FINANCE & ACCOUNTING – SENIOR ACCOUNTANT ANALYSIS ESSAY
SunsTruck is the company that is potentially attractive for investors but, before taking the right decision, it is necessary to conduct the analysis of the financial position of the company. To meet this goal the accurate accounting information is of the utmost importance.
Debt + self-financing is the best option for the company at the moment because, on the one hand, the company relies on its own financial resources and invests into its business development by means of increasing the production and supply of sun glasses, on the other hand, the company increases its liabilities moderately since a part of funds needed is covered by the debt or loan taken from the bank. As a result, the company can increase the supply of the stock efficiently and sustain possibilities for the further growth due to low liabilities of the company and investments into the production and supply of the stock.
The best next step is to record the transactions in journals and undertake further steps in the accounting cycle because the company has already undertaken first steps of the accounting cycle. In such a way, the company will be able to record accounting data correctly and report its financial performance properly (Kaplan & Bruns, 2010). Recorded transactions will create the basis for the further analysis and evaluation of the accounting information. Then, the company should post journalized amounts to accounts in general and subsidiary ledgers to finally create an unadjusted trial balance and to reveal the actual financial performance of the company.
Balance sheet will provide the investor with the adequate and accurate information about the current financial position of the company and its debts. To put it more precisely, the balance sheet uncovers the current and total liabilities of the company and shows its debt. In addition, the balance sheet shows the general financial performance of the company (Drucker, 2012). This is why the investor may use the balance sheet as the ground for the detailed analysis of the financial position and performance of the company and, more specifically, its debt. The balance sheet provides the accurate statement of the debt of the company and reveals details of the debt and liabilities of the company (Staubus, 2014). More specifically, the balance sheet shows the short-term and long-term liabilities of the company as well as the balance sheet shows whether the company is capable to pay off its debt and what future financial prospects of the company are.
I would invest into SunsTruck at the moment because the company is growing and, what is more important, has the potential for the further growth. The demand on the company’s products is growing that means that the company may increase the production that will bring more revenues and profits to the company. At the same time, liabilities of the company remain relatively low and provide the company with an opportunity to invest into its further business development. The investment into SunsTruck will bring profits in the future since the company is growing. In addition, the company is on the rise that means that investors can earn high profits, if they invest now, while, if the company enters the maturity stage, potential revenues of investors may drop. This is why it is possible to recommend investing into the company right now.
References:
Drucker, P. F. (2012). Management Challenges of the 21st Century. New York: Harper Business.
Kaplan, R. S. and Bruns, W. (2010). Accounting and Management: A Field Study Perspective. Harvard Business School Press. Staubus, G. J. (2014). Activity Costing and Input-Output Accounting. Richard D. Irwin, Inc.
