Lakeside Case Exercise Template
Case 3 - Exercise 1
The Lakeside Company
Analytical Review Procedures
December 31, 2012
Prepared by:
Date:
(a) Compute the financial ratios listed in Exhibit 3-2 for Lakeside for the years ended December 31, 2010 and December 31, 2011. Comment on any large fluctuations, unusual fluctuations, or lack of expected fluctuations. Also, give an overall conclusion as to the significance of the change in Lakeside’s liquidity, solvency, and profitability positions from 2010 to 2011. Use the following format. [Use Case3.xls for a spreadsheet to compute the ratios].
Ratio
2010
2011
Significance of Change
Current
1.35
1.35
No significant fluctuation, indicating a stable liquidity position (based on this measure of liquidity)
Average Days Inventory on Hand
Average Days to Collect Receivables
Debt-to-Total Assets Ratio
Times Interest Earned
Profit Margin
Return on Assets
Return on Equity
Overall Conclusion:
(b) Compare the year 2011 financial ratios computed for Lakeside above to the industry average ratios included in Exhibit 3-3. Comment on any large fluctuations, unusual fluctuations, or lack of expected fluctuations. Also, give an overall conclusion as to the significance of the difference between Lakeside’s liquidity, solvency, and profitability positions in 2011 and the industry average positions. Use the following format.
Ratio
Industry Ave.
Lakeside 2011
Significance of Change
Current
2.16
1.35
Lakeside is below the industry average. This may indicate short-term solvency problems
Average Days Inventory on Hand
Average Days to Collect Receivables
Debt-to-Total Assets Ratio
Times Interest Earned
Profit Margin
Return on Assets
Return on Equity
Overall Conclusion:
(c) Scan each of the financial statements and the trial balances included in Exhibits 3-4 through 3-7. Comment on any unusual accounts, account
The Lakeside Company
Analytical Review Procedures
December 31, 2012
Prepared by:
Date:
(a) Compute the financial ratios listed in Exhibit 3-2 for Lakeside for the years ended December 31, 2010 and December 31, 2011. Comment on any large fluctuations, unusual fluctuations, or lack of expected fluctuations. Also, give an overall conclusion as to the significance of the change in Lakeside’s liquidity, solvency, and profitability positions from 2010 to 2011. Use the following format. [Use Case3.xls for a spreadsheet to compute the ratios].
Ratio
2010
2011
Significance of Change
Current
1.35
1.35
No significant fluctuation, indicating a stable liquidity position (based on this measure of liquidity)
Average Days Inventory on Hand
Average Days to Collect Receivables
Debt-to-Total Assets Ratio
Times Interest Earned
Profit Margin
Return on Assets
Return on Equity
Overall Conclusion:
(b) Compare the year 2011 financial ratios computed for Lakeside above to the industry average ratios included in Exhibit 3-3. Comment on any large fluctuations, unusual fluctuations, or lack of expected fluctuations. Also, give an overall conclusion as to the significance of the difference between Lakeside’s liquidity, solvency, and profitability positions in 2011 and the industry average positions. Use the following format.
Ratio
Industry Ave.
Lakeside 2011
Significance of Change
Current
2.16
1.35
Lakeside is below the industry average. This may indicate short-term solvency problems
Average Days Inventory on Hand
Average Days to Collect Receivables
Debt-to-Total Assets Ratio
Times Interest Earned
Profit Margin
Return on Assets
Return on Equity
Overall Conclusion:
(c) Scan each of the financial statements and the trial balances included in Exhibits 3-4 through 3-7. Comment on any unusual accounts, account