BUS 121 Managerial Accounting20151.SummerGroup Project Textron Inc. & Raytheon…

BUS 121 Managerial Accounting20151.SummerGroup Project Textron Inc. & Raytheon Co.Overview:Textron Inc. & Raytheon Co.Your group will function as an investment advisory firm to a large manufacturingconglomerate. Once you have selected your companies and have been approved, yourgroup will begin an in-depth analysis of the two companies. The analysis will becomprised of several elements, such as both companies most recent financialstatements, as well as learning all you can about the companies in terms of theirproducts, success within their industry, and any current news that would be relevant toyour advisory firm. In your financial analysis, you will be analyzing sales, manufacturingcosts, net income, cash, etc. Your analysis will also require you to answer thequestions listed below.You will also take into account other factors that would influence your decision whetheror not to recommend purchase of this stock. Some items in this category might includethe companys green initiatives, a new product or service, recent cost cutting moves,or consolidation or merger with another company. Finding this information will be partof your research for the project.Requirements:The written final report will ultimately recommend to the Board of the Directors of themanufacturing conglomerate (your client) which of the two companies should beconsidered for acquisition purposes. You will support the reasons for recommendingyour choice by performing the necessary financial analysis and answering the questionsbelow. The more detail and depth you include in your analysis, the better. I expect youto do a good job of explaining your position. I will not tell you how to do the project, as Iwant you as a group to develop your own best methods. However, I will act as aresource and a sounding board for suggestions and ideas.Resources required for the project:An Excel worksheet that includes your computationsThe most recent financial statements for both companiesThe report must be a minimum of three pages, a maximum of five, and it must be typewritten using MS Word or comparable software, no more than 12-point font and doublespaced with margins of no more than one inch.It is expected that each group member will actively participate in the project.Project Grading:Your project will be graded on completeness, correctness, creativity, and quality ofpresentation.Managerial AccountingGroup ProjectBusinesslike presentation:Cover sheet – namesGrammar/spellingBackground for bothcompanies:Brief historyCurrent newsGreen emphasis?New products?Cost cutting moves?Questions:Part 1-SalesPart 2-COGSPart 3-InventoryPart 4-WarrantiesRecommendationResources:Excel spreadsheetFinancial statements-bothcompaniesIn addition to the above requirements, in order to ensure that all members of a groupparticipate in the project, each member will submit a written evaluation of themselvesand the other members of the group. This evaluation is required and will factorheavily in the computation of your individual grade. The evaluation form is to becompleted and submitted in Blackboard. See the course menu for the assignment. Theform is also shown at the end of this document for you to see before beginning theproject so you know what is expected.I suggest exchanging phone numbers and e-mail addresses to assist in this process. Ialso recommend that you use a service like www.freeconferencepro.com to meettogether as a group if you are unable to do so in person.I am available to answer questions and provide some guidance, but the goal is for youto use your talents and imagination to figure out the best methods to accomplish theobjectives of this project.Questions:Part 1 Sales1. Identify and record the most current three years sales (in dollars) for bothcompanies using their financial statements.2. Using the data in question 1, predict both companies sales activity for the nexttwo to three years. Hint: use trend analysis (Chapter 13). If possible, compareyour predictions to actual sales figures for those years.3. Use Excel to compute profit margin for both companies for the two most recentyears. Comment on your findings.Part 2 COGS1. Use Excel to compute the ratios of cost of goods sold to total expenses for bothcompanies for their two most recent fiscal years. Record answers aspercentages, rounded to one decimal place.2. Comment on the similarities and/or differences in the ratio results across bothyears between the two companies.3. Which company has a higher ratio of costs, defined as COGS plus total operatingexpenses, to revenues? Use the two most recent years income statements.Use Excel to show your analysis.4. How might the use of activity-based costing help the less competitive companybecome more competitive?Part 3 Inventory1. Identify the impact on operating cash flows (increase or decrease) for changes ininventory levels (increase or decrease) for both companies for each of the threemost recent years. Use Excel for your analysis.2. What impact would a JIT inventory system have on each companys operatingincome? Link this answer to your response in question 1 above.3. Would the move to a JIT system have a one-time or recurring impact onoperating cash flow?Part 4 Warranties1. Read the Product Warranties section of the Organization and SignificantAccounting Policies footnotes for both companies. For each of the three yearsreported, compare the dollar amounts of the annual warranty expense and actualwarranty claims paid. Is the expense higher, lower, or about the same as itsclaims paid?2. Using your answers from question 1 above, which company made more accurateestimates of warranty costs over the most recent three years.Project Timeline:1. Groups established and project information distributed: July 17, 20152. Company picks submitted: July 19, 20153. Final written report submitted: July 28, 2015Assignments submitted late will suffer a 20% penalty. Late assignments will beaccepted no later than July 30, 2015 at 11:59 PM.Key Resources:Chapter 13 of your textbook Financial Statement Analysishttp://finance.yahoo.comwww.fool.comhttp://www.sharebuilder.comHere are some suggestions from Rachel Morks Effective Teamwork in 11 Easy Steps:1. Share Added ValueEstablish a baseline level of respect and admiration within your team. Set upmeetings where the overall purpose of the team is discussed. Focus on what addedvalue each person brings.2. Build RespectEach student share what he/she brings to the team. Everyone share what parts of theproject appeal to their individual strengths. Discuss how the team works well together,along with what areas could use improvement.3. Brainstorm Ideas As A GroupMake some time in your meetings for brainstorming. Allow everyone in the group tocontribute ideas for streamlining efficiency, improving the workflow process, or anyother area of concern that might arise.4. Establish A Neutral Procedure To Deal With ConflictMake sure you’ve established a clear, safe procedure for conflict resolution andcomplaints. Everyone in the group needs to know that dissatisfaction will beaddressed and problems solved to the best of your teams ability.5. Schedule Progress MeetingsDon’t let too much time pass as the project progresses. Make sure you hold meetingswhere concerns and developments can be discussed as a group, allowing all voices tobe heard. The point of these meetings should be to deal with conflict, smooth outbumps in the process, and allow team members to voice concerns.Have fun!Group Project EvaluationsYour project will be graded on completeness, correctness, creativity, and the quality ofpresentation in your written report. To ensure that all group members participate in thisproject, each member will submit a written evaluation of the other members in thegroup. The evaluation form is to be completed and submitted in Blackboard. See thecourse menu for the assignment. This evaluation is required and will factor heavilyin the computation of your individual grade.On the evaluation form, you will give your team members (and yourself) a rating on ascale of 100% to 0%. In addition to your numerical rating, you must provide anexplanation where you highlight each team members achievements and mention anyweaknesses if any.Be objective in rating the performance of your group members. Members who activelyparticipate in the process and make a contribution should be given a rating that reflectsthis. Others, who have not made the effort, should not be rewarded for their lack ofeffort. If someone contributed nothing to the project, you should rate them at 0%.Working with others to accomplish a goal is part of the educational experience,particularly for business students. Interdependence allows us to recognize the value ofother peoples talents and skills and how we can use them with our own to create a winwin situation. In this case, it means submitting a project which results in a positivegrade.Heres what the evaluation form looks like:GROUP PROJECT EVALUATIONYou are to give each of your fellow group members and yourself a rankingbetween 100%-0%. You must include your reasons for the score youve providedfor yourself and the other members of your group. If someone did not contributeto the final project, give them a 0% or they will be awarded points for doingnothing.Remember, your evaluation will count significantly in the grading process, and Iam asking you to be as honest and objective as possible.Additionally, I would love to hear your comments about the project itself at thebottom of the page.Failure to submit this evaluation when the final project is due means that youhave earned a zero for the project grade and will not pass the class.Your Name:Score:Rationale:Group Member Name:Score:Rationale:Group Member Name:Score:Rationale:Group Member Name:Score:Rationale:Group Member Name:Score:Rationale:Project Comments for Professor Baumunk: