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Having learned key issues to address on the income statement, now look at an example of the analytical process, featuring Anne Schippel, the business banker. Dry Supply began as a wholesaler of powdered laundry products. Twenty years later, the operation changed its focus to dry cleaning supplies, such as liquid cleaners, plastic bags, and metal hangers. The company continues in that capacity today. Historically, the company has had a very good operating and credit record, and a check on its dealings with suppliers and customers reveals no notable problems. Having obtained this and other background information, Schippel prepares to analyze Dry Supply's Income Statements. Adhering to a consistent process, Schippel begins by first reviewing the statements presented, noting the overall quality and completeness of the data. Applicable information, taken from the statements, then is entered into a computer, which generates a standard spreadsheet. At Schippel's bank, all financial statements, regardless of the preparer, are analyzed by using a standard format. The bank has discovered that a key to effective analysis is consistency in both the presentation and evaluation of information. With spreadsheet in hand, Schippel begins a comprehensive financial analysis of Dry Supply's income statements to answer the following questions. Question 1: For the last three years Schippel analyzed sales have shown a moderate increase from approximately $895,000 to $918,000. Sales have declined, however, during the most recent year. Schippel sees this decrease as more of a concern than the three-year increase. What are some questions Schippel should ask Dry Supply to help explain this sales decrease? Question 2: Dry Supply's cost of goods sold has decreased over the three-year period. What questions should Schippel develop to ask Dry Supply regarding the cost of goods sold? Question 3: Operating expenses increased from $157,000 to $180,000 in two years. What are some questions Schippel should ask about the operating expenses? Question 4: Overall, Dry Supply has been consistently profitable, with after-tax profits rising each year. What are some questions Schippel should ask Dry Supply about the growing profitability? Provide at least three different questions for each of the above. Having learned key issues to address on the income statement, now look at an example of the analytical process, featuring Anne Schippel, the business banker. Dry Supply began as a wholesaler of powdered laundry products. Twenty years later, the operation changed its focus to dry cleaning supplies, such as liquid cleaners, plastic bags, and metal hangers. The company continues in that capacity today. Historically, the company has had a very good operating and credit record, and a check on its dealings with suppliers and customers reveals no notable problems. Having obtained this and other background information, Schippel prepares to analyze Dry Supply's Income Statements. Adhering to a consistent process, Schippel begins by first reviewing the statements presented, noting the overall quality and completeness of the data. Applicable information, taken from the statements, then is entered into a computer, which generates a standard spreadsheet. At Schippel's bank, all financial statements, regardless of the preparer, are analyzed by using a standard format. The bank has discovered that a key to effective analysis is consistency in both the presentation and evaluation of information. With spreadsheet in hand, Schippel begins a comprehensive financial analysis of Dry Supply's income statements to answer the following questions. Question 1: For the last three years Schippel analyzed sales have shown a moderate increase from approximately $895,000 to $918,000. Sales have declined, however, during the most recent year. Schippel sees this decrease as more of a concern than the three-year increase. What are some questions Schippel should ask Dry Supply to help explain this sales decrease? Question 2: Dry Supply's cost of goods sold has decreased over the three-year period. What questions should Schippel develop to ask Dry Supply regarding the cost of goods sold? Question 3: Operating expenses increased from $157,000 to $180,000 in two years. What are some questions Schippel should ask about the operating expenses? Question 4: Overall, Dry Supply has been consistently profitable, with after-tax profits rising each year. What are some questions Schippel should ask Dry Supply about the growing profitability? Provide at least three different questions for each of the above.
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Related Book For
Introduction To Materials Management
ISBN: 978-9386873248
8th edition
Authors: Arnold J. R. Tony, Gatewood Ann K., M. Clive Lloyd N. Chapman Stephen
Posted Date:
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