Financial Statement Analysis - Business Accounting Assessment Answers

Internal Code: 1ICFE

Task: Financial Analysis - Business Accounting

PURPOSE The purpose of this assignment is to provide hands-on experience to Business Accounting students on financial analysis using real-life data. It gives students the opportunity to demonstrate, through an extended exercise, their ability to apply their accounting knowledge and analytical skills to a real-world setting. It also provides an opportunity to develop students’ interpersonal skills in a work environment. ASSIGNMENT QUESTIONS Answer both Part A and Part B as outlined below. All questions relate to the financial figures of the consolidated entities. Part A Use the ‘ABC Learning’ and ‘One Tel’ documentaries to identify:

• issues that led to the corporations collapse
• financial statement (s) and/or other sources of information that contain any earlier signs of the businesses’ failure
• financial ratios that can be used to detect early signs of these issues Summarise your findings in the table attached, recording the first issues that both companies had in common followed by the issues unique for each company. Use a ‘bullet point’ format and record one issue per line.

Part B (Financial Statement Analysis) Assume that you are a financial adviser and a client has approached you seeking your advice as to whether they should place their money (e.g. $10,000) in to a long-term bank deposit or invest it in one of the selected companies. Discuss potential risks and returns related to the above options using: