BUS-FPX4060Assessment 1-1

School: Capella University - Course: BUS 4060 - Subject: Accounting

FINANCIALACCOUNTINGP RINCIPLES Assessment 1: Transaction Analysis and Financial Statements Worksheet Use this worksheet to complete the following three exercises for Assessment 1. Refer to the instructions in the course for submitting your assessment. Exercise 1-1 Key comparative figures ($ millions) for two companies, Alltech and SynergyXT, are presented in the following table. Key FiguresAlltechSynergyXT Liabilities + owners' equity.................$11,502$48,823 Net income.........................................3,1279,276 Sales..................................................15,45344,612 For this exercise, perform a comparative analysis of these two companies that answers the following five questions: 1.What is the total amount of assets invested in each company? Total assets = Liabilities + Equity Alltech: $11,502 SynergyXT: $48,823 1.What is the return on assets for each company? Alltech's beginning-year assets equal $8,101 (in millions) and SynergyXT's beginning-year assets equal $36,171 (in millions). Revenues - Expenses = Net income Alltech:3,127 / ((11,502 + 8,101) / 2) = 0.32 x 100 = 32% SynergyXT: 9,276 / ((48,823 + 36,171) / 2) = 0.22 x 100 = 22% 2.How much are expenses for each company? Revenues - Expenses = Net income Alltech: 15,453 - 3,127 = $12,326 SynergyXT: 44,612 - 9,276 = $35,336 1

3.Is return on assets satisfactory for each company? Assume competitors average an 18 percent return. Both companies had a satisfactory return on assets.However, at 22%, SynergyXT's return on assets was just slightly above average while Alltech's return on assets was significantly better than the competitors' average at 32%. 4.What can you conclude about Alltech and SynergyXT from these computations? Alltech is a much smaller scale company with only about a third of the net income of SynergyXT.However, at $35,336, SynergyXT carries significantly more expenses that Alltech.Controlling its expenses within the smaller scope of its operation Alltech is able to make a more efficient use of its assets, generating a 27% return on assets, which is 9% above the market average 8% better than that of SynergyXT.