Blu Jay Aviation, Inc. Financial Recommendations

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The issue raised questions about the latest corporate financial plan, effective from 1 April 2017 to 15 September 2017. The following recommendations are made as guides for the following items:
Accounting of assets: property, plant, equipment, and investment (PPE)
Accounting of Shareholders’ Liabilities Equity and Statement of Cash Flows
Analysis of financial statements
Advanced Analytics Limited will recognize BluJay Aviation as a great market opportunity. Through the partnership, Advanced Analytics has demonstrated sound knowledge about the envisaged plan geared towards providing BluJay Aviation with a proactive operations strategy, hence making the company one of the most competitive within its market niche, the aviation sector.

Advanced Analytics boasts of having over two decades of aviation-related experience as well as providing business consultancy and accounting services for enterprises operating within the aviation industry. The company is confident in its abilities to provide both small and medium-sized businesses with timely advice concerning corporate operations and accounting aspects, which are the key pillars of any organization. Besides, the consultancy services are structured to nurture unique operating models that will enable BluJay Aviation to realize its growth potential, consolidate its market position, and at the same time have the most efficient balance sheet across the aviation sector.

Our consultancy services assess the client business needs and give unbiased recommendations to the management, and as a result, most of Advanced Analytic clients apply operational models that are only in line with the best practices in industry.

The company has included lists of consultants involved with the project so that BluJay Aviation oversees the level of financial expertise that the organization stands to benefit.

Name

Title

Qualifications

Costs Incurred

Mike Dean

Senior Corporate financial Consultant

Master’s Degree Financial Engineering (CPA) (ACCA) (CISA)

$4,000

Lillian Clinton

Chief Tax Consultant

Bachelor’s degrees (CPA), Postgraduate diploma in corporate tax

$3,000

Tom Jeremy

Financial Analyst

Bachelor’s degree (CPA), professional certificate in financial analysis and projections

$3,000

Jane Hawthorne

Investment manager

Master’s Degree (Finance option)

ACCA, CPA, CISA,

$3,000

The company will charge a base rate of $50,000 as its fees exclusive of the expert’s remunerations are equal to $13,000. Therefore, the entire consultancy bill for BlueJay Aviation stands at $63,000 inclusive of taxes. Please, take note that the first installment is due two weeks from the date above, and any late payments made after the 30th day will attract a penalty of 2%.

The next section details professional recommendations from Advanced Analytics Inc., and we look forward into deliberating on the short-term goals and other financial concerns of BlueJay Aviation.

Sincerely,

Richard Buffett (Country Manager).

Recommendations to BlueJay Aviation

Accounting for Assets: Property, Plant, Equipment (PPE), and Investments

PPE is considered non-current capital assets used to generate revenues or profits to business. PPE is useful during financial planning and analysis, and it is also considered as the net of any accumulated depreciation (Christensen & Nikolaev, 2013). Therefore, if an organization, which is BluJay Aviation in our case, fails to invest in new equipment, the capital expenditure becomes nil. Accordingly, the net PPE should always gradually drop its value because of depreciation. BluJay’s Aviation’s PPE is calculated using the following formula:

Net PPE=Gross PPE + Capital Expenditure – Depreciation

Accounting for Liabilities

It involves amount that the organization owes its creditors for previous transactions, or they can also be considered as claims against the organization’s assets. Liability also includes aspects such as amounts received in advance since such assets have not been earned and can be subjected to dispute (Lachmann, Stefani & Wöhrmann, 2015). Some of the liability items include:

Bonds payable

Unearned revenues

Salaries payable

Lawsuits payable

Wages payable

Warranty liability

During instances when the organization has loan payable across several years, it is only the principal due within a particular financial year that gets entered as a current liability, while the rest of the principal is denoted as the long-term liability.

Stockholders Equity and Statement of Cash Flows

It is an entry that indicates changes made in retained earnings, which are also influenced by revenues and dividends issued (Ball et al., 2016). In the case of BluJay, arriving at the stockholder’s equity involves the following formula:

Retained Earnings +

Premium on preferred stock +

Preferred stock +

Premium on common stock

________________________________

= Stockholders Equity

On the other hand, the statement of cash flows attempts to display the following information:

Alterations of cash balance

Cash spent

Main sources of revenues

In a nutshell, the cash flow statement reveals transactions on how BluJay Aviation derived its revenues, and how the cash resources are used.

Financial Statement Analysis

According to Zack (2015), it involves the company’s sources of revenues and includes accounting documents such as the statements of equity, cash flows, balance sheets, and the income statement. Some of the techniques applied during financial analysis of BluJay Aviation included financial rations, DuPont analysis, fundamental analysis, and horizontal and vertical analysis methods. The reasons for implementing different techniques is justified in the sense that various stakeholders have diverse interests with the company’s operations, and therefore, the stakeholders always have the propensity to favor technique’s that meets their needs and demands.

References

Ball, R., Gerakos, J., Linnainmaa, J. T., & Nikolaev, V. (2016). Accruals, cash flows, and operating profitability in the cross section of stock returns. Journal of Financial Economics, 121(1), 28-45.

Christensen, H. B., & Nikolaev, V. V. (2013). Does fair value accounting for non-financial assets pass the market test? Review of Accounting Studies, 18(3), 734-775.

Lachmann, M., Stefani, U., & Wöhrmann, A. (2015). Fair value accounting for liabilities: Presentation format of credit risk changes and individual information processing. Accounting, Organizations and Society, 41, 21-38.

Zack, G. M. (2013). Financial Statement Analysis. Financial Statement Fraud: Strategies for Detection and Investigation, 209-213.

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