ACC 308 5-1 Final Project Milestone Two: Management Analysis Brief Southern New Hampshire University 03:38:49 GMT -05:00 My objective in this managerial analysis brief is to analyze how pro forma financial statements can be used to predict future growth objectives, how inventory costs are calcu...
ACC 308 5-1 Final Project Milestone Two: Management Analysis Brief
Southern New Hampshire University
03:38:49 GMT -05:00
, My objective in this managerial analysis brief is to analyze how pro forma financial
statements can be used to predict future growth objectives, how inventory costs are calculated,
contingent liabilities are accounted for, and revenue is recognized, along with identifying
potential financial statement issues. A substantial amount of growth has been experienced by
Peyton Approved over the past few years. If Peyton Approved goes ahead with its plans to open a
new location, pro forma statements based on financial statements from 2015-2018 can be
generated to predict the company's continued success.
In order to make an informed decision, Peyton Approved creates pro forma financial
statements. A new location will involve multiple costs, including obtaining additional
commercial space, maintaining new equipment, hiring workers, and increasing expenses.
Management and investors need to keep in mind that pro forma income statements and pro
formal balance sheets are only a prediction and not created or regulated by Generally Accepted
Accounting Principles (GAAP). This type of pro forma financial statement should be presented
to potential investors as a projection rather than an actual financial statement. Despite the
projected positive net income, the current location will earn 42.2% less than the new one.
According to me, a second location would increase the company's bottom line and result in a
profit.
Costing inventory, recognizing revenue, and addressing contingent liabilities are some
issues that need to be addressed. Since the reports are based on last in, first out (LIFO) which "is
a method used to account for inventory costs, where the most recently produced items are
recorded as sold first" the new location may want to consider changing to first in, first out
(FIFO) method instead. (Kenton, 2018). Revenue will increase as a result of this method. An
inventory costing method change would also change the estimated figures. "A contingent liability
03:38:49 GMT -05:00
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller newage. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.99. You're not tied to anything after your purchase.
