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Future Technology - Flying Cars

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Computer Assignment II

Anton Saadeh

10995740

BUS 503

Accounting Information for Decision Making

University of La Verne

May 3rd , 2010

MEMORANDUM

Date: May 3, 2010

To: Allyn T. Brown, President of Global Electronic Company

From: Anton Saadeh

Subject: Sensitivity Analysis for the 1st Quarter, 20X1

Scope and objective of the work performed

We analyzed the Global Electronic Company’s budget for the first quarter. The analysis is included retained earnings, income statement and balance sheet. From the analysis of the paper, cash flow has changed because of the collections from sales on account during the first quarter. The company collects the cash in three months when the sale is made. The biggest amount was collected in the last month of the payment.

Significance of the sensitivity analysis

Sensitivity analysis is a method used to clarify how different values of an independent variable will impact a particular dependent variable under a set of assumptions. Sensitivity analysis helps us to understand how conditions changing in setting budget affected the financial statement of the company in order to avoid the company bankruptcy. There are five different models used for the sensitivity analysis. In this assignment I used sensitivity analysis and it helped me to recognize the changes in the income statement, statement of retained earnings, and the balance sheet under four scenarios. The first model contains the data from the original budget and financial statement and the other four types were from the case scenarios. Each spreadsheet shows different scenarios from the case.

Assumptions

I came out with my assumptions for this case which is that the economy will be the same; cost of goods, expenses, and companies efficiency will remain constant. as a result, everything should stay constant, other than

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