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Financial Accounting ACCT202 Capstone Project – An Overview

Financial Accounting ACCT202 Capstone Project – An Overview

ACCT202 –Financial Accounting

Capstone Project – An Overview

At North, all of our ACCT202 –Financial Accounting II courses are encouraged to have some type of capstone project incorporated into the course. Your course has adapted with some modification the continuing analysis problem found in your textbook as the capstone project that meets our needs.


Before starting this project I want to emphasize how important this project is to North’s accounting department and its ability to design, deliver and update courses that meet student needs while having some sort of overarching evidence that students are learning. This important project also provides accounting students with an opportunity to demonstrate that they can “pull everything together” in a professional and learned way in regards to their experiences in ACCT201 & ACCT202. If we accept that accounting, as defined, is a system of identifying, recording, and communicating economic events of the firm so that interested users can make decisions, then it should be clear that this project focuses on

using all you have learned about identifying transactions, recording those transactions and preparing financial statements so that you can now use that knowledge for the end game– analyze financial statements in order to make sound business decisions regarding the firm.


Therefore, this project requires you to step up your level of professionalism, written communication, research and analysis. In this project we’re looking for the ability to analyze accounting information and prepare a professional written report. We’re looking for the writing process and communications necessary to be successful in the business community. In the business community it’s important that we avoid giving one line answer that fail to allow a reader or customer to grasp the impact and importance of what we are communicating. Likewise, in this project, brief incomplete concepts and statements, unsupported conclusions and less than professional written communication will not be acceptable.


In preparing your written response in this project – I want you to remember at all times that you’re either taking the role of a Wall Street analyst who has tens of people listening to your advice, and depending on what you say, these people might invest tens of millions of dollars based on your analysis and recommendations. Or, you might want to think of yourself as a highly compensated vice president of a commercial bank making decisions to loan millions of dollars to a company based on your analysis of the company future ability to sustain itself, grow and ultimately repay the loan.  Either way, your analysis must to be thorough and your concluding statements and recommendations have to be clear; supported by verifiable source data or calculations.


In all aspects of this project you are required to show your own work. Simply Googling the ratios, using some other investment web site or printed research report issued by a brokerage firm or bank and turning it in as your own, will not work.  In fact the use of such tactics and submitted response will be considered a form of plagiarizing and could result in you receiving a failing grade or other sanctions imposed by the college. In the written/analysis portion, keep in mind the importance of the writing process and communication necessary in the business community – and take a professional approach to this answer. Please visit the LOFT on campus if you need assistance in writing professional level papers. You can also visit the business librarian if you need assistance doing college level research.  These resources are both available to online students who cannot come to campus via links in Canvas to the Loft Writing Center Plus and to the NSCC Library Resources.



1)    Compute the ratios in the exhibit on page 3 for Target and Walmart for 2010.  The financial statements can be found in the annual report – visit each company’s website, then go to investor relations to access the online report. For both companies, assume that all sales are

credit sales. Compare the ratios of Target and Walmart. Which company do you think is doing a better job in managing the following? Explain your answers.

  1. Liquidity
  2. b. Net income or loss
  3. c. Financing with debt or equity d.   Investing in assets
  4. Rewarding its stockholders


2)    Compute Target’s ROE for the year ending January 29, 2011, including the elements of net income/sales, sales/average total assets, and average total assets/average stockholders’ equity. What does this analysis tell you about how Target generates its ROE?


3)    What are Target’s dividends per share and dividend payout ratio for the last two years? Why do you think Target pays a dividend? How do you think Target determines the amount of dividend they will pay?




4)    Given Target’s stock price was $50 per share at the end of January 2011, what was Target’s PE ratio as of that date? If the average PE for companies is 15, what does this tell you the market is saying about Target’s future?


5)    Research Target for any important issues including ethical issues which it may have had to deal with in the last three years – evaluate the company’s response to these issues.




6)    Looking back over your answers to questions 1 – 5, how do you think Target is performing?

What is the short term (one year) and long run (five+ year) financial outlook Target?   Would

you buy the stock of Target? If so, why? If not, why not? On the other hand, if you were a commercial banker, would you lend money to this company? Support your conclusions with a summary of your research and analysis.


7)    Do you have any ideas of how to improve Target’s performance and its value?


Five  Key Questions             Ratios  used to analyze  and make  the  decision




Is the  business

a going  concern?

Use liquidity    ratios  to  determine   the  following:



Net Working   Capital   = Current   Assets   –   Current   Liabilities


o                                          Current   Assets


Current  Ratio  = Cu rrent

LO bOlO0

ra  I ities



Q  0       k  R   to     _Quick   Assets   (Cash  + Net Current   Receivables   + Short-Term    Investments)


UIC     a  10 –                                                       Cu rrent

LO bOlO0

ra  I ities



Cash Conversion   Cycle  = (Days-Sales-In-Inventory)         + (Receivable   Collection    Period)

–   (Accounts    Payable  Payment   Period)


Average   Inventory

Days-Sales-In-Inventory       = (Cost  of Goods  Sold/365    Days)




R 0              bl    C  II    to          Period   _  Average  Net Accounts   Receivable eceiva e   0   ec Ion    eno    –       (Net  Credit  Sales/365   Days)



o                                                         Average  Accounts    Payable

Accounts   Payable  Payment  Period   = (Cost  of Goods  Sold/365    Days)





How is the  business earning   a net

Use profitability     ratios  to  determine   the  following:


income  or loss?





