Paper II Reading and Understanding Financial Statements The purpose of this pape

Paper II
Reading and Understanding Financial Statements
The purpose of this paper is to apply and illustrate what you have learned this semester, by submitting a full financial synopsis based on a hypothetical fast food restaurant. Below is a mock financial report indicating actual sales and expenses versus budgeted sales and expenses for a one year period of time. Review the report and write a 5 to 7 page financial review of this business incorporating the following areas:
Part I: Analysis (Sections 1 – 3)
Sub-divide your analysis into three distinct sections: 1) Revenue, 2) Expenses, and 3) Profitability
For each section, review the financial statement below and comment on:
Current status, apply vertical analysis to both Actual Results and Budgeted Results.
Determine and comment on the variance as it applies to each section. Ask yourself things like:
How did management perform against what was budgeted?
What are the strengths and weaknesses of this operation per section based on your variance analysis?
Create graphs or charts to illustrate and help clarify your synopsis
Part II: Recommendations & Budgeting (Sections 4 and 5)
After your financial analysis in sections 1 – 3, add two more sections; 4) Recommendations and 5) Budgeting.
Section 4: Based on your synopsis in sections 1 – 3, what recommendations would you make to upper management that would reduce expenses and increase revenues. For example:
Talk about your thoughts on product mix. Where should they focus their marketing dollars next year in order to increase profit margin?
How will your recommendation affect food cost?
What other recommendations would you make based on this year’s performance?
Consider doing some outside research of current fast food chains, compare how they perform versus this operation to support your recommendations
Section 5: Prepare next year’s budget
Create next year’s budget based on what it would look like if upper management accepted your recommendations
Consider doing some outside research of current fast food chains, compare how they perform versus this operation to support your recommendations
Paper:
APA format – no abstract is required
Must have a title page that includes date and your name
Must have a Reference page at the end citing any outside resources for your analysis, have at minimum two sources