Understand Models

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Learning about Excel the past two weeks of this module have been interesting. There is more to learn about Excel than students could have anticipated. Week two of classes we were to complete an income statement, balance sheet, statement of cash flows, a common size income statement, and a common size balance sheet, from chapter two of Mayes & Shank (2012) problem number 3. The question that needs to be answered is what the value is in having the financial statements on a spreadsheet (Mayes & Shank, 2012). The answer is that all the information is formulated within the Excel; it is easy to read and even easier to navigate through and follow.

When doing an Excel spreadsheet especially dealing with financial statements, there are a lot of formulas and numbers to be tracked. In the problem we had missing numbers that needed to be calculated with the proper formulas in Excel. For the income statements the first number to be calculated was for the gross profit. This was accomplished by taking the sales of Winter Park Web Design and subtracting that by the cost of goods sold. Next was to find the depreciation expense. This was found by looking on the statement of cash flows spreadsheet of Winter Park Web Design under depreciation expense. The next missing calculation was for the net operating income. The net operating income was found by taking the gross profit and subtracting it from the depreciation expense and subtracting that from the selling and administrative expense to get the total for net operating income. Next was to calculate the earnings before taxes, by taking the net operating income and subtracting the interest expense from it. The next was to calculate the taxes. This was done by taking the earnings before taxes and multiplying the number by the tax rate. Last was to calculate the net income. This is calculated by taking the earnings before taxes and subtracting it by the taxes.

By doing the first step of the problem it was easy to realize...
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