Purpose of the Exercise
This case study has three objectives:
1) To demonstrate your skill in building spreadsheets in Excel.
2) To demonstrate your understanding of basic management accounting principles.
3) To facilitate possible future conversations during the recruiting process as a candidate for the
position of Senior Business Consultant.
Although most of our consulting time is spent literally turning the business around by changing
behavior in the workplace, it is imperative to be able to verify, build and discuss simple financial
management reports with Clients on virtually every engagement. In addition, behavior change,
and key performance indicators must drive financial return. It is essential to reverse engineer
behavior change goals and these goals must be supported by a clear understanding of solid
Instructions for the Exercises
Follow the directions for each exercise carefully.
o Exercises must be built from scratch (no templates) in MS Excel
o Use one MS Excel document, but a separate tab (sheet) for each exercise
o Place your name at the top of each sheet
o Try your best to format each sheet so that it will print on one page
o Include assumptions you have made and explain pertinent choices for each exercise at
the bottom of each sheet.
o Be certain to consider the biographical information in all exercises to help paint a picture of reality.
ABC Company- Biographical Information
ABC Company is a family owned business which Jonathan started 15 years ago, issuing 900 shares of the 1000 authorized, at a par value of $100 a share. ABC Company is a small manufacturer which produces ladies’ sports apparel. The business has employed as many as 30 people; however, sales have slipped the last three years, according to Jonathan, due to competition in the marketplace, and the economy.
Currently, the business employs 9 people, including Jonathan and his son, Junior, who is the Plant Manager. The business appears to be on pace to produce about the same as last year, $800,000, which is down from their high of about $2,500,000 just four years ago. Jonathan’s family is personally in financial trouble, because Jonathan and Junior aren’t taking home the same salary they used to. Three years ago, each of them earned $200K per year. At the time of our arrival, Jonathan hadn’t taken any pay for a month, and Junior is being paid at the rate of $50K per year. Jonathan has a few health issues, and wants Junior to take over the business, but can’t afford to hire a new Plant Manager. Morale throughout the company is low,
and productivity is suffering.
ABC Company sold 12,307 units last year. 85% of the sales were in workout leggings.
Remaining sales were from one order of sweatshirts by their oldest customer.
They are behind in payables and past due receivables are at an all time high. Their customer base consists mainly of three local retailers who love working with Jonathan and Junior and have been customers for years.
Vendors are getting tired of being paid late, and their primary fabric vendor has just recently put them on COD. There is a loan on the books from Junior’s mother-in-law for $30,000, with a pay plan of $750 a month, but the Company has missed the last three payments and Junior and his wife are becoming increasingly upset about the embarrassment and problems this is causing in their family life.
Exercise One – Tab One (portrait page format)
Build a standard, simple Income Statement (P&L). It must show Revenue, Cost of Goods/Direct Costs, and Overhead expenses, along with the standard totals in each section. Include dollar amounts and percentages for each line item. Be careful to choose only P/L appropriate items from the list of “The Numbers” the Client provided.
Accounting Fees 6,000
Accounts Payable 94,300
Accounts Receivable 92,600
Accum Depr – Building 20,000
Accum Depr – Equipment 16,000
Accum Depr – Vehicles 8,000
Additional Paid-in Capital 25,000
Bank Fees 4,450
Capital Stock 90,000
Discounts & Allowances – 21,500
Discounts – Materials -8,520
Dues & Subscriptions 620
Equipment Maintenance 18,690
Freight Out Expense 5,200
Income Tax 800
Interest Expense 4,000
Investment in JKL Corporation 9,000
Marketable Securities 8,000
Material Purchases 292,500
Merchandise Inventory 119,000
Motor Vehicles 20,000
Note Payable (due in 6 months) 7,000
Note Payable (due in 2.5 years) 30,000
Notes Receivable 5,000
Office Supplies 6,000
Payroll – Administrative 44,000
Payroll – Direct Labor 202,210
Payroll – Management 50,000
Payroll – Overtime 13,600
Payroll taxes 15,000
Prepaid Expenses 3,000
Repairs & Maintenance 21,250
Retained Earnings 119,750
Revenue Received in Advance 2,000
Sales Commissions 40,000
Selling Supplies 2,250
Exercise Two – Tab Two (landscape page format)
Prepare a Six-Week Cash Flow Forecast taking into account the information directly below, the information from the income statement, and the biographical information. This exercise does not have an exact answer, of course. However, there must be positive cash flow each week, and your choices must be reasonable and realistic. You must also show improvements because you are there to improve the business.
