Abstract This paper presents the basic forms and methods of accounting for cash accounting and accrual-based accounting and compares the two. It examines which form of accounting is more beneficial to specific sectors of the economy and looks at the advantages and disadvantages of each.
From the Paper "In the cash basis of accounting, the business records are "cash in" (deposits to the bank account) called cash receipts, and "cash out" (checks) called cash disbursements. Cash receipts - Cash disbursement = Cash flow. Each month's cash flow is added to the preceding month's cash balance yielding the current month's cash balance.
The cash basis of accounting is more likely to be used by service businesses than by retail or manufacturing businesses. Service businesses usually do not need equipment and can sell a service they perform with nothing more than their own hands and minds. Think of people who are lawyers, writers, public relations and advertising personnel, and accountants."
Abstract This paper examines how the organizational culture and management style at Enron contributed to this culture of silence that both silenced critics and forced employees to go along with management's questionable decisions. It focuses particularly on the organizational style of Jeffrey K. Skilling, whose tenure as Enron's Chief Operating Officer is largely credited with sowing the seeds of Enron's destruction.
From the Paper "Skilling's micro-management style and rank and yank policies resulted in an intense competition among Enron executives. Robert J. Hermann, Enron's former tax counsel, described the culture of Schilling's Enron as "me first, I want to get paid...There were always people wanting to do deals that didn't make sense in order to get a bonus" (cited in Behr and Witt, "Visionary's Dream Led to Risky Business"). Whenever possible, Schilling reportedly used such financial incentives to shore up his "loose-tight" management style."
Abstract This paper discusses the rise and fall of nation's seventh largest company, Enron International. Enron announced bankruptcy last year and this unveiled one of the worst stories of deception, greed and fraud in the history of Corporate America. The largest energy trader of the United States managed to keep its negative debt position off the books with the help of its auditing firm, Arthur Andersen.
Abstract CVS is a retail corporation that sells prescription drugs and general merchandise products. This paper presents an overview of the company, including its corporate structure and history. The paper then discusses CVS's strategic goals and objectives, including its impressive community involvement plan. Finally, the paper concludes with overall highlights of the company's operations before providing financial statements for both CVS and its prime competitor, Walgreen's.
From the Paper "CVS has also improved its company strength from all areas of the business. Most notable is the operating income increased from $700 million in 2001 to $1.2 billion in 2002, return on equity increased from nine percent in 2001 to 13 percent in 2002, and return on assets increased from five percent in 2001 to almost eight percent in 2002. This reflects the strong growth from the company, improving their inventory controls, expanding into new markets, opening new stores in existing market areas and marketing to the baby boomers, which is the largest user group in the U.S."
Abstract This paper explains that the Sarbanes-Oxley Act (July 2002) is a weak attempt by Congress and the Securities and Exchange Commission to make meaningful changes in the oversight of public companies. The paper relates that the future of the accounting profession will be different under the Sarbanes-Oxley Act because auditors will report to an audit committee, not management; auditors will no longer be allowed to offer many non-audit services to the client; and the lead audit partner and audit review partner must be rotated every five years. The author has serious reservations regarding whether or not Sarbanes-Oxley does enough to change the underlying root cause of accounting irregularities and believes that more research is needed.
From the Paper "Although many department chiefs already are stepping up Sarbanes-Oxley Act compliance activity throughout their organization, most say they feel like they are just going through motions. And, few finance executives believe Sarbanes will do much to restore investor confidence. In a PricewaterhouseCoopers survey, eighty-four percent of executives reported that Sarbanes has changed control and compliance practices at their companies?though not significantly. And, more than half contend the new law simply formalizes what their company had been already doing anyway."
Abstract To maintain a strong financial position the company's capital structure must be well organized to reduce the overall cost of capital. It is essential that proper management of the cash flow and investments are scrutinized on a constant basis. This paper shows that without a firm hand on the money going out and the money coming in, a company could find themselves without working capital, bad dept and an excess inventory. Everything that affects working capital, such as payables, receivables, equity, loans, inventory and investments must be controlled constantly. This paper examines how capital management in healthcare requires regular maintenance to be successful.
Paper Outline:
Introduction
Capital Management
Importance in Healthcare
Cash and Investments
Managing Payables
Inventory Management
Investments
Conclusion
References
From the Paper "Ratios are important to a company and must be analyzed frequently. Comparing the ratios to that of other similar companies will reveal just where the organization stands in the business. There are two basic financial decisions a company must make before starting. While looking at the assets of an organization, the company will naturally lean towards investing in the positive net present value (NPV) projects. Once this is determined then a capital structure is created to fund the project."
