DAMM Good! Lemonade Stand (DGLS) Accounting Summary Report – Season One Bus 599 - Introduction to Quantitative Principles 12 September 2010 Background The enclosed DAMM Good! Lemonade stand (DGLs) accounting summary is a quantitative snapshot of financial transactions that have occurred during the first season of operation of DGLs. This accounting summary report has two aspects: to generate common accepted financial statements that reflect the health of the business and to provide concise but insightful interpretations and necessary recommendations deduced from the data (Larson, 2008). Financial Position Summary Appendix I: Daily Seasonal Data * The seasonal data was used as an “ad hoc” journal or daily receipts record to build each of the financial worksheets.
The computation of ratios facilitates the comparison of firms which differ in size. Ratios can be used to compare a firm's financial performance with industry averages. In addition, ratios can be used in a form of trend analysis to identify areas where performance has improved or deteriorated over time. Because Ratio Analysis is based upon Accounting information, its effectiveness is limited by the distortions which arise in financial statements due to such things as Historical Cost Accounting and inflation. Therefore, Ratio Analysis should only be used as a first step in financial analysis, to obtain a quick indication of a firm's performance and to identify areas which need to be investigated further Profitability.
Shortterm debt increased from 0.3 percent in 1984 to 16.8 percent in 1987. Accrued expenses went from 16.6 percent in 1984 to 1.9 percent in 1987. In addition, the inventory turnover decreased from 4.6 in 1984 to 3.2 in 1987 while the age of inventory increased from 79.7 days in 1984 to 113.2 days in 1987. This is a miserable sign because the electronics innovate day by day but Crazy Eddie needed more time to sell the products. The accounts receivable turnover decreased from 135.4 in 1984 to 53.9 in 1987 while the age of accounts receivable increased from 2.7 days in 1984 to 6.8 days in 1987 indicate that Crazy Eddie had some problems on realizing accounts receivable.
This could have been due to an increase in people going on holiday. Statistics show that during July and August people are more likely to organise holidays. This had a negative effect on the business as less services would be needed, resulting in a loss of sales. In the following months the business saw an increase of sales leading to £6000 from November to December. Whilst this is good for the company these figures are only predictions and may not happen in real time.
The 33% increase showed the strength of the company, but the huge drop in sales demonstrated how Competition Bikes, Inc. (CB) struggled to attain a surge in its revenue which is the result of the 15% decline in sales caused by economic situations. The rise of cost of goods sold (COGS) by almost 32% contributed to the rise in net sales for Years 6 and 7. During Year 7 and 8, CB had an almost 15% drop in COGS which resulted in a bad year for the company. However, COGS remained less than the company’s net sales which is always a financial plus. Overall, a rise in revenue and reduction in cost adds to CB’s profitability in Years 6 and 7.
Comparing IFRS to GAAP Essay University of Phoenix- Week 4 Kevin Waters ACC/291 IFRS8-1 What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed? * Fair value measurements provide users of financial statements with an accurate picture of value of a company's assets. Both GAAP and IFRS require firms to include information regarding fair value measurement practices in the notes of financial statements. Under either system, companies will be required to report assets at either book value or fair value, depending on the situation.
"The recent wave of offshore souring has certainly generated rapid income growth in the target countries, at least for some sectors of the population" (Levy, 2005, P.691). Therefore, China gets more wages during this time. "Workers demand higher wages and more of the population is becoming a market for their own country's products, thus reducing the drive to export" (Aronson, 2008, para. 4). Finally, China's middle class likewise is increasing because they have more jobs and more wages (Dyer, n.d., para.
While gas grills were seeing a 8 percent increase since the previous year charcoal grills had dropped by 3 percent. Charcoal grill penetration was trending down since 1997 and gas grill penetration was trending up. Another contributing factor may have been a increase in price by stores to their private label brands as well as their main competitor (who also produced these stores private brands) increase their price as well. Kingsford had kept the prices the same though some stores had increased the prices on their own. Kingsford had also reduced their media presences since 1996 (because of a decrease in media spending), a direct from the text by Warren explains " The charcoal category was now paying the price for the several years of reduced advertising".
Variable Identification Assignment Variable Identification Assignment The Lemonade Stand Game is a great way for one to learn about quantitative analysis and variables. Every aspect of the game is present in what organizations experience today. Variables The Lemonade Stand Game provided the owner, or in this case, myself with a number of variables to consider when setting the price of my lemonade. One of these variables is the price of my products. I needed to make sure I would make enough money by charging a certain amount per cup in order to afford the ingredients needed.
However, the account receivable turnover and inventory turnover ratios went down in 2008 as compared to 2007. They went down by 3.71 and 6.7 times respectively, in the year 2008 as compared to 2007. The account receivable turnover went down due to decline in revenues and increase in account receivable in 2008; it shows that the company generated fewer revenues in 2008 against its account receivable in 2008 as compared to 2007. The inventory turnover ratio was also down due to no change in inventory but the revenues went down. All profitability ratios are showing decline in the year 2008 as compared to 2007.