1. Transfer your company’s balance sheet to an excel sheet and income statement. Also, include a screenshot of the original balance sheet and income statement in the worksheet on excel. (Company Adidas , Financial Year 2020)
2. Identify the costs/expenses as either variable of fixed. For the variable cost per unit, you will have to find or estimate the total products sold during the fiscal year. Write the cost function for your company.
3. Track your company’s stock price this week. Record the amount the stock price increased or decreased each day, totaling five days. I will provide an example of this during class. (The week is 3rd week of May)
With your sales forecast, you now have to assemble the data to make your master budget. Below is a list of the data points you will have to find using your company’s most recent income statement, balance sheet, and possibly cash flow statement:
– Divide your cost of goods sold by total sales to get the cost of goods sold percentage
– Add together the fixed expenses form your income statement and divide the total by 12 to get the monthly total.
– Add together the variable expenses (excluding COGS) from the income statement and divide the total by the sales revenue total to get your variable expense percentage.
– Divide the depreciation expense total by 12 to get the monthly depreciation.
– Divide the Income tax expense by Earnings before income taxes to find the income tax rate.
– Search for a rate of interest from the annual report of the company. Use the rate you find when you make a capital budget.
Additional Information Needed to Make Master Budget :
– Sales are 40% Cash and 60% Credit. Of the credit sales, 30% are collected the next month, 40% the month after, and 25% the month after that, and 5% are determined to be uncollectible.
– Your account receivable total from your balance sheet will be collected as follows: 40% the next month, 40% in two months, 15% in three months, and 5% is determined to be uncollectible
– 50% of your account payable total is inventory bought on account which you pay for the next month.
– Whatever your inventory total is on your balance sheet, you must keep 20% of this as ending inventory each month (Like the example we did in class).
– You must maintain 10% of your cash total from you balance sheet in your cash account (This applies to the cash budget).
5. Question Set 1:
5.1) Complete the budgeted income statement and balance sheet for the three month period.
5.2) Use your budgeted income statement and create a flexible budget for a 5% and 10% increase in sales and decrease in sales.
5.3) What changes did you notice to your Cash Budget when you inserted the new sales figures?
5Question Set 2:
5.2.1) List 3 non-financial goals that your company may use in a balanced scorecard.
5.2.2) Go to the the Management Discussion and Analysis section in the annual report of your company (If one exists). What long term financial goals are outlined?
5.2.3) Based on your budget and the strategic/long range goals, what advice can you give the managerial accountant of your company going forward?