Applied Managerial Accounting: Assignment 1 - Business Case

Instructor: Ori Gold
If you have a Study.com College Accelerator membership and are seeking college credit for this course, you must pass the proctored final exam and complete the assignment below. You must submit your project before registering for the final. Below you will find instructions for submitting your project as well as information on how it will be graded.

Project Instructions

You oversee the technology department at Innovative Technology Solutions, Inc., a company founded two years ago. The company grew quickly and the executives are trying to decide how to best allocate funds to support the company's growth.

The executive team approaches you to ask if you think some of the increased revenue should be spent on hiring new employees in your department to keep up with increased demands for the company's product. You believe growing your team would be beneficial, but you've been told to consider a number of factors while analyzing whether or not this would be an appropriate use of funds. If too much money is spent on new hires who don't ultimately help bring in revenue or trim expenses, the company will lose money in the long run.

You are tasked with creating a business case for your recommendation regarding hiring or not hiring more employees to your team. The company's accountant provides the financial information listed below, which you will need to analyze in order to make your final determination.

In a 800-1200-word report to the company executives, state and support your decision on whether or not you recommend hiring more employees at this time. Be sure to consider liquidity, solvency ratios, and cash flow in your answer. Your report should include calculations of the ratios and a discussion of the company's cash flow situation. The calculations you must include in your report are the current ratio, quick ratio, operating cash ratio, debt ratio, equity ratio, and debt to equity ratio.

If you use any Study.com lessons as sources in your assignment, please cite them using APA format (including the lesson title and the instructor's name). If you're unsure about how to use APA format to cite your sources, please see the following lessons:

Financial Information

Balance Sheet

Assets
Cash in the bank $45,000
Inventory $203,000
Office Supplies $2,500
Office Equipment $15,000
Total Assets $265,500

Liabilities
Accounts Payable $150,000
Notes Payable $75,000
Total Liabilities $225,000

Owner's Equity
Assets Liabilities + equity
Owner's Liability $40,500

Statement of Cash Flows for Quarter Ending March 31

Cash received from customers $250,000
Cash paid for salaries $100,000
Cash paid for rent $10,000
Cash paid for other items $20,000
Cash provided by operating activities $120,000

Investing Activities
Purchase of equipment $5,000

Financing Activities
Additional owner's equity $5,000
Cash on hand as of Jan 1 $35,000
+$120,000
Cash on hand as of March 31 $155,000

Grading Rubric

Your report will be graded on the following rubric:

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