An overview of the Wrigley chewing gum company, their marketing and product strategy and how they revitalized the market by catering to evolving consumer tastes.
2,447 words (approx. 9.8 pages), 11 sources, 2000, $ 74.95
From the Paper "Industry experts have characterized Wrigley's marketing and product strategy in the past as "conservative"; however, marketing and product changes reflecting an awareness of changing demographics are helping Wrigley maintain their position as market leader and revitalize a mature market. "
Abstract This paper compares two confectionery companies: Hershey Foods Corporation and Tootsie Roll Industries. The confectionery industry is shown to be highly competitive, and the companies worthy of investment will be those that combine the abilities to maximize sales, minimize costs and maximize operating efficiencies. An analysis of their annual reports and financial statements is carried out to find out how profitable and viable they are, as well as how they manage and finance their operations.
From the Paper "The global confectionery industry, estimated at $100 billion USD, has never been more challenging, or more competitive. The world's leading confectionary companies struggle for market share in a mature industry characterized by increased numbers of firms competing for the same business, price erosion, and the necessity to produce more to maintain profit margins. To compete effectively, manufacturers are challenged to create new products, maximize efficiencies at the factory and corporate level and increase penetration within existing markets (Candy Industry, 1998). "
Abstract This paper looks at the two different accounting systems for mergers and acquisitions, and evaluates their effectiveness. It uses the merger of Idol Steel and Crown Welding to demonstrate their point. First the details of the merger are first examined using the pooling of interests accounting system, and then, by the purchase accounting system. After the two cases are presented, the author presents a direct comparison of the numbers and the methods used to do the calculations, to show the strengths and weaknesses of these two methods. Through this comparison, the author substantiates the FASB' s elimination of the pooling method in order to improve financial reporting.
From the Paper "Accounting for a business combination using the pooling method is conceptually straightforward. Upon completion of the business combination, the balance sheet of the combined entity reflects the sum of the book values of the assets, liabilities and owners's equity accounts of the combining entities immediately before the combination takes place (Walter, pg 29). The pooling method treats the entities as if they had always been together and thus the combination as "non-event" (Baker, Lembke, and King, 2002, pg 20). Unlike the purchase method when utilizing the pooling-of-interests method it is not necessary to indicate which entity is the acquirer and which is the acquired (Journal of Accountancy, July 1999). However, in order to use the pooling method there are twelve criteria that must be met. If one of the criteria is not met the use of the purchase method is required but if all twelve criteria are met, the pooling method is required (Baker, Lembke, and King, pg 27)."
Abstract This paper discusses the commonalities and differences between the budgets of individual, for-profit, non-profit and public-sector entities. This paper explains how the budget process is similar and different between all of these entities. Budgeting is a critical element in financial planning, explains the author--whether the budget applies to an individual, a company or public entity, the budgeting process, its application and execution forecast the expected future.
From the Paper "One of the most essential ingredients for a manager to effectively run an organization is the ability to develop and implement a good budget. The main objective of a budget is to establish a method of allocating limited resources in order to achieve the best return on their dollars. Furthermore a budget also outlines the various sources of revenue and the anticipated amount of money that will be derived from each source. Individuals, governments, non-profit organizations and profit making businesses commonly use this financial planning process. Each of these entity's budgets have many similarities and differences."
Abstract The writer asks whether the accounting industry should be regulated and if so, how this should be done. It looks at the factors surrounding this issue such as independent audits and government controlled Accounting Authorities.
From the Paper "Currently, the accounting industry is a "self-regulating" industry, which means they set their own rules, and abide by them within the industry, with a minimum of outside intervention. The Financial Accounting Standards Board governs companies. The board sets the rules and applications accounting firms must follow. Many experts feel that self-regulation is no longer working, and the Federal Government needs to place more constraints on accounting firms. ??non-regulation and deregulation of the financial industries has gotten us into this mess. Auditors are allowed to receive income both from auditing and from consulting or "management advisory services" to the same client, the latter usually being the more lucrative relationship with more potential for growth? (Amato)."
Abstract This is a financial report on Budd Canada, Inc, a company in the business of supplying automotive components, specializing in the production of bumpers, chassis components and light truck frames. It is the writer's recommendation that a banking institution does not consider Budd to be a viable investment risk at this time as it has had a ten year history of increasing sales coupled with even greater decreasing profits. This paper shows how the company's position in the market is precarious.
From the Paper ?This general industry trends also touched Budd Canada. The Corporation reported a $94.2 million dollar net loss as of September 30, 2001. Budd had mixed results this year due to the need to ramp-up production on its new state-of-the-art system in order to meet customer demand. Typically, the introduction of new equipment produces a negative financial effect initially. The 2001 losses were anticipated however early losses were greater than anticipated and a new management team was put into place. Traditional product lines declined, as order shifted to newer product lines. The Budd Company is substantially dependent upon two major customers. These two customers account for 99% of sales and 99% of the accounts receivable balance.?
Abstract This paper explores the issues and history of corporate taxation. Corporations are taxed at a rate depending on their income. This paper discusses the pros and cons of dropping the corporate tax, the methods which can be used to drop or lower corporate taxes and why. The paper includes charts and statistics concerning corporate taxes.
Table of Contents
I. The Beginning of Corporate Income Tax
II. The 1986 Tax Reform Act
III. How Does Taxes Affect Business
IV. Corporate Tax Rates
V. Decline of the Corporate Income Tax
VI. Why the Wide Range Between State and Corporate Taxes
VII. How Does Corporate Tax Work with Multi-state Manufacturers?
VIII. Does the Corporate Tax Help
IX. Proposals of Corporate Income Tax
X. Need of Stimulus
XI. Future Research Concerning Corporate Taxes
XII. Conclusions
XIII. Works Cited
From the Paper "Where did the corporate income tax begin? How does it affect our economy? What is the future of the corporate income tax? Will deleting corporate income tax be the answer for the economy? What about cutting part of this tax? How does the corporate income tax help the economy? These are questions that will be answered in this paper as well as how the corporate tax is affecting our economy now.
The Beginning of Corporate Income Tax
"How the corporate tax began is an example of why tax systems can be worse than they should be and how little influence the economic profession has on government policy (Norton 2). Sometimes ideals look great when they are not that sound. Corporate taxes were used during wartime until 1909, when Congress enacted a 1 percent tax on corporation income. The rate increased until 1932 to 12.5 percent when the rate was changed to the progressive rates. Norton stated, ?Surtaxes on corporate income were added for "excess profits" during both world wars. The highest peacetime rate, 52.8 percent, was reached in the sixties? (2). "
Abstract This paper examines a method for estimating targeted capital structure using data extracted from a firm's financial statements. The weighted cost of capital (WACC) with its components: debt, common and preferred stock are calculated. The cost of retained earnings is calculated and explained. Issues regarding the computation of net present value (NPV) and internal rate of return (IRR) are explored in relation to capital budget questions. Additional issues management should evaluate when considering capital expenditures are discussed.
From the Paper "For most firms the "average cost of capital" is the combined cost of capital raised from the sources that the firm uses (Brigham & Ehrhardt, 2002a, p. 421). Each capital component will have its own minimum rate of return, expected by the investors, who provide that form of capital (p. 421). This combined capital cost is termed the "weighted average cost of capital" or WACC (p. 421). Typically capital is obtained from the components of debt (preferred and common) and stock (p. 420)."
Abstract The paper shows that the increased globalization of companies has led to a dilemma for investors because accounting standards in various capital markets are not always reliable. It shows too that in an effort to increase the reliability of financial information in capital markets the SEC seeks to maintain the high quality of financial reporting in the U.S., while working towards establishing a high quality financial reporting structure worldwide. This paper summarizes the issues presented in the SEC's concept release on International Accounting Standards. These issues include: the five elements of global financial reporting; exceptions to rules for foreign private issuers using accounting standards that differ from GAAP; and the three criteria for assessing the International Accounting Standards Committee.
From the Paper "Rigorously interpreted and applied: The development of high standards does not ensure that the standards will be upheld. In order for the standards to be practiced consistently accountants have to understand the responsibility they have in applying these standards consistently and in a manner that is needed to ensure high quality. This understanding only comes when regulators including auditors, rigorously interpret and apply these standards to accounting standards around the globe. The SEC contends that IASC standards are not used in many capital markets, which makes it impossible for them to be interpreted or applied. In addition countries that do utilize IASC standards have yet to incorporate the new changes created by the IASC."
