In this course, you will examine managerial accounting as part of the business’s accounting information system and legal aspects of the business enterprise. Topics include managerial accounting and capital budgeting, cost analysis; management planning and control, negotiable instruments, secured transactions, debtor/creditor relationships, property and insurance, and legal aspects of employment and environment.
Competency 1 – Managerial Accounting and Capital Budgeting
Provides a description of the competency, assessment directions, and a grading rubric you can download and follow. Use the rubric to determine where your knowledge gaps are and what Learning Resources will help close the gap.
Learning Resources – Managerial Accounting and Financial Statement Analysis
1. Competency 1 – Reflection
Once your faculty marks this activity as complete in the gradebook, the Competency Assessment will open for you to submit.
This reflection is comprised of two sections, collectively totaling a minimum of 500 words. Complete your reflection by responding to all prompts.
Financial statement analysis focuses primarily on isolating information that is useful for making a particular decision. Through ratio analysis, users of financial data can analyze various relationships between items reported.
Describe the 3 main categories of ratios and provide a specific example of a ratio that is used in each category. For each of the 3 ratios you selected, describe how it is used in managerial decision-making.
Managers can choose from several analytical techniques to help them make capital investment decisions. Each technique has advantages and disadvantages. Distinguish between the 3 capital investment techniques of:
- Net Present Value
- Internal Rate of Return
- Payback Method
Describe what you consider to be the top 2 advantages and 2 disadvantages of each technique and provide an example to support your top advantage of each method.
2. Competency 1 – Assessment
By computing net present value and approximate internal rate of return of a project, the MBA candidate will be able to present a comparison and analysis of the approaches and recommend investment opportunities.
Analyze key aspects of managerial accounting and capital budgeting to drive effective business decisions.
Learning Objective (LO)
LO1: Compute a ratio analysis to determine tests to perform on financial statements.
LO2: Recommend investment opportunities based on net present value and internal rate of return computations.
Competency Assessment Description
In this assignment, you will create a presentation synthesizing result of your analysis and computations to determine the best investment opportunity.
Why It Matters
Have you ever wondered how businesses decide to invest their money? To make improvements within the company.
There are counting strategies that you can use to determine the most rational investment decision when you have more than one choice.
Using these strategies, you will be able to evaluate investment options and make recommendations for the best investment opportunities.
Welcome to Competency one of Accounting 543, managerial accounting and legal aspects of business.
This competency focuses on giving you knowledge, skills and practice necessary to compute net present value and internal rate of return and analyze the results of your computations.
You’ll discover how to make recommendations to company leaders based on your findings.
In this first module, you’ll learn how to compute specific ratios using provided financial statement information.
You’ll explore how calculating financial statements can help guide companies to make the most effective business decisions.
In the second module, you’ll learn how to compute net present value and internal rate of return for a business investment opportunity.
You’ll analyze your findings and present them with your recommendations based on your calculation.
In this assessment, you’ll take on the role of Senior Accountant and use your knowledge of net present value and internal rate of return to identify the best investment opportunity for your company.
You will be able to submit this assessment after you’ve completed the Competency 1 Reflection. Save and upload each part of the assessment as a separate file and title the files so it’s clear to see what part of the assessment they serve. Include your name in your documents on the first page, upper left.
Download and save Competency 1 Assessment Rubric and use it as a guide when completing your assessment.
Net Present Value and Internal Rate of Return
Part I: Investment Opportunities Scenario
Review the scenario and complete the activity that follows. This scenario can also be found in the “Problems – Series A” section 10-19A of Ch. 10, “Planning for Capital Investments” of Fundamental Managerial Accounting Concepts.
Dwight Donovan, the president of Donovan Enterprises, is considering 2 investment opportunities. Because of limited resources, he will be able to invest in only 1 of them.
Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of 4 years and no salvage value.
Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $400,000 and for Project B are $160,000. The annual expected cash inflows are $126,000 for Project A and $52,800 for Project B.
Both investments are expected
Part II: Presentation
Create an 8- to 10-slide presentation showing the comparison of the net present value approach with the internal rate of return approach that you calculated.
Complete the following in your presentation:
- Analyze the results of the net present value calculations and the significance of these results, supported with examples.
- Determine which project should be adopted based on the net present value approach and provide rationale for your decision.
- Analyze the results of the internal rate of return calculation and the significance of these results, supported with examples.
- Determine which project should be adopted based on the internal rate of return approach and provide rationale for your decision.
- Determine the preferred method in the given circumstances and provide reasoning and details to support the method selected.
- Synthesize results of analyses and computations to determine the best investment opportunity to recommend to the president of Donovan Enterprises and provide rationale for your recommendation.
- Include detailed speaker notes.
Part III: Resource
Note: Please ensure that when citing or referencing an outside resource or external entity that a proper attribution is made to that source. An example of a method for citing outside resources can be found in the APA 7th edition manual. Although you will not be graded on your ability to format citations in a specific format, it is expected that all learners submit work that is representative of their own original thoughts and work, and clearly attribute when referencing outside sources or entities when completing competency assessments.
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