Long-Term Asset and Accounts Receivable Analysis ESSAY

Long-Term Asset and Accounts Receivable Analysis

Instructions
Prior to beginning work on this discussion forum, read Chapters 7 and 8 in the course textbook, Using Financial Accounting Information: The Alternative to Debits and Credits.

You may consider using the same company and annual report that you chose for your Week 1 – Discussion Forum, Reading and Using the Annual Report Case Study. This choice will work only if the company is using the straight-line depreciation method. The company’s choice of depreciation method can be located in the notes to the financial statement in the annual report. If the company does not use this method or does not have long-term assets, you will need to choose another company. Select a company that a fellow student has not already posted.

Using your selected company’s financial statement,

Calculate the average life, average age, and asset turnover ratios. Discuss what each ratio tells you in the context of your chosen company.
Calculate the accounts receivable turnover ratio and convert that ratio into days. Discuss what each ratio tells you in the context of your chosen company.
Your initial response should be a minimum of 200 words. Graduate school students learn to assess the perspectives of several scholars. Support your response with at least one scholarly and/or credible resource, in addition to the text.

Nautilus Inc.
The current ratio refers to its ability to cover its short-term obligations with its current and
short-term assets. The calculation is by dividing the company’s total assets by their liabilities.
Profit margin ratio is the ratio of profit remaining from sales after covering expenses; it is
calculated as revenue- cost/revenue. The current and gain ratios for Nautilus Inc was
calculated and were as follows,
The ratios for 2020: Current ratio: 318117/24651= 12.904
Profit margin ratio: (552560-150993)/552560=0.726
The ratios for 2019: Current ratio: 220479/27104= 8.135
Profit margin ratio: (309285-211127)/309285=0.31730
The ratios show an increase in business over the past two years since it has increased by
almost half, meaning that business is good and growing.
The management discussion and analysis comments show a 78.7% increase in sales from
552.6 million dollars in 2020 to 309.3 million dollars in 2019. This can be attributed mainly
to the business operating model shifting to primarily cater to direct customers through online
shopping since the Covid pandemic.
James Barr IV was the one to conduct the audit, and he did note the following.
1. The report does not contain any false statements to the best of his knowledge.
2. The control of the financial reporting was supervised by him in order to provide
reassurance on the reliability of the reports.
3. He has recorded any instance of fraud involving either the management of employees
involved in the financial department.
Based on all this information, I assess that Nautilus Inc is a fast-growing company that
increases revenue year on year by making smart decisions and being fluid because it changes
and adapts according to the situation.

2
References
Annual Reports. (2021). Retrieved from https://www.annualreports.com/Company/nautilus-
inc
Nathan, N. (2017, June). Annual report can reveal the secrets a company wants to hide:
Here’s how to uncover. The Economic Times. Retrieved from
https://economictimes.indiatimes.com/
Nautilus Inc. (2021). https://www.nautilusinc.com/
Porter, G., & Norton, C. (2018). Using financial accounting information: The alternative to
debits and credits. (10th ed.). Retrieved from https://www.cengage.com

Porter, G., & Norton, C. (2018). Using financial accounting information: The alternative to
debits and credits (10th ed.). Retrieved from https://www.cengage.com
 Chapter 6: Cash and Internal Control
 Chapter 7: Receivables and Investments
 Chapter 8: Operating Assets: Property, Plant, and Equipment, and Intangibles

Babcock -Hyde, J. (2017, February). Internal controls checklist. CPA Practice
Advisor, 6. Retrieved from https://www.cpapracticeadvisor.com/
Chambers , A. (2014). Implementing an effective internal controls system. In QFinance:
The ultimate resource (5th ed.). Retrieved from https://www.bloomsbury.com/us/
Dimitrijevic , D., Milovanovic, V., & Stancic, V. (2015). The role of a company’s internal
control system in fraud prevention. eFinanse, 11(3), 34–44. Retrieved from https://e-
finanse.com/
ProfAlldredge. (2014, December 2). Financial accounting: Internal controls for cash
receipts & payments (Links to an external site.) [Video file]. Retrieved from

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Long-Term Asset and Accounts Receivable Analysis ESSAY

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