CASE STUDY 23. Janet Janitorial and the Case of the Serious Service B.docx

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CASE STUDY 23. Janet Janitorial and the Case of the Serious Service Business Financial Statement Analysis Case LEARNING OBJECTIVES: After completing this case, you should be able to Find financial irregularities in financial statements Analyze trends in account balances Perform horizontal, vertical, and trend analysis Compare financial ratios to industry averages Gain a better understanding of the accuracy/effort trade off Analyze the statement of cash � � flows As an accountant you are frequently asked to solve business or tax problems your friends encounter. Once again your accounting skills are called upon as a friend of yours, Janet Janitorial, asks you to look over her financial statements and advise her on them. She shares the following information: After 20 years of service at her prior job, Janet was tired of the same old, daily routine and looking for a career change. At a New Year's party, she was talking with an old high school friend who had started an office cleaning business ten years prior. This friend enthusiastically described the excellent earnings potential in the industry with substantially more demand than supply of janitorial companies in the market. In January, Janet decided to embrace the opportunity by quitting her job and starting a janitorial service, Acme Office Cleaning Services. She was fortunate that her friend from the New Year's party had more business than she could handle and was kind enough to refer this extra business to Janet. Janet's initial client was an office

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