Abstract When it was learned that Xerox had overstated its revenues, it was just another in a long line of financial shocks that have rocked corporate America. What caused this fraud and what was the impact to the shareholders? This paper focuses on these questions and more regarding the Xerox scandal.
From the Paper "Xerox was formed in 1906 and had grown to an international corporation with over eighty thousand employees. Obviously this organization did not start out by defrauding people; it was a highly respected and well-known organization. Xerox became best known for their photo-copying machines that had taken over the market. Their machines and technology in the photo-copying department are so well known that the word 'Xerox' has become universally to be known as a photocopy (Pratley and Treanor 2002)."
Abstract This paper provides an overview of ethical issues affecting accounting practices as they relate to how stock options are expensed. Detail is provided regarding the background of the issue and forces in the accounting, business, and governmental communities that affect the resolution toward more accurate company income statements.
From the Paper "We can"t remember another time when there's been more discourse about the lack of quality and transparency in corporate financial reporting than today. And it isn?t only the usual crowd of investors, legislators, regulators, journalists, lobbyists, bankers, accountants, and corporate financial managers. Even Jay Leno is satirizing accountants.?(Grant and Ciccotello, April, 2002) However, inconsistencies regarding accounting practices are not a new topic of the Enron era."
Abstract This paper examines the purpose and users of financial statements which can include present and future shareholders, creditors, employees, the government and the public at large. It looks at how the statement of principles focuses the attention of both regulatory authorities and the reporting entities on what it considers to be the main users of financial statements and current and future investors. It also discusses how there is clearly a limit to the amount of information that can be disclosed in a set of financial statements, as too much information would overwhelm users, who would not then be able to find the information relevant to them.
From the Paper "According to the Accounting Standards Board, the Statement of Principles contains the philosophy of what the Accounting Standards Board is trying to achieve through the process of issuing accounting standards, and can be used to some extent as the mission statement of the Accounting Standards Board. In the Statement of Principles, several users of financial statements are identified (Accounting Standards Board 1999). These include present and future shareholders, creditors, employees, the Government, and the public at large. With such a diverse set of users for a company?'s financial statements, it would be very difficult for a set of accounts to successfully satisfy the informational needs of all users fully. This is why the Statement of Principles focused the attention of, both regulatory authorities and the reporting entities, on what it considers to be the main users of financial statements, current and future investors."
Abstract The role of the financial manager has become more predominate over the last few years and is different from the role of an accountant. This paper discusses how financial managers have become more of a "hot commodity" because they provide more than just knowing how to record, and track transactions. It explains how a financial manager is involved in the vital roles of planning, budgeting, and analyzing risk.
From the Paper "A Financial managers role works closely with accountants yet have a different role than an accountant. Financial managers are involved in the decisions that flow assets from investors to the companies and back to the investors. This typically is done to create a return on investments. They are the ones that make decisions on how to obtain financing for the companies, and then in turn how to use those assets to generate a return. This involves financial decisions about how they actually want to raise the money that will be utilized for the investment, and also the capital budgeting or which real assets the company will acquire."
Abstract This paper explains that venture capitalists make appropriate risk assessments, called due diligence, to find out if they are really and truly buying the company, an interest, or a product as presented in that infamous "fine print". The author points out that the checklist delineates a request for various kinds of documents from the company or the producers in question with whom the venture capitalists are dealing. The paper relates that the due diligence checklist includes a list of banks or other lenders with whom the future company might have a financial relationship, including credit agreements, debt instruments, and other agreements evidencing outstanding loans to which the company is a party or was a party within the past two years.
Table of Contents
Introduction
Checklist
Corporate Documents Regarding ChipeX Company and Subsidiaries
Issuances of Securities
Material Contracts and Agreements
Employees and Related Parties
Memo
Conclusion
From the Paper "This is a financially chancy and dicey time for technological investment. According to some of their independent analysts, the microchip to be developed by the aforementioned former members of ChipeX Company is a sure thing. This alone, however, should raise red flags. Even though the technical viability of the product has been sung in its praises by many technologically forward independent experts, in business, particularly the business of technology, experience and the dot.com bomb has taught us all that there is no sure thing."
Abstract This paper describes the unethical management and business conduct of WorldCom and its CEO, Bernard J. (Bernie) Ebbers. The paper details Ebbers's ethical failures in his attempt to make WorldCom the number-one stock on the market and describes the consequences of his mismanagement.
From the Paper "While much of the business world was gnashing its teeth over the dot-com bust, telephony was having a bad day, or at least, that portion of it that had been subsumed into giant WorldCom was. In 2001, "The number of competitive local telephone companies in operation dropped to 150 from 330 the previous year, and long distance carriers lost pricing power and market share to the regional Bell and other local telephone companies. Many companies had entered the market for Internet services in the late 1990s, and the resulting expansion in network capacity led to a glut in the market" (Zekany et al, 2004, p. 101+). That situation might lead some CEOs to err on the side of caution, but the CEO of WorldCom, Bernard J. (Bernie) Ebbers, was riding a huge wave of publicity, generated by his own grandiose scheme for WorldCom to become Wall Street's all-time Number One stock."
