Accounting Challenge 12.1

Accounting Decision Files

Reading Between the Numbers: Financial Statement Analysis

About this activity

Campus Cycle Repair · you gather the facts by interviewing, not by reading a handout.

Campus Cycle Repair now has enough history to analyze rather than just record. Riley reads the results one way; the ratios may read them another. Your job is to evaluate profitability, liquidity, and how the shop is financed — and to decide what the combination of those measures says about the business, including where they disagree with each other.

Watch the tutorial video

Length: 11 minutes, 5 seconds

Open the tutorial video in a new window

Interview Riley and Morgan

Neither character has the whole picture. Morgan can tell you what the records show; Riley can tell you why. Ask real questions, follow up on anything that does not add up, and reconcile the two accounts before you answer anything.

Riley — founder and owner. Knows the business story and what actually happened, but does not keep the books. Optimistic, cautious about debt, and candid when working from memory.
Interview Riley

Morgan — handled the accounting records. Organized, practical, and precise. Morgan knows what was recorded and how.
Interview Morgan

Questions worth asking

You may ask your own questions. These will get you started.

Riley, what expansion decision are you considering?
Riley, what would the full satellite location cost, and how would it be financed?
Riley, what sales and operating-income estimates are you using, and how firm are they?
Riley, what evidence do you have about demand, and what was not tracked?
Riley, why did receivables and inventory increase this year?
Riley, is there a smaller or phased alternative to the full location?
Morgan, what do the comparative income statements show?
Morgan, what do the comparative balance sheets show?
Morgan, what are the net credit sales and operating cash flow amounts?
Morgan, what do the receivables and inventory aging records show?
Morgan, what benchmark information is available?
Based on both interviews, which favorable and unfavorable signals matter most?

Then answer in Canvas

The questions are in Canvas, in the quiz named Accounting Challenge 12.1.

Interview both characters before you start the quiz.
The questions ask about evidence you gather in the interviews, so the tutorial video alone will not be enough.
You have one attempt, and you will get 5 questions.
Questions appear one at a time, and you cannot return to a question after you submit it.
Keep this page open in a second window so you can go back to an interview while you work.
Do not paste quiz questions into the interviews. Gather facts, then reason from them.

If something does not work

Email Dr. Tietz at wtietz@kent.edu with your section number and what happened. Do not wait until the due date has passed.