| Course | MT217 Finance |
|---|---|
| Unit | Unit 2 |
| Paper type | Financial statement review |
| Length | About 840 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT217 Unit 2
Fuel Brings the Customers, the Store Earns the Profit: Reading a Convenience Chain's Statements for Unit 2
[Student Name]
Purdue University Global
MT217: Finance
Unit 2 Financial Statement Review
[Instructor Name]
[Date]
Prairie Junction Stores and every figure are composite and illustrative; the sources cited are real.
The Company
Prairie Junction Stores operates [312] convenience stores with fuel islands across four Midwestern states. Its most recent annual report shows revenue of [$1.84 billion], net income of [$22.1 million] and total assets of about [$640 million]. The chain owns about a third of its locations and leases the rest.
The Income Statement
The income statement shows two very different businesses under one roof. Fuel provides about 68 percent of revenue, about [$1.25 billion], but only about 38 percent of gross profit. Merchandise, meaning food, drinks, tobacco and general items sold inside the store, provides about 32 percent of revenue and about 62 percent of the [$361 million] in gross profit.
The reason is margin. Fuel is sold at a few cents a gallon above cost, so a large volume yields a thin profit. Merchandise carries margins several times higher. Gross profit from fuel is about [$137 million], or roughly 11 cents of every fuel dollar, while gross profit from merchandise is about [$224 million], or about 38 cents of every merchandise dollar.
The rest of the income statement absorbs most of that gross profit. Store wages, utilities, card fees, rent and depreciation leave operating income of about [$41 million]. After interest of about [$11.6 million] and taxes, net income is [$22.1 million], about 1.2 cents on every dollar of sales.
The pattern tells a reader what drives the business. Fuel brings customers to the stores; the stores earn the profit. A month when fuel margins widen can lift results sharply, but the steadier engine is how much each fuel customer buys inside. That also explains the chain's capital spending on food counters: a customer who stops for gas and leaves with a sandwich and a coffee is worth far more than one who only fills the tank. If the chain reports merchandise sales per store and fuel gallons per store separately, a reader can track which engine is improving.
The Cash Flow Statement
Operating activities produced [$61.4 million] of cash, nearly three times net income. Brigham and Houston (2019) explain that operating cash flow adds back noncash charges and adjusts for changes in working capital, and both explain the gap here. Depreciation and amortization of [$36.0 million], mainly on fuel equipment, buildings and store fixtures, is the largest add-back; it reduced net income but used no cash this year. Working capital added a smaller amount, since suppliers' credit grew slightly faster than inventory.
Investing activities used [$48.7 million], mostly capital spending on remodeling stores, replacing underground tanks and adding food counters. That absorbed most of the operating cash. Financing activities used the remainder, mainly to repay debt and pay a modest dividend.
The picture is of a company that generates steady cash but reinvests most of it. Depreciation is not a free source of money; it reflects equipment that will eventually need replacing, which the capital spending line shows is already happening.
The Balance Sheet
Inventory is about [$58 million], small relative to sales, because convenience goods and fuel turn over quickly; fuel may sit in a tank only a few days. Accounts payable of about [$71 million] exceed inventory, which means suppliers effectively finance the whole stock. Penman (2013) notes that operating liabilities such as payables can fund operating assets at little cost, and this chain shows that pattern clearly.
Property and equipment, net of depreciation, is the largest asset at about [$402 million]. Long-term debt is about [$190 million]. Equity, after years of retained earnings, is about [$150 million], so debt and leases together are well above what the owners have invested. Cash on hand is small, about [$24 million], because the chain uses its cash to pay down its credit line rather than hold it.
The Lease Note
The note on leases adds a large obligation that a reader of older statements would have missed. The current lease standard requires Prairie Junction to show each store lease twice, once as money owed to landlords and once as the store it occupies (Financial Accounting Standards Board, 2016). Prairie Junction reports operating lease liabilities of about [$214 million], more than its long-term debt. Because two thirds of its stores are leased, the lease payments are a fixed cost much like interest, and a review of the company's obligations that looked only at debt would understate them by more than half.
The leases are larger than the debt, and only the note says so plainly.
What the Review Shows
Three points follow for the ratio work in Unit 3. Profitability depends on merchandise margins more than fuel volume. Cash generation is strong, but most of it is committed to replacing equipment. And the chain's fixed obligations are much larger than its debt alone suggests, once leases are counted.
References
Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management (15th ed.). Cengage.
Financial Accounting Standards Board. (2016). Leases (Topic 842) (Accounting Standards Update No. 2016-02).
Penman, S. H. (2013). Financial statement analysis and security valuation (5th ed.). McGraw-Hill.
What the MT217 Unit 2 assignment asks for
Unit 2 usually asks you to review all three of a company's core statements, often for a public company you choose. Most prompts expect each statement to be described in terms of what it reveals, not recopied line by line. Explain where profit comes from, how cash from operations relates to net income and why, what the balance sheet shows about how the company funds itself, and what the notes add. Lease, debt and revenue notes often change the picture. Ratios usually come in the next unit, so keep the focus on reading the statements. Many sections want figures quoted accurately from the annual report with a citation. End with points the ratio analysis should test. Expect about four pages with headings for each statement and the notes, citing the report and course sources in APA 7.
How this MT217 Unit 2 example is built
The review introduces the chain's store count, revenue, net income and assets. The income statement section separates fuel and merchandise by revenue share and by gross profit share, computes cents of gross profit per dollar for each, and concludes that fuel brings customers while stores earn the profit, with a margin note explaining why the largest line is not the most important one. The cash flow section explains the gap between operating cash and net income through depreciation and working capital, citing Brigham and Houston, and shows capital spending absorbing most of the cash. The balance sheet section notes payables exceeding inventory, with Penman on operating liabilities, plus debt, equity and cash. The lease section cites the lease standard and shows lease liabilities exceeding long-term debt, which the highlighted line states. Three points for the ratio unit close the review, with a second note.
Where the points sit in the MT217 Unit 2 rubric
Statement reviews are usually graded on interpretation, accuracy and use of the notes. Describing what each statement reveals earns more than restating its totals. Separating revenue share from profit share, as the fuel and merchandise comparison does, shows the writer can find what drives the business. Explaining why operating cash flow differs from net income, with the specific add-backs, demonstrates understanding of accrual accounting. Graders reward reviews that read the notes, since leases, debt maturities and segment data often change the conclusion. Figures should be quoted accurately and cited. A closing list of questions for the ratio analysis shows how the units connect. Clear headings for each statement help. Brigham and Houston, Penman and the Financial Accounting Standards Board lease update should appear in APA 7, along with the annual report if you use a real company.
MT217 Unit 2 help from the desk
Statement reviews often lose points by listing every line of each statement without explaining any of them. Another frequent problem is treating revenue and profit as the same, so a reader never learns where the company actually makes money. Some reviews describe operating cash flow without explaining why it differs from net income. Others skip the notes entirely and miss leases or debt that change the risk picture. Ratios sometimes creep in before the unit asks for them, crowding out interpretation. Watch the figures closely, since a misread line or wrong year is easy for a grader to spot. If your section asks for a real company, pick one with segments or a clear business model, which makes the review easier to write. Tell our writers which company you are reviewing, and they can help you read each statement and find the note that matters most.
Get an MT217 Unit 2 example written to your instructions
Which company did you choose? Attach its annual report or filing with the Unit 2 prompt and rubric. In plain language, the review reads that firm's statements, explains where profit and cash come from and flags the notes that matter. Nothing is billed for the initial sample, which generally arrives in 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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MT217 Unit 2 questions, answered
Why does the sample use a composite instead of a real company?
Because most sections ask each student to choose a real, publicly traded company, and a sample built on one would invite borrowing rather than reading. The composite's figures are consistent with the statements a regional chain might file. The custom version works on whichever company you chose, using its actual filings and the fiscal year your prompt specifies.
How can operating cash flow be almost three times net income?
Mainly because of depreciation, which reduces income but costs no cash in the year it is recorded. A store chain with large investments in buildings and equipment carries heavy depreciation. Changes in inventory and payables add or subtract the rest. The sample shows depreciation of 36.0 million doing most of the work and names the other items beside it.
Where can I find a free MT217 Unit 2 sample paper?
This page holds a full MT217 Unit 2 financial statement review of a composite convenience store chain. It explains where profit is made, why operating cash exceeds net income, what the balance sheet and lease note show, and includes margin notes.
Do lease liabilities count as debt in the review?
For judging what a company owes, usually yes. Store leases commit the chain to fixed payments for years, much like a loan, and the current standard puts them on the balance sheet. The sample shows them exceeding long-term debt.
Why does the sample say fuel brings customers but stores earn the profit?
Fuel is about 68 percent of revenue but sold at a few cents above cost, so it yields only about 38 percent of gross profit. Merchandise inside the store carries much higher margins and supplies the rest.