Tags: u.s., telecommunications, industry, infrastructure, internet, carrier, government
This paper is a comparative analysis of Blockbuster Inc. and Netflix Inc., both movie rental companies, using financial ratios based on their respective income statement information covering the five-year period of 2001 to 2005.
Abstract This paper uses four types of financial ratios---leverage ratios, liquidity ratios, efficiency ratios and profitability ratios---to summarize large quantities of financial data from Blockbuster Inc. (BBI) and Netflix Inc. (NFLX) and to compare their performances. The author points out that, because Blockbuster Inc. carries the heavy weight of debt, if Blockbuster loses market share and revenues are spread thinner, they will have a hard time repaying that debt. The paper states that current trends in this industry are in Netflix's favor because more and more people are opting not to drive to their local video store but rather have several selections mailed to them at once; however, both companies are challenged by companies that sell movie downloads. Many tables.
Table of Contents
Leverage Ratios
Total Debt Ratio (Debt to Assets) = Total Liabilities / Total Assets
Liquidity Ratios
Current Ratio = Current Assets / Current Liabilities
Quick Ratio = Cash + Marketable Securities + Receivables / Current Liabilities
Net Working Capital to Total Assets Ratio
Efficiency Ratios
Asset Turnover Ratio = Sales / Average Total Assets
Profitability Ratios
Net Profit Margin = Net Income / Sales
Operating Profit Margin = Net Income + Interest / Sales
Return on Equity = Net Income / Average Equity
Conclusion
From the Paper "In liquidity ratios there is a major focus on current assets. Efficiency ratios judge how effectively the company is using them. The asset turnover ratio shows how hard the companies' assets are working for them or against them. [Table: Yearly Asset Turnover Ratio] Blockbuster as expected has a steadily increasing Asset Turnover Ratio as their assets are older and more depreciated. Netflix and their assets are young compared to that of Blockbusters' and is evident in their highly erratic ratios. You can see spurts of growth between each year. Their numbers are greater in response to having less overall total assets than Blockbuster and their thousands of stores possess."
Abstract The paper identifies and evaluates the key components of ethical accounting practices in the modern world, where there is a strong tendency to succumb to external influences in favor of personal gain. The paper explains that it is no longer that GAAP is the supreme code for accounting practices, rather there must be strong moral and ethical foundations that should be created at the academic level.
From the Paper "In today's society, the accounting profession has experienced numerous challenges in an attempt to act in ethical ways with regards to accounting principles and business records. Generally Accepted Accounting Principles (GAAP) serve as a key reminder that businesses must act responsibly in their accounting activities at all stages, regardless of the potential that exists for personal gain and success. The following discussion will evaluate the importance of GAAP and accounting ethics in the context of modern organizations, where the temptation to act in a selfish manner is greater than ever. GAAP were designed to encourage a truthful representation of financial statements, based upon all business transactions conducted within specific periods (Shafer, Ketchand, & Morris, 2004)."
This paper presents a plan for improving the balance sheet of Franktek Inc. in light of a renegotiated agreement it entered into with Conte Technologies.
1,125 words (approx. 4.5 pages), 4 sources, 2006, $ 44.95
Abstract In the case of Frantek, Inc., a manufacturer of microcomputer parts, and Conte Technologies, a buy of same, the issue is how to measure and recognize valuation of assets and liabilities in order to provide a proper accounting at year's end for Frantek, relevant to an amended agreement between Frantek and Conte for parts supplied by Frantek to Conte. This paper first lays out the basic facts of this case and discusses general accounting principles which will impact the path that Frantek takes and then presents a general recommendation concerning how Frantek ought to recognize revenues, valuate inventories, and valuate and classify liabilities. Issues of the Case Frantek agreed to provide 100,000 boards over a 12-month period to Conte at a stipulated price per board, with provision for penalties for failure to perform.
From the Paper In the case of Frantek, Inc., a manufacturer of microcomputer parts, and Conte Technologies, a buy of same, the issue is how to measure and recognize valuation of assets and liabilities in order to provide a proper accounting at year's end for Frantek, relevant to an amended agreement between Frantek and Conte for parts supplied by Frantek to Conte. After laying out the basic facts of the case and discussing general accounting principles which impact the path taken, a general recommendation will be made concerning how Frantek ought to recognize revenues, valuate inventories, and valuate and classify liabilities. Issues of the Case Frantek agreed to provide 100,000 boards over a 12-month period to Conte at a stipulated price per board, with provision for penalties for failure to perform.
Abstract This paper examines the issue of strategic planning for a company specializing in plastic injection molding and design, Riordan Manufacturing. The paper points out that strategic planning is the very essence of long-term survival for a business. Since publicly-owned corporations like Riordan Manufacturing have the primary goal of maximizing shareholder wealth, strategic planning centers on the long-term growth in a company's financial position. Also, Riordan Manufacturing must constantly keep abreast of local, state, federal, and international laws, since a simple legislative act could affect them in any number of ways. Another primary concern is that of competition. The paper also suggests that Riordan Manufacturing should construct much of its budget based upon its economic forecