcomes, prescriptive analytics goes a step further

and helps to make specific recommendations for

management to consider based on what they expect will

happen.

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Prescriptive analytics can guide decisions

• Sensitivity Analysis.

• Evaluating Future Cash

Flows Using Various

Analysis Techniques.

• Marginal (or Incremental)

Analysis.

• Goal Seek Analysis.

• Scenario Analysis.

• Optimization.

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Types of Prescriptive Analytics

Exhibit 9.2 Circumplex of Types of Data Analytics

Access the text alternative for slide images.

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Learning Objective 9-2

Marginal (or Incremental) Analysis

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What is marginal analysis?

Marginal analysis is an examination of the associated cost or

benefit of very specific business decisions.

Marginal analysis typically refers to the cost or benefit of

the next (or the marginal) unit.

Marginal analysis can be applied using financial modeling,

which is a representation, or model, of the financial outcomes

resulting from a decision or future event.

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Marginal analysis is useful for management decisions. 1

Manufacturer decision:

Should the manufacturer

expand their operations by

adding new product lines or

increasing the volume of

what they currently produce?

Audi is trying to decide

whether to manufacture more

of their current lineup of cars

with gasoline engines or

invest more in electric cars.

They will use marginal

analysis to help decide the

financial and other

implications of their decision.

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Marginal analysis is useful for management decisions. 2

Manufacturer decision:

Whether to sell additional

units to a customer at a

reduced price.

A E R T makes plastic/wood

composite decking materials

out of recycled materials.

They have an opportunity to

sell an additional 20,000 10-

foot deck boards for $8 to

Sully’s, well below the usual

retail price of $12, but above

the variable cost of $6.

Should it sell the product to

Sully’s for this reduced

price? Will A E R T only do it if

they have excess product at

the end of the season, so

they won’t have to pay to

store the decking until next

year? What other

considerations should A E R T

evaluate?

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Marginal analysis is useful for personal decisions. 1

Personal decision: Kris

Allee recently lost his job.

Since he is uncertain how

long it will take to get a new

job, he is trying to decide

whether to go back to school

to get his M B A.

What is the cost of getting an

M B A? If Kris gets a

scholarship and can’t find

another job, then his

opportunity cost (next best

alternative) is near zero.

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Marginal analysis is useful for personal decisions. 2

Q. Define marginal analysis. Let’s suppose an auditor

has the choice to accept one more audit client, which

may constrain resources for other audit clients. What

should be included in this marginal analysis?

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Make or Buy: Making Outsourcing Decisions

Make-or-buy analysis is a technique used to analyze and

address the question whether to manufacture a product in

house or to purchase it (or outsource it externally).

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Make or Buy: Should Apple Outsource the iPhone? 1

• How does the variable cost per unit compare to the price offered by the

outsourcer?

• If Apple can make a longer-term decision to outsource, can they

ultimately get rid of some fixed costs? What happened with past

outsourcing decisions at the company with respect to fixed costs?

• If Apple doesn’t manufacture its own products, does it have other

promising projects to pursue with its freed capacity, preferably projects

that are consistent with Apple’s core competency?

• Should Apple engage multiple companies as outsourcing partners

rather than just one (FoxConn)? What happens if FoxConn faces

political issues (such as accusation of the use of child laborers or poor

working conditions)? What would happen to Apple iPhones?

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Make or Buy: Should Apple Outsource the iPhone? 2

How can prescriptive data analysis help with this make-or-

buy decision?

Sensitivity Analysis

Look at impact of reducing the company’s fixed costs by

25%, 50%, or 75%.

Scenario Analysis and Financial Modeling

Model the alternative use of excess capacity and the

profitability increased profit/margins of new products.

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Make or Buy: Should Apple Outsource the iPhone? 3

Q: Let’s suppose General Motors wants to buy engines

from Toyota instead of making them for itself. What

would General Motors consider when evaluating this

option besides just fixed and variable costs?

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Learning Objective 9-3

Cash Flow Analysis

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What is the objective of financial accounting?

An objective of financial

accounting is to help

investors, creditors, and

other users assess the

amounts, timing, and

uncertainty of

prospective cash

receipts.

Amounts – How much cash will

be given up (invested) or received

from a company initiative?

Timing – In what time period

(month, quarter or year) will each

cash flow be given up (invested)

or received?

Uncertainty – How likely or

unlikely are we to receive this

cash flow? What is the risk that

the actual cash flow we receive is

greater than what was forecasted?

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What is the accounting rate of return (A R R)?

The accounting rate of return (A R R) is the percentage rate of

return expected on an asset. It compares profit to the initial

investment cost.

If $1,000 investment gives us an average of $100 in profit

each year, the A R R would be $100/$1,000 = 10%.

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What is the payback period?

The payback period is the

length of time required to

earn back the amount of

the initial investment.

For example, if an initial $1,000

investment returns $100, $300,

and $600 in profits the first 3

years following the investment,

the payback period would be 3

years.

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What is the net present value?

Net Present Value (N P V)

is the present value of the

cash inflows less the

present value of the cash

outflows.

Assume you have a new

piece of equipment that is

expected to cost $200,000

up front (at time 0) and

returns $150,000 per year

for three years. Assume a

cost of capital (the cost of

borrowing money for the

company), or the discount

rate is 10%.

In the following table, read ‘1.100’ as

1.10 to the zero power; ‘1.101’ as 1.10 to

the first power; ‘1.102’ as 1.10 squared;

‘1.103’ as 1.10 cubed;

Year 0 Present value=−$200,000/(1.100) =−$200,000

Year 1 Present value = $150,000/(1.101) = $136,364

Year 2 Present value = $150,000/(1.102) = $123,967

Year 3 Present value = $150,000/(1.103) = $112,697

Sum of Present Values, or N P V $173,028

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What is the internal rate of return?

The Internal Rate of Return

(I R R) is the discount rate

that makes the project’s net

present value equal to

zero, or the rate of return

where the present value of

cash outflows is exactly

equal to the present value

of the cash inflows.

Exhibit 9.11 Evaluating Potential

Investments Using Internal Rate of Return

Access the text alternative for slide images.

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Use Excel to calculate the Net Present Value and Internal Rate of Return. 1

Use the = N P V() function to compute net present value.

Use the = I R R() function to compute internal rate of return.

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Use Excel to calculate the Net Present Value and Internal Rate of Return. 2

Q: When starting a new job, how would you evaluate

your salary options (salary, stock options, etc.) using net

present value analysis? Would you take the stock

options in addition to your salary or just take pure

salary?

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Learning Objective 9-4

Goal Seek Analysis

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What is goal seek analysis?

Goal seek analysis is a form of what-if analysis that tells us

what input will be needed or what will need to be done (or

assumed) in order to reach a desired outcome, output or

result.

Goal seek analysis is the ability to calculate backwards to

understand the input needed to achieve a certain output.

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Goal seek analysis relies on changing inputs to determine desired outputs. 1

Exhibit 9.17 Examples of Goal Seek Analysis in Accounting and Business

Goal-Seek Examples Desired Output Changing Inputs

Maximum mortgage loan you can

afford given a certain monthly

payment

$1,200 monthly payment Maximum amount of mortgage

loan

The minimum needed level of

sales to achieve breakeven

Breakeven = no profit where total

expenses are exactly equal to total

revenues

Minimum level of sales needed

Minimum performance on the final

exam to get a certain grade in this

Accounting Analytics course

An “A” as a final grade in your

Accounting Analytics class!

Minimum needed grade on the

final exam.

The minimum employees needed

to carry out timely audits for all

clients

Adequate resources to complete a

timely audit

Minimum number of employees

needed

The minimum hours needed to

pass all parts of the C P A Exam

Pass all parts of the C P A exam in

one sitting with a 75% passing

score

Minimal number of hours of study,

assuming each hour studying

increases the probability of

passing by about 2%

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Goal seek analysis relies on changing inputs to determine desired outputs. 2

Q: Framing your grade in this course as a goal seek

analysis, what is your desired output in the course

(which grade do you desire—an A, B, C, or D, etc.)? What

inputs will be required to get the desired output?

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Learning Objective 9-5

Scenario Analysis

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What is Scenario Analysis?

Scenario Analysis is the process of analyzing future events

by considering potential outcomes.

Scenario Analysis does not try to predict one possible

outcome, but rather it presents a range of alternative

outcomes.

While it considers a range of outcomes, it also computes the

expected overall impact on the company based on the joint

probability of multiple events on the company.

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Scenario Analysis might be used to determine impact of tax law.

Assume the Arkansas General Assembly is debating a

reduction in the corporate income tax rate from 8 percent to

either 6 percent or 4 percent.

At the same time, a company might have a potential 5

percent increase in taxable income, might stay neutral

(taxable income remains the same), or might have a potential

5 percent decrease in taxable income.

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Scenario Analysis: What Happens If Tax Rates Change? 1

Exhibit 9.18 Taxable Income and Taxes Owed, Based on Average

Earnings before Tax of $2,000,000

Income Scenarios Taxable

Income

8% Tax

Rate

6% Tax

Rate

4% Tax

Rate

Income Increases by 5% 2,100,000 168,000 126,000 84,000

Income Remains the Same 2,000,000 160,000 120,000 80,000

Income Decreases by 5% 1,900,000 152,000 114,000 76,000

This matrix shows the taxable income under each of the income

scenarios and the taxes owed under each potential tax rate.

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Scenario Analysis: What Happens If Tax Rates Change? 2

Exhibit 9.19 The Change in Income Based on the Different Taxable

Income and Tax Rate Scenarios (Negative values represent tax

savings.)

Income Scenarios Taxable

Income

8% Tax

Rate

6% Tax

Rate

4% Tax

Rate

Income Increases by 5% 2,100,000 8,000 (34,000) (76,000)

Income Remains the Same 2,000,000 (40,000) (80,000)

Income Decreases by 5% 1,900,000 (8,000) (46,000) (84,000)

This matrix shows the taxable income under each of the income

scenarios and the net tax increase/(decrease) under each potential tax

rate.

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Scenario Analysis: What Happens If Tax Rates Change? 3

Exhibit 9.20 Joint Probabilities of Changes in Tax Rate and Change

in Taxable Income

Income Scenarios Taxable Income 8% Tax

Rate