Posted: September 17th, 2017
As an accountant, it is important to know where to locate specific information within the financial statement that supports decision making. In order to do this, it is important to understand how the different sections of the financial statement relate to one another. Review the two scenarios below. Based on the Course Readings – Fraser, L., & Ormiston, A. (2013). Understanding financial statements (10th ed.). Boston: Prentice Hall. (files uploaded), consider how you would respond to the question posed after each.
1: As a loan officer for First Loans Bank, you have been approached by Custom Window Blinds (CWB). CWB needs to borrow money to purchase new state-of-the-art window-blind manufacturing equipment. As the loan officer, you need to view the company’s financial statements. What information/ratios should you, as the loan officer, use? Why?
2: You are president of Custom Window Blinds, and business has been very good. You are thinking of expanding to a new location. In order to decide if this is something your company should do, you ask the controller of your company, Joe Beancounter, to do an analysis based on your current financial statements. What information/ratios should Joe use? Answer the questions below in your own words & in paragraph form. Follow the APA Guidelines (file uploaded). Do not write introduction & conclusion. You can add additional sentences/paragraphs. You can research on the Internet or books/journals & you can add additional references.
QUESTIONS: Briefly describe how the information in the two scenarios is interrelated. Expresses your thoughts on how the two given scenarios are interrelated.
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