AR, AP, and other payments due.
Beginning Checking Account Balance $ 7,000
Average Weekly Sales for the last 3 months $ 6,000
A/R Current $23,600
A/R 30 days $20,000
A/R 60 days $12,000
A/R 90 days $18,000
A/R over 90 $24,000
Payroll is every other week $11,916
Payroll Taxes (due on 15th of every month) $ 1,250
Page 5 of 5
A/P Current $30,000
A/P 30 days $33,000
A/P 60 days $15,000
A/P 90 days $ 6,200
A/P over 90 $9,100
Truck Lease (due on 13th of every month) $ 550
Payment on Building (due 1st of every month) $ 2,500
Equipment Loan (due 22nd of every month) $ 1,350
Accountant Fee (due 1st of every month) $ 1,200
Telephone average (due 20th of every month) $ 650
Utilities average (due 4th of every month) $ 850
Mother-in-Law loan payback (due 5th of every month) $ 750
Exercise Three – Tab Three (portrait page format)
Based on all of the information provided within this case study, please answer the following
1. What are the first 3 things you would address in Sales at ABC Company? Why?
2. What are the first 3 things you would address in Operations? Why?
3. What are the first things you would address in Finance? Why?
Exercise Four – Tab Four (portrait page format)
The following items may require some research on your part. Please utilize information on the internet, books, or other publications/resources to briefly answer the following:
1. How might the concept of the Theory of Constraints (Goldratt) apply to turnaround
consulting for ABC Company and Clients like them?
2. Provide 2-3 each of leading metrics (KPIs) for Sales, Ops and Finance for ABC Company
3. What lagging metrics will you measure?
4. How would you use the “I” and the “N” of the SPIN Selling concept as a means of
discovery when speaking to Clients and their employees of ABC Company?
We value our customers, and so ensure that our papers are 100 percent original. Our Team of professionals does not miss the mark; they ensure that step by step each paper is written uniquely. We never duplicate or work as we compare papers rest assured. We deliver our work a day before time to ensure that you don’t miss your deadlines. It is not only doing the work but delivering it at the right time. We capture the consequences of late remittances. .
We value customer satisfaction here at popularessaywriters.com and make sure that you get the best value for your Money. It happens that sometimes you can pay twice for your order or may want to cancel it, or you feel that it doesn’t meet your requirements; our money back guarantee will give you the opportunity to get back your money. We will also refund 100% of money paid double. In case your paper does not satisfy your requirements , we request that you notify us via writing within 2 days otherwise on the third day we will assume that you have been satisfied. Do all your correspondences through our email address email@example.com.Read more
At popularessaywriters.com, our professional writers know the consequence plagiarism does for our clients. We have updated software’s such as article checker and copyscape to check for originality of the custom papers before submission of the final paper to the you. Our guarantee to the customer is that we will write 100% original papers for them that are quality, timely and of low cost. We have experienced professional and competent PhD writers who will write quality custom papers for you..Read more
. At popularessaywriters.com, we are proud to provide top-quality Essay writing service to our esteemed customers. We are ready to take up that challenging academic assignment that is giving you sleepless nights and simplify it for you according to your desired requirements. We are willing to revise your paper if it does not meet your requirements. At popularessaywriters.com, we do not compromise with quality; thus, we offer unlimited free revisions until the customer is satisfied with their custom paper. Our unlimited free revision services are provided under the following terms:.. .Read more
Popularessawriters.com knows that client’s information is an essential tool for our company. It means that whatever the client requests from our service is kept strictly confidential. It means that whoever writes for this company understands the terms and conditions hence you should not be worried because you will never see your work somewhere else...Read more
Rest assured that we will always be attentive to your needs and requirements. We belief in the phrase treat your neighbour as you would want them to treat you. We leave nothing to chance and always look forward to a good interaction with each other.. .Read more