BMATWT 353 - Understanding Financial Statements

BMATWT 353 - Business of Building

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Understanding Financial Statements

Due Thursday May 1

This assignment is drawn from the material covered in Chapter 13 of the text, Understanding Principles of Accounting, and from the Online reading: "Accounting Habits of Successful Contractors".

Note it will be helpful in assigning any partial credit, if you show your work for the following questions (if applicable).

1) Find Figure 1 "9 month expense budget " appearing on the second page of the online Article Accounting for contractors. Use the "9 mo. total" Column, Rank order the 4 largest budget expense line items and calculate the PERCENTAGE each of these line items contributes to the total of the 9 months expenses.

2) Officers salaries vary in this example. The months of March, May and July show a higher figure than the other months. Can you explain why? (hint: it has to do with the calendar, look at Fridays)

3) On the next page, Figure 3 presents a job cost profitability report. Gross Profit Rate (gross margin) is shown on the last line of the table for the Job Total (combining both the door and window phases). Here is some additional information: We can calculate the Gross Profit for each of the phases for the job if we know the Price we would charge for these phases. Assume the expected "Price" that was to be charged for each of the two phases separately is as follows:

Doors: $4,000, and Windows: $19,000 which sums to the total job Price of $23,000

Calculate the ESTIMATED and ACTUAL Gross Profit ($) and Gross Profit Rates for each phase, Door and Window.

4) The article mentions the firm is quite solvent in the short term. What is the firm's "Current Ratio"? (relevant data is given on the balance sheet, the last figure in the article on p. 71)

5) Is this a "good" figure or a "bad" one?

6) Figure 4 (p. 70) shows Monthly income statements for July, August and September. We want to look at a "quarterly" figure. Sum the Total Net Incomes for all three months. Next Sum the Total Cost of Goods Sold. What is the GROSS PROFIT AMOUNT ($) and the GROSS PROFIT Percentage (%) for the Quarter?

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Building Materials and Wood Technology
Department of Natural Resources Conservation
College of Natural Resources and the Environment
University of Massachusetts, Amherst.

Understanding Financial Statements

Due Thursday May 1

This assignment is drawn from the material covered in Chapter 13 of the text, Understanding Principles of Accounting, and from the Online reading: "Accounting Habits of Successful Contractors".

Note it will be helpful in assigning any partial credit, if you show your work for the following questions (if applicable).

1) Find Figure 1 "9 month expense budget " appearing on the second page of the online Article Accounting for contractors. Use the "9 mo. total" Column, Rank order the 4 largest budget expense line items and calculate the PERCENTAGE each of these line items contributes to the total of the 9 months expenses.

2) Officers salaries vary in this example. The months of March, May and July show a higher figure than the other months. Can you explain why? (hint: it has to do with the calendar, look at Fridays)

3) On the next page, Figure 3 presents a job cost profitability report. Gross Profit Rate (gross margin) is shown on the last line of the table for the Job Total (combining both the door and window phases). Here is some additional information: We can calculate the Gross Profit for each of the phases for the job if we know the Price we would charge for these phases. Assume the expected "Price" that was to be charged for each of the two phases separately is as follows:

Doors: $4,000, and Windows: $19,000 which sums to the total job Price of $23,000

Calculate the ESTIMATED and ACTUAL Gross Profit ($) and Gross Profit Rates for each phase, Door and Window.

4) The article mentions the firm is quite solvent in the short term. What is the firm's "Current Ratio"? (relevant data is given on the balance sheet, the last figure in the article on p. 71)

5) Is this a "good" figure or a "bad" one?

6) Figure 4 (p. 70) shows Monthly income statements for July, August and September. We want to look at a "quarterly" figure. Sum the Total Net Incomes for all three months. Next Sum the Total Cost of Goods Sold. What is the GROSS PROFIT AMOUNT ($) and the GROSS PROFIT Percentage (%) for the Quarter?

Many of the materials created for this course are the intellectual property of the instructor. This includes, but is not limited to, the syllabus, lectures and course notes. Except to the extent not protected by copyright law, any use, distribution or sale of such materials requires the permission of the instructor. Please be aware that it is a violation of university policy to reproduce, for distribution or sale, class lectures or class notes, unless the faculty member has explicitly waived copyright. Copyright 2008, David T. Damery