Executive Summary Maria Hernandez

Executive Summary: Maria Hernandez

This report is based on self-employed brand new business, started by Maria Hernandez on July 2, 2004. She named the company Maria Hernandez & Associates which elaborates Web-pages for business and people in general, this company is her first business venture. The purpose of this financial report is to analyze the profitability of the company and give an overview and explanation of the current financial situation.

Based on the financial statements Team 5 Auditing Firm has elaborated for her, it appears that the company, which is in year one of operations, required a great deal of investments its start-up. Even though Maria Hernandez & Associates had to invest a large amount of money, it managed to make US$ 4600.00 retained earnings from the net income, so income was still made and the investment made in computers and office supplies is a one-time deal, as she won’t need to pay them again at least for some time except the costs of maintenance.

The biggest problem facing the company is the amount of cash left in the account. At the end of August the company only has $ 6600 left. That means that the company is facing some shaky ground in terms of paying for future salaries, rent and potential new investments in equipment. Making things more worrying is the fact that we do not have any information on future sales and revenues or possible new loans and financial support. However as stated earlier most of the initial investments are connected to the startup phase. The amount of cash needed in the future is significantly lower than the first months.

Marie has not paid the interest to her father for the $ 20 000 loan. This however, has been calculated into the income statement with a 2 month interest rate which comes down to $200.

By using the accrual based accounting method we get a clearer picture of how successful her business is. This overview is different than the perception Maria has of the success of her...