Assume you are a mid-level executive at Automotive Solutions Inc., and you have been assigned to analyze the company’s financial statements for 20Y7 and 20Y8 and prepare a report for upper-level organizational leaders.
The following tables (attached) show the comparative financial statements for Automotive Solutions Inc. The market price of Automotive Solutions Inc. common stock was $119 on December 31, 20Y8. The market price of Automotive Solutions Inc. common stock was $103 on December 31, 20Y7.
Check attached documents for Rubric and instructions… Please follow the Rubric and use APA
ACC201.W5A1.09.2023
Description:
Total Possible Score: 20.00
Discusses the Purpose of the Report and the Role of Accounting in Business
Total: 3.00
Distinguished – Thoroughly discusses the purpose of the report and the role of accounting in business.
Proficient – Discusses the purpose of the report and the role of accounting in business. Minor details are missing.
Basic – Minimally discusses the purpose of the report and the role of accounting in business. Relevant details are missing.
Below Expectations – Attempts to discuss the purpose of the report and the role of accounting in business; however, significant details are missing.
Non-Performance – The discussion of the purpose of the report and the role of accounting in business is either nonexistent or lacks the components described in the assignment instructions.
Prepares a Liquidity Analysis by Computing and Using the Appropriate Ratios to Assess Liquidity
Total: 3.00
Distinguished – Prepares a clear and accurate liquidity analysis by computing and using the appropriate ratios to assess liquidity.
Proficient – Prepares a liquidity analysis by computing and using the appropriate ratios to assess liquidity. Minor details are slightly unclear or inaccurate.
Basic – Prepares a vague liquidity analysis by computing and using the appropriate ratios to assess liquidity. Relevant details are unclear and/or inaccurate.
Below Expectations – Attempts to prepare a liquidity analysis by computing and using the appropriate ratios to assess liquidity; however, significant details are unclear and inaccurate.
Non-Performance – The liquidity analysis by computing and using the appropriate ratios to assess liquidity is either nonexistent or lacks the components described in the assignment instructions.
Prepares a Solvency Analysis by Computing and Using the Appropriate Ratios to Assess Solvency
Total: 3.00
Distinguished – Prepares a clear and accurate solvency analysis by computing and using the appropriate ratios to assess solvency.
Proficient – Prepares a solvency analysis by computing and using the appropriate ratios to assess solvency. Minor details are slightly unclear or inaccurate.
Basic – Prepares a vague solvency analysis by computing and using the appropriate ratios to assess solvency. Relevant details are unclear and/or inaccurate.
Below Expectations – Attempts to prepare a solvency analysis by computing and using the appropriate ratios to assess solvency; however, significant details are unclear and inaccurate.
Non-Performance – The solvency analysis by computing and using the appropriate ratios to assess solvency is either nonexistent or lacks the components described in the assignment instructions.
Prepares a Profitability Analysis by Computing and Using the Appropriate Ratios to Assess Profitability
Total: 3.00
Distinguished – Prepares a clear and accurate profitability analysis by computing and using the appropriate ratios to assess profitability.
Proficient – Prepares a profitability analysis by computing and using the appropriate ratios to assess profitability. Minor details are slightly unclear or inaccurate.
Basic – Prepares a vague profitability analysis by computing and using the appropriate ratios to assess profitability. Relevant details are unclear and/or inaccurate.
Below Expectations – Attempts to prepare a profitability analysis by computing and using the appropriate ratios to assess profitability; however, significant details are unclear and inaccurate.
Non-Performance – The profitability analysis by computing and using the appropriate ratios to assess profitability is either nonexistent or lacks the components described in the assignment instructions.
Drafts a Summary of What the Financial Statements Indicate About the Company’s Overall Financial Health and Performance, Strengths, and Weaknesses of the Company, Identified Positive or Negative Trends, and the Risk of Investing in the Company
Total: 3.00
Distinguished – Drafts a comprehensive summary of what the financial statements indicate about the company’s overall financial health and performance, strengths, and weaknesses of the company, identified positive or negative trends, and the risk of investing in the company.
Proficient – Drafts a summary of what the financial statements indicate about the company’s overall financial health and performance, strengths, and weaknesses of the company, identified positive or negative trends, and the risk of investing in the company. Minor details are missing.
Basic – Drafts a limited summary of what the financial statements indicate about the company’s overall financial health and performance, strengths, and weaknesses of the company, identified positive or negative trends, and the risk of investing in the company. Relevant details are missing.
Below Expectations – Attempts to draft a summary of what the financial statements indicate about the company’s overall financial health and performance, strengths, and weaknesses of the company, identified positive or negative trends, and the risk of investing in the company; however, significant details are missing.
Non-Performance – The draft of a summary of what the financial statements indicate about the company’s overall financial health and performance, strengths, and weaknesses of the company, identified positive or negative trends, and the risk of investing in the company is either nonexistent or lacks the components described in the assignment instructions.
Intro, Thesis, & Conclusion
Total: 1.00
Distinguished - The paper is logically organized with a well-written introduction, thesis statement, and conclusion.
Proficient - The paper is logically organized with an introduction, thesis statement, and conclusion. One of these requires improvement.
Basic - The paper is organized with an introduction, thesis statement, and conclusion. The introduction, thesis statement, and/or conclusion require improvement.
Below Expectations - The paper is loosely organized with an introduction, thesis statement, and conclusion. The introduction, thesis statement, and/or conclusion require much improvement.
Non-Performance - The introduction, thesis statement, and conclusion are either nonexistent or lack the components described in the assignment instructions.
Written Communication: Control of Syntax and Mechanics
Total: 1.00
Distinguished - Displays meticulous comprehension and organization of syntax and mechanics, such as spelling and grammar. Written work contains no errors and is very easy to understand.
Proficient - Displays comprehension and organization of syntax and mechanics, such as spelling and grammar. Written work contains only a few minor errors and is mostly easy to understand.
Basic - Displays basic comprehension of syntax and mechanics, such as spelling and grammar. Written work contains a few errors which may slightly distract the reader.
Below Expectations - Fails to display basic comprehension of syntax or mechanics, such as spelling and grammar. Written work contains major errors which distract the reader.
Non-Performance - The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: APA Formatting
Total: 1.00
Distinguished - Accurately uses APA formatting consistently throughout the paper, title page, and reference page.
Proficient - Exhibits APA formatting throughout the paper. However, layout contains a few minor errors.
Basic – Exhibits limited knowledge of APA formatting throughout the paper. However, layout does not meet all APA requirements.
Below Expectations - Fails to exhibit basic knowledge of APA formatting. There are frequent errors, making the layout difficult to distinguish as APA.
Non-Performance - The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Page Requirement
Total: 1.00
Distinguished - The length of the paper is equivalent to the required number of correctly formatted pages.
Proficient - The length of the paper is nearly equivalent to the required number of correctly formatted pages.
Basic - The length of the paper is equivalent to at least three quarters of the required number of correctly formatted pages.
Below Expectations - The length of the paper is equivalent to at least one half of the required number of correctly formatted pages.
Non-Performance - The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Resource Requirement
Total: 1.00
Distinguished - Uses more than the required number of scholarly sources, providing compelling evidence to support ideas. All sources on the reference page are used and cited correctly within the body of the assignment.
Proficient - Uses the required number of scholarly sources to support ideas. All sources on the reference page are used and cited correctly within the body of the assignment.
Basic - Uses less than the required number of sources to support ideas. Some sources may not be scholarly. Most sources on the reference page are used within the body of the assignment. Citations may not be formatted correctly.
Below Expectations - Uses an inadequate number of sources that provide little or no support for ideas. Sources used may not be scholarly. Most sources on the reference page are not used within the body of the assignment. Citations are not formatted correctly.
Non-Performance - The assignment is either nonexistent or lacks the components described in the instructions.
