COGS Assignment Help.

COGS Assignment Help.

Answer: COGS Assignment Help.

Part 1

Income statement items Balance sheet items
Interests and taxes Cash
Sales Notes payables/short term debts
Cost of goods sold Inventory
Selling and administrative expenses Property plant and plant
Gross profit Long term notes debt
Earnings before interest and taxes Stakeholders equity
Net income Accounts receivables
  Accounts payables
   

 

Definitions

  1. Cash – cash can be defined as a current asset that is often in physical form, in either notes or coins
  2. Notes Payables/short term debts – Notes payable are often categorized as current liabilities which are often drafted to be paid within a year and can be equated to promissory notes.
  3. Inventory- Inventory refers to assets owned by an organization or company which hold value and can be sold when need be. They are often categorized as current assets.
  4. Property, plant and equipment- These are often categorized as fixed assets and have a lower depreciation value when compared to current assets. Land is a good example of this category.
  5. Long term note – Long term notes are long term liabilities that have a flexible repayment period, in most cases more than one year.
  6. Stockholders equity- this refers to the equity that shareholders hold in a given firm. In most instances it is in form of shares and stocks. It can also be defined as capital invested in a company by shareholders.
  7. Interest and taxes – These are expenses that are often achieved from financing activities and in most instances, they exist through accrued expenses in the company. COGS Assignment Help.
  8. Sales- often referred to as sales revenues, these are direct revenues realised from the sale of company products.
  9. Cost of goods sold- the cost of goods sold is often termed as the expenses realized after the sale of inventory.
  10. Selling and general administrative expenses – these are the expenses of all other things with the exempt of inventory and cost of goods sold.
  11. Gross Profit – this is the revenue realized by a firm after subtracting the cost of goods sold.
  12. Earnings before interest and taxes – the earning before interest and taxes is the total revenue after subtracting expenses.
  13. Net income – The net income is the whole revenue within a period in time after the subtraction of total expenses within the same period.
  14. Account Receivables – Account receivables constitute unpaid balances (Earned by the company) that are waiting to be paid.
  15. Accounts payable – these constitute short term debts that the company is yet to pay those who it owns (creditors or product suppliers)COGS Assignment Help.

 

Part 2

  1. What is the mark-up on COGS?

The mark-up on the Cost of goods sold can be calculated by dividing the gross profit by the cost of goods sold (Edwards, 2016).

= 40,000/80000 *100%

= 50%

  1. Compare this company’s markup to a COGS Standard Industrial Classification ‘norm’ of 70%. What is the result?

The company’s mark up of 50% is less than the industrial average of 70%. This means that the company earns less gross profit than most companies in the same industry.

  1. Explain how the difference in this company’s markup and industry markup rates affect profitability, or levels of the GPM?

The lower mark up for the company means that they earn less gross profit as compared to most firms in the industry. This in turn leads to lower net income of the company as compared to a majority of the other companies.

Part 3

  1. What is the nature of this company’s capital structure? Include percentages in your commentary. I.e., what percent of Total Liabilities (Debt) was used to finance Assets?

Capital structure requires one to calculate the ratio of total debt to total equity. COGS Assignment Help.

Total debt = total liabilities/Total Assets

Total debt = Total liability/ (Total liability + Shareholders equity)

Total debt = $160000/($160000+$27000)

$160,000/$187,000

= $160,000/$187,000 * 100%

= 85.56%

  1. Compare this company’s capitalization structure, stated as a percent, to a Standard Industrial Classification – Industry norm of 50%. What is the result?

The company with a ratio of 85.56% is very highly leveraged as compared to the industrial average of 50%. A majority of the assets are financed by debt as compared to the owners’ equity. COGS Assignment Help.

  1. To what extent is this company ‘over’ or ‘under’ leveraged?

Over leverage means that a company has much debt/liability while a company is underleveraged if it has little liabilities or debt (Smith, Grill, & Lang, 2017). In this case we can see that the company has a high amount of liability/debt and therefore, it is over leveraged. COGS Assignment Help.

=593%/50%

= 11.86

This company is leveraged 11.86 times more than most companies in the same industry. COGS Assignment Help.

 

 

References

Smith, J. A., Grill, M., & Lang, J. H. (2017). The leverage ratio, risk-taking and bank stability (No. 2079). ECB Working Paper.

Edwards, J. B. (2016). Modern Gross Profit Analysis. Journal of Corporate Accounting & Finance27(4), 45-55. COGS Assignment Help.

 

 

Question:

In Part 1 of this Assessment, you will define and classify accounts into an Income Statement or Balance Sheet. In Parts 2 and 3 you will assume the role of a financial manager who has been tasked to report to senior management in an upcoming finance meeting. Senior management is particularly interested in learning the performance of the company in two particular areas. The first focus of your discussion with management, Part 2 of this Assessment, relates to the markup on Cost of Goods Sold (COGS). The second focus of your discussion with management, Part 3 of this Assessment, relates to capital structure.

Part 1

To properly measure financial statements managers must know account definitions and classifications. Using the accounts below, define each and classify each as an Income Statement or Balance Sheet account.

1. Cash
2. Notes payable/Short term debt
3. Inventory
4. Property, plant, and equipment
5. Long term note-debt
6. Stockholder’s equity
7. Interest and taxes
8. Sales
9. Cost of Goods Sold
10. Selling and general administrative expenses
11. Gross profit
12. Earnings before interest and taxes
13. Net income
14. Accounts receivable
15. Accounts payable

Before you move on to Part 2 and Part 3 below, you must first complete the following Excel Spreadsheet. You must complete the Income Statement tab and the Balance Sheet tab. Then, answer the following questions in Part 2 and Part 3 below.

Part 2

After completing the Income Statement, you should be able to measure a company’s COGS and its effect on the Gross Profit Margin (GPM). Based on your assessment of the firm’s Income Statement, you are to report to senior management on these key components:

a. What is the markup on COGS?

b. Compare this company’s markup to a COGS Industry Standard of 70%. What is the result?

c. Explain how the difference in this company’s markup and industry markup rates affect profitability, or levels of the GPM?

Part 3

After completing the Balance Sheet in the Excel Spreadsheet hyperlinked above, you should be able to measure a company’s capital structure. Based on your assessment of the firm's Balance Sheet, you are to report to senior management on these key components:

a. What is the nature of this company's capital structure? Include percentages in your commentary?

b. Compare this capitalization structure percent to an industry standard of 50%. What is the result?

c. To what extent is this company 'leveraged'?

Minimum Submission Requirements

This Assessment should be in a separate Microsoft Word document. Use this template for your Assessment.

Respond to the questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions. Your paper should be highly organized, logical, and focused.

Your paper must be written in Standard English and demonstrate exceptional content, organization, style, grammar, and mechanics.

Your paper should provide a clearly established and sustained viewpoint and purpose.

Your writing should be well ordered, logical and unified, as well as original and insightful.

A separate page at the end of your paper should contain a list of references, in APA format. Use your textbook, the Library, and/or the internet for research.

Be sure to cite both in-text and reference list citations were appropriate and reference all sources. Your sources and content should follow proper APA citation style. Review the APA formatting and citation style found in the Writing Center. The Writing Center can be found within the Academic Support Center under Academic Tools in the left navigation of your course. (It should be in Times New Roman 12-point font, include correct citations, Standard English with no spelling or punctuation errors, and correct references at the bottom of the last page.)
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