PART 1 - Calculate and Interpret Basic Accounting Ratios In this part of the course project, you will calculate one financial ratio from each of the three categories you learned about in Module 2 of the course (Liquidity, Profitability, and Efficiency) so that you can better understand Astrobucks performance.

To complete this part of the project you will need to refer to the balance sheet and income statement in part one, and use the data to complete each of the three sections below. You will be identifying the ratio using Year 1 of financial performance. Note that some ratios require you to know Astrobucks Year 0 financial information, and so for this part of the project, assume that their Year 0 Accounts Receivable was $78,553, that their Year 0 Inventory was $242,247, and that their Year 0 Accounts Payable was $120,552.

PART 2 - Examine Financial Trends in Business Organizations In this part of the course project, you will examine financial data across multiple years in order to discover a financial trend in Astrobucks performance.

To complete this part of the project you will need to again consult the balance sheet and income statement that you examined in Part One. In Part Two of the project, you calculated three sets of ratios for one year of Astrobucks performance. In Part Three of the course project, you will calculate the same three ratios for the following year in order to discover a trend in their performance over time. For each type of ratio, you will calculate the ratio and identify the trend (if any) that the financial performance shows.

A. Write a paragraph that answers the following questions: is there a trend from Year 1 to Year 2 that you uncovered for the Liquidity Ratio? Why or why not? What is the trend and what does it mean? Is the trend positive, or negative, and how can you tell?

B. Write a paragraph that answers the following questions: is there a trend from Year 1 to Year 2 that you uncovered for the Profitability Ratio? Why or why not? What is the trend and what does it mean? Is the trend positive, or negative, and how can you tell?

C. Write a paragraph that answers the following questions: is there a trend from Year 1 to Year 2 that you uncovered for the Efficiency Ratio? Why or why not? What is the trend and what does it mean? Is the trend positive, or negative, and how can you tell?

PART 3

Analyze Financial Data to Propose Business Strategies

In this part of the course project, you will propose corrective action to address any negative trends that you uncovered in Part Three.

To complete this part of the project you will need to take the trends that you identified in Part Three and apply at least one of the four financial decision-making strategies: Increase Debt, Increase Income, Raise Equity, or Reduce Costs.

Liquidity Ratio

If the first trend was positive, what numbers changed between Year 1 and Year 2 to create that positive change? If the change was negative from Year 1 to Year 2, what would you recommend needs to change in order to improve Astrobucks performance?

Profitability Ratio

If the second trend was positive, what numbers changed between Year 1 and Year 2 to create that positive change? If the change was negative from Year 1 to Year 2, what would you recommend needs to change in order to improve Astrobucks performance?

Efficiency Ratio

If the third trend was positive, what numbers changed between Year 1 and Year 2 to create that positive change? If the change was negative from Year 1 to Year 2, what would you recommend needs to change in order to improve Astrobucks performance?

BALANCE SHEET: ASTROBUCKS