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AUTOMOTIVE SOLUTIONS INC. Comparative Statement of Stockholders' Equity
For the Years Ended December 31, 20Y8 and 20Y7 20Y8 20Y7 Preferred stock Common stock Retained Earnings Preferred stock Common stock Retained Earnings Balances, Jan. 1 $500,000 $500,000 $5,375,000 $500,000 $500,000 $4,545,000 Net income 900,000 925,000 Dividends: Preferred stock (45,000) (45,000) Common stock _______ _______ (50,000) ________ _______ (50,000) Balances, Dec. 31 $500,000 $500,000 $6,180,000 $500,000 $500,000 $5,375,000
AUTOMOTIVE SOLUTIONS INC. Comparative Income Statement
For the Years Ended December 31, 2018 and 20Y7 20Y8 20Y7 Sales $10,000,000 $ 9,400,000 Cost of goods sold (5,350,000) 4,950,000) Gross profit $ 4,650,000 $ 4,450,000 Selling expenses $(2,000,000) $(1,880,000) Administrative expenses (1,500,000) (1,410,000) Total operating expenses $ (3,500,000) $(3,290,000) Operating income $ 1,150,000 $ 1,160,000 Other revenue and expense: Other revenue 150,000 140,000 Other expense (interest) (170,000) (150,000) Income before income tax $ 1,130,000 $ 1,150,000 Income tax expense (230,000) (225,000) Net income $ 900,000 $ 925,000
AUTOMOTIVE SOLUTIONS INC. Comparative Balance Sheet
December 31, 20Y8 and 20Y7 Dec. 31, 20Y8 Dec. 31, 20Y7
Assets Current assets: Cash $ 500,000 $ 400,000 Marketable securities 1,010,000 1,000,000 Accounts receivable (net) 740,000 510,000 Inventories 1,190,000 950,000 Prepaid expenses 2,50,000 229,000 Total current assets $3,690,000 $3,089,000 Long-term investments 2,350,000 2,300,000 Property, plant, and equipment (net) 3,740,000 3,366,000 Total assets $9,780,000 $8,755,000
Liabilities Current liabilities $ 900,000 $ 880,000 Long-term liabilities: Mortgage note payable, 10% $ 200,000 $ 0 Bonds payable, 10% 1,500,000 1,500,000 Total long-term liabilities $1,700,000 $1,500,000 Total liabilities $2,600,000 $2,380,000
Stockholders' Equity Preferred $0.90 stock, $10 par $ 500,000 $ 500,000 Common stock, $5 par 500,000 500,000 Retained earnings 6,180,000 5,375,500 Total stockholders' equity $7,180,000 $6,375,000 Total liabilities and stockholders' equity $9,780,000 $8,755,000
In your report to upper management, analyze the company’s financial statements for 20Y7 and 20Y8:
• Discuss the purpose of the report and the role of accounting in business.
o What are the two major objectives of accounting and how are they achieved?
o What kind of information do these financial statements provide to internal stakeholders, such as organizational leaders within the company, and to external stakeholders, such as lenders and current or potential investors?
o How do internal and external stakeholders use financial accounting information?
• Prepare a liquidity analysis by computing and using the appropriate ratios to assess liquidity.
o Compute a minimum of three liquidity ratios for the years ended Dec 31, 20Y8 and Dec. 31, 20Y7 and show your supporting calculations. Use the same three liquidity ratios for both years.
o Analyze the ratios computed and discuss any insights or conclusions that can be drawn from your analysis.
• Prepare a solvency analysis by computing and using the appropriate ratios to assess solvency.
o Compute a minimum of three solvency ratios for the years ended Dec 31, 20Y8 and Dec. 31, 20Y7 and show your supporting calculations. Use the same three solvency ratios for both years.
o Analyze the ratios computed and discuss any insights or conclusions that can be drawn from your analysis.
• Prepare a profitability analysis by computing and using the appropriate ratios to assess profitability.
o Compute a minimum of three profitability ratios for the years ended Dec 31, 20Y8 and Dec. 31, 20Y7 and show your supporting calculations. Use the same three profitability ratios for both years.
o Analyze the ratios computed and discuss any insights or conclusions that can be drawn from your analysis.
• Draft a summary of what the financial statements indicate about the company’s overall financial health and performance, strengths and weaknesses of the company, as well as any identified positive or negative trends and the risk of investing in the company.
The Financial Statement Analysis final paper
• must be 3 to 5 double-spaced pages in length (not including title and references pages) and formatted according to APA StyleLinks to an external site. as outlined in the Writing Center’s APA Formatting for Microsoft WordLinks to an external site. resource.
• must include a separate title page with the following in title case:
o title of final paper in bold font
Space should appear between the title and the rest of the information on the title page.
o student’s name
o name of institution (The University of Arizona Global Campus)
o course name and number
o instructor’s name
o due date • must utilize academic voice. Review the Academic VoiceLinks to an external
site. resource for additional guidance. • must include an introduction and conclusion paragraph.
o Your introduction paragraph needs to end with a clear thesis statement that indicates the purpose of your paper.
o For assistance on writing Introductions & ConclusionsLinks to an external site. and Writing a Thesis StatementLinks to an external site., refer to the Writing Center resources.
• must use APA Level Headings, found on the Writing Center’s APA Style ElementsLinks to an external site. page, for each one of the topics discussed in the research paper as shown:
o Introduction Level 1
o Liquidity Analysis Level 1
o Solvency Analysis Level 1
o Profitability Analysis Level 1
o Summary and Conclusion Level 1
• must use at least four scholarly and/or credible sources in addition to the course text.
o The Scholarly, Peer-Reviewed, and Other Credible SourcesLinks to an external site. table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source.