Gross  Profit

=  N    S  I

et    a es


Net  Income


Net Income  Percentage   =  N    S  I

et    a es




Where  is the  business getting its money  and can it pay its debt

Use solvency   ratios  to  determine   the following:



Debt Rato    loT=ota-l







Total  Assets



o                                                                          EBIT Interest   Coverage  Ratio  = I             E

nterest     xpense






How is the  business

investing   its  money

Use asset  management    ratios  to  determine   the  following:



and is it using  its






Ratio  = A

Net Credit  Sales

N    A               R      0                               bl


assets  efficiently?

verage     et    ccounts      eceiva    e



o                               Cost  of  Goods  Sold

Inventory   Turnover   Ratio  = A             I

verage    nventory



Fixed  Asset  Turnover   Ratio  = A           sF~leA~

verage    rxe      ssets


o                                                                                   Sales


Total  Asset  Turnover   Ratio  = Average

T     I A

Iota     ssets



Net  Income

Return  on Assets  = A             ~     I A

verage    ota     ssets





Is the  busi ness generating    enough  net

income  to reward  the

Use market  analysis   ratios  to  determine   the  following:





Earnings  per Share  (EPS)




Net  Income



stockholders    for the use of their  money?

=                                                              0

Average   Number   of Common   Shares  Outstanding



o          0                                                                                                                                                                                                                                                            Dividends

DIvidends   per Share  (DPS)  =                                                             0

Average   Number   of Common   Shares  Outstanding





Dividend   Payout  Ratio  =



Net  Income




lt    (ROE)                        Net  Income










Needs Improvement








Exemplary 12.5

Proficient 11

Satisfactory 9.5













Prepare attractive and


professionally written reports in word or pdf


Very well formed paragraphs.


Good use of charts, tables, or graphics – inserted and referenced correctly into document. Required elements: cover page, executive summary, illustrations, and table of contents, are all provided


Well-formed paragraphs. Good


use of charts, tables, or graphics – inserted correctly, sometimes not referenced properly. Missing either cover page, executive summary, illustrations, or table of contents.


Some ill-formed phrases and


awkward paragraphs. Some

use of graphics, missing two or more required elements.



Poorly written, lacking


integration of graphics, or missing required elements.












Make professional and effective


introduction of report and presentation


Presents a concise lead-in to


the report and presentation


Presents a reasonably good


introduction, but lacks information needed to focus the report and presentation.


Gives too much information–


more like a summary.



Does not give any


information about what to expect in the report and presentation.









Effectively address problems


and issues presented


Answers or addresses all


questions and includes many

other interesting facts.


Answers or addresses all


questions and tasks and includes a few other interesting facts.


Answers or addresses all


questions and tasks and includes no other interesting facts.



Answers or addresses a few


questions and tasks suggested in the assignment









Use data & excel spread sheet to


aid corporate research and analysis


All Data table, spread sheets


and graphs neatly completed and totally accurate.


One or two inaccuracies and


ill-formed characters.


Two or more are incomplete,


minor inaccuracies and/or illegible characters.



Data, table, spread sheets


and/or graph missing information and/or inaccurate.










Use of Ratios and their


appropriateness in corporate research and analysis


Selects and uses ratios which


are logical and adequately detailed -with supporting calculations.


Most of the ratios used are


understandable, but some lack adequacy.


Some of the ratios used are


understandable; most are confusing and/or lack detail.



Ratios are presented with


little thought of their relevancy, some key ratios could be missing and/or confusing.










Use a variety of resources to do


corporate analysis


Uses a variety of (4 or more)


primary resources as basis of research and to support answering questions and addressing issues


Uses 2-3 primary resources as


basis of research and to support answering questions and addressing issues.


Uses 1-2 primary resources as


basis of research and to support answering questions and addressing issues.



Uses 1 or less primary


resources as basis of research and for support when responding to questions and addressing issues.











Formulate and express


conclusions, opinions and recommendations based on research and analysis


Presents a logical explanation


for findings and addresses all of the questions and tasks in the assignment.


Presents a logical explanation


for findings and addresses

some of the questions and tasks in the assignment.


Presents an illogical


explanation for findings and addresses few questions and tasks in the assignment.



Presents an illogical


explanation for findings

and does not address any of the questions and tasks suggested in the










Use appropriate grammar &


spelling when generating reports


Paper follows the conventions


of English grammar, spelling, and usage.


Paper follows the conventions


of English grammar, spelling, and usage with almost no errors.


Paper follows the conventions


of English grammar, spelling, and usage with several errors.



Paper does not follow the


conventions of English grammar, spelling, and usage.










Rubric for Accounting Capstone Project


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  • Title: Financial Accounting ACCT202 Capstone Project – An Overview
  • Price: £ 159
  • Post Date: 2020-04-30T08:49:22+00:00
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