SAMPLE CASE STUDY: ACCOUNTING ANALYSIS & DECISION MAKING CASE STUDY SITUATION Februn is a small corporation which

sells Party Supplies. Felix and Brunhilde began their small business 10 years ago. The business has now outgrown the original owners. They have incorporated and will now seek additional financing through additional stockholders or through creditors. Given the data shown below, what additional steps should the management of Februn make to properly document the operations and to prepare for additional financing? Dec 31 2010 Cash Inventory Receivables Office Building and warehouse Long-term loan 20000 50000 30000 150000 50000 Sales Cost of Goods Administrative exp Interest on loan Tax rate year ending 2010 1,000,000 500000 100000 2000 35%

THINGS TO CONSIDER Analyze major ratio categories of Februn. Liquidity, Leverage, Efficiency, Return . What are the strengths and weaknesses of Februns current situation? What numbers are missing? Which of the ratio categories is impacted by levels of inventory? Assuming the company uses LIFO and the economy is experiencing an inflationary climate. Realizing that Februn is using straight-line depreciation, what impact is this decision having on expense control and asset efficiency? What are some areas of the Februn organization areas that need to have improved documentation or potential auditing? Describe any other recommendations you might make to the owners and the creditors of Februn.

 Copyright of Future Business Leaders of America Phi Beta Lambda (FBLA-PBL) This document is property of Future Business Leaders of America Phi Beta Lambda (FBLA-PBL) and its contents may not be copied, uploaded to the internet or posted to a listserve without the copyright holders express written permission. However, users may print, download, or email articles for individual use.

A full version of this document can be purchased at http://www.fblamarketplace.com/ under the competitive events section.