Your dog , Peyton , has severe allergies and cannot have the usual store-bought dog treats . You have been making homemade treats for him that are all-natural and hypo-allergenic . Over the past year , you have been making and selling these treats out of your home and have been quite successful . You now have an opportunity to open your own dog treat bakery . You have decided on a corporate form of business and have named your company “ Peyton Approved .”
During the first part of this final project , you were asked to follow the business transactions for a six-month period from that initial stage of analysis and recording through the reporting process . Now , you will use this information to compose a memorandum to the bank detailing the results of operations as communicated in the financial statements you have produced based on the business transactions for the period .
Use your completed workbooks to prepare your ratio analysis and memo , which will include an overview of the company ’ s accounting system , discussion of the results of operations and what those results mean , and a discussion on what changes in operations might need to be made to make the company more profitable . This memo will be used as part of a loan package to request additional funding for potential expansion in year two .
Specifically , the following critical elements must be addressed : 1 . Ratio Analysis
a ) Create a ratio analysis . Be sure to include all relevant ratios .
b ) Discuss each ratio . What does the ratio tell you ?
c ) Why is ratio information useful ? What decisions will you make based on the ratio ?
2 . Prepare a Memo to a Bank
a ) Provide an overview of the company ’ s accounting system . What basis of accounting is used ? Why ?