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Summary ACC 308 5-1 Final Project Milestone Two: Management Analysis Brief Southern New Hampshi $7.99   Add to cart

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Summary ACC 308 5-1 Final Project Milestone Two: Management Analysis Brief Southern New Hampshi

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ACC 308 5-1 Final Project Milestone Two: Management Analysis Brief Southern New Hampshire University 03:38:49 GMT -05:00 My objective in this managerial analysis brief is to analyze how pro forma financial statements can be used to predict future growth objectives, how inventory costs are calcu...

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ACC 308 5-1 Final Project Milestone Two: Management Analysis Brief

Southern New Hampshire University




03:38:49 GMT -05:00

, My objective in this managerial analysis brief is to analyze how pro forma financial

statements can be used to predict future growth objectives, how inventory costs are calculated,

contingent liabilities are accounted for, and revenue is recognized, along with identifying

potential financial statement issues. A substantial amount of growth has been experienced by

Peyton Approved over the past few years. If Peyton Approved goes ahead with its plans to open a

new location, pro forma statements based on financial statements from 2015-2018 can be

generated to predict the company's continued success.

In order to make an informed decision, Peyton Approved creates pro forma financial

statements. A new location will involve multiple costs, including obtaining additional

commercial space, maintaining new equipment, hiring workers, and increasing expenses.

Management and investors need to keep in mind that pro forma income statements and pro

formal balance sheets are only a prediction and not created or regulated by Generally Accepted

Accounting Principles (GAAP). This type of pro forma financial statement should be presented

to potential investors as a projection rather than an actual financial statement. Despite the

projected positive net income, the current location will earn 42.2% less than the new one.

According to me, a second location would increase the company's bottom line and result in a

profit.

Costing inventory, recognizing revenue, and addressing contingent liabilities are some

issues that need to be addressed. Since the reports are based on last in, first out (LIFO) which "is

a method used to account for inventory costs, where the most recently produced items are

recorded as sold first" the new location may want to consider changing to first in, first out

(FIFO) method instead. (Kenton, 2018). Revenue will increase as a result of this method. An

inventory costing method change would also change the estimated figures. "A contingent liability



03:38:49 GMT -05:00

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