Complete a 10-15 slide presentation with 150-200 words in the notes page, using all 3 financial stat

  

Complete a 10-15 slide presentation with 150-200 words in the notes page, using all 3 financial statements. Please provide an analysis on Apex’s assets, liabilities, cash, and profit. As well, choose 2 additional components on each of the sheets, and provide your initial impression on the company financial situation.
Apex Printing
Balance Sheets
As of December 31, 2013 and 2012
Assets
Cash
Accounts Receivable
Inventory
Total Current Assets
Land
Building & Equipment
Less: Accumulated Depreciation – Building & Equipment
Total Long Term Assets
Total Assets
000$
000$
2013
6,000
2,350
12,100
20,450
2012
5,700
2,300
6,500
14,500
25,000
20,000
300,000
300,000
(187,850) (160,000)
137,150
160,000
157,600
174,500
Liabilities and Stockholders’ Equity
Accounts Payable
Salaries Payable
Interest Payable
Short Term Notes Payable
Taxes Payable
Total Current Liabilities
4,600
0
1,500
12,000
0
18,100
3,500
2,100
0
0
5,600
11,200
Mortgate Payable
Total Long Term Liabilities
54,950
54,950
100,000
100,000
60,000
24,550
84,550
157,600
60,000
3,300
63,300
174,500
Common Stock
Retained Earnings
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
Apex Printing
Income Statements
For the Periods Ended December 31, 2013 and 2012
Revenue:
Less: Cost of Goods Sold
Less: Depreciation Expense
Gross Margin
Selling, General & Administrative Expenses
Income Before Interest & Taxes
Interest Expense
Income Before Taxes
Income Taxes
Net Income
000$
000$
2013
2012
450,000
475,000
(324,300) (374,500)
(27,850) (26,000)
97,850
74,500
(29,100) (32,000)
68,750
42,500
(7,500)
(6,000)
61,250
36,500
(35,000) (30,000)
26,250
6,500
Apex Printing
Statement of Cash Flows
For the Period Ended December 31, 2013
000$
Cash Flows from Operating Activities:
Net Income
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation Expense
Increase in accounts receivable
Increase in inventory
Decrease in salaries payable
Increase in interest payable
Decrease in taxes payable
Increase in Short Term notes Payable
Increase in accounts payable
Net Cash Flow from Operating Activities
Cash Flows from Investing Activities:
Cash paid to purchase land
Net Cash Flow from Investing Activities
26,250
27,850
(50)
(5,600)
(2,100)
1,500
(5,600)
12,000
1,100
55,350
(5,000)
(5,000)
Cash Flows From Financing Activities:
Cash paid for mortgage
Cash paid for dividends
Net Cash Flow from Financing Activities
Net Increase in Cash
Plus: Cash Balance at December 31, 2012
Cash Balance at December 31, 2013
(45,050)
(5,000)
(50,050)
300
5,700
6,000

Introduction: In this analysis, we will be examining the financial statements of Apex Printing, a printing solutions company that provides printing services to a range of clients. The company’s balance sheet, income statement, and cash flow statement will be analyzed to better understand the company’s financial situation.

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Description: Apex Printing’s balance sheet shows the company’s assets and liabilities at the end of 2012 and 2013. The company’s current assets increased from $14,500 in 2012 to $20,450 in 2013 due to an increase in the inventory and cash held by the company. Apex Printing’s total assets decreased from $300,000 in 2012 to $274,750 in 2013. The company’s liabilities and stockholders’ equity decreased from $157,600 in 2012 to $137,150 in 2013.

The income statement shows Apex Printing’s revenue, cost of goods sold, gross margin, and net income for the years 2012 and 2013. The company’s revenue decreased from $475,000 in 2012 to $450,000 in 2013. The company’s net income increased from $26,250 in 2012 to $68,750 in 2013. This increase was primarily due to a decrease in selling, general, and administrative expenses.

Lastly, the cash flow statement shows Apex Printing’s cash inflows and outflows for the year 2013. The company’s net cash flow from operating activities was $55,350, which was primarily due to an increase in short-term notes payable and accounts payable. The company had a net decrease in cash of $50,050 due to cash payments for mortgages and dividends.

Analysis: Apex Printing’s current assets increased in 2013, indicating that the company had more cash and inventory on hand to meet its financial commitments. Additionally, the company’s net income increased in 2013 due to a decrease in selling, general, and administrative expenses. However, the company’s total assets decreased, and liabilities and stockholders’ equity decreased, indicating that the company may have experienced a decline in its business operations.

The company’s cash flow from operating activities indicates an increase in short-term notes payable and accounts payable, indicating that Apex Printing may have had difficulty paying off its short-term debt obligations. Finally, the decrease in cash due to payments for mortgages and dividends may put pressure on the company’s liquidity going forward.

Overall, while Apex Printing may have experienced some financial success in 2013 with an increase in net income, the company’s decline in assets and liabilities may indicate some challenges going forward. The company may need to re-evaluate its debt obligations and cash management strategies to improve its financial performance in the future.

Objectives:
1. To analyze and interpret the financial statements of Apex Printing for the years 2013 and 2012.
2. To identify the components of the balance sheet and income statement that are relevant to the financial analysis.

Learning Outcomes:
1. Students will be able to calculate the gross margin, net income, and cash flow from operating activities using data from Apex Printing’s financial statements.
2. Students will be able to identify the trend in sales, inventory, accounts receivables, and payables over the two years.
3. Students will understand the impact of depreciation expense on the net income and cash flow.
4. Students will be able to assess the liquidity and solvency position of Apex Printing based on its balance sheet.
5. Students will be able to identify the factors that contributed to the change in the cash balance of Apex Printing over the period.

Analysis of Assets, Liabilities, Cash, and Profit:
The current assets of Apex Printing increased from $14,500 in 2012 to $20,450 in 2013, mainly due to the increase in inventory and cash balance. The long-term assets remained the same at $137,150. The total assets of Apex Printing increased slightly from $174,500 to $177,600 over the two years. The accounts payable and salaries payable increased from $3,500 to $4,600, and from $2,100 to $3,500, respectively, over the two years. The short-term notes payable increased from $12,000 to $18,100, while the mortgage payable decreased from $100,000 to $54,950. The total liabilities and stockholders’ equity remained the same at $174,500. The net income decreased from $68,750 to $26,250 over the two years. However, the cash balance increased slightly from $5,700 to $6,000.

Impression on the Company Financial Situation:
Based on the analysis, Apex Printing appears to be in a stable financial position with slightly increasing sales and total assets. However, the decreasing net income suggests that the company may have declining profitability. The increasing short-term notes payable and accounts payable indicate that the company may have some liquidity issues. The decrease in the mortgage payable and increase in the cash balance suggest that the company may have reduced its debt and increased its financial flexibility.

Solution 1: Improving Apex’s Cash and Short Term Liquidity

The financial statement suggests that Apex has improved its total assets over the year but experienced a decrease in its total liabilities indicating positive financial performance. However, to improve its short-term liquidity, Apex should increase cash reserves. One solution is to cut expenses to free up cash, like minimizing salaries expense by restructuring the workforce.

To increase cash on hand, Apex can approach a reliable banking institution for a short-term line of credit. Therefore, instead of borrowing large sums of money, Apex can get access to cash when needed. Obtaining factoring financing can also be another solution. Factoring allows Apex to sell its accounts receivable at a discount, in return for cash. Apex can use the cash to finance its obligations and strengthen its cash position.

An analysis of the Income Statement indicates that Apex has been experiencing a continuous decrease in gross margins. This highlights a potential issue with the cost of goods and services. Therefore, improving gross margins can add significant value to the firm. The Solution is having a better purchasing strategy to improve profit margins or re-evaluating its pricing strategy to raise prices and increase revenue.

Solution 2: Focus on Building Long-Term Credit Facilities

Another solution is to focus on long-term borrowing and debt financing to take advantage of long-term financing initiatives and reduce the tax liability. By shifting its focus to long-term borrowing and debt financing, Apex can access much needed funds to finance large projects and invest in capital expenditures. Apex can secure long-term financing by issuing bonds and commercial paper to finance its short-term and long-term financing requirements.

An analysis of the Balance Sheet highlights that Apex has limited long-term assets, which limits the firm’s ability to borrow long-term. The solution will be to make long-term investments that can generate returns and improve financial flexibility. Therefore making long-term investments with existing creditors can build trust, and increase the possibilities of obtaining better loan agreements. Apex can also consider the possibility of loan guarantees by local authorities or financial institutions, which will help ease the process of obtaining long-term financing.

Furthermore, keeping an eye on accounts receivable aging, inventory turnover, and average collection period can help Apex make well-informed decisions. Modifying payment terms, updating the inventory count system, and improving the collections process can improve profit margins improving Apex’s overall financial stability.

Suggested Resources/Books:

1. Financial Accounting: Tools for Business Decision Making by Paul D. Kimmel, Jerry J. Weygandt, and Donald E. Kieso
2. Fundamentals of Financial Accounting by Fred Phillips, Robert Libby, Patricia Libby
3. Financial Reporting, Financial Statement Analysis and Valuation by James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Similar Asked Questions:

1. How can the use of financial statements help in decision-making for companies?
2. What are some ways to analyze a company’s assets and liabilities on a balance sheet?
3. How is net income calculated and what does it signify for a company?
4. What is the importance of cash flow statements in assessing a company’s financial health?
5. How can investors use financial ratios to evaluate a company’s performance?

Slide Presentation:

Slide 1: Introduction
– Brief overview of the financial statements and why they are important
– Company background information

Slide 2-4: Analysis of Balance Sheet
– Overview of the company’s assets and liabilities over two years
– Analysis of cash, accounts receivable, and inventory
– Analysis of building & equipment and depreciation

Slide 5-7: Analysis of Income Statement
– Comparison of revenue and costs of goods sold over two years
– Analysis of gross margin, selling, general & administrative expenses, and net income
– Calculation and explanation of depreciation expense

Slide 8-10: Analysis of Cash Flow Statement
– Explanation of operating, investing, and financing activities
– Analysis of net cash flow and cash balance
– Calculation and explanation of certain adjustments made

Slide 11-12: Financial Ratios
– Explanation of key financial ratios such as current ratio, debt-to-equity ratio, and return on equity
– Calculation and application of these ratios to the company’s financial statements

Slide 13-14: Conclusions and Recommendations
– Summary of overall financial health of the company
– Recommendations for areas of improvement based on the analysis

Slide 15: Q&A
– Open forum for any questions or concerns regarding the presentation or financial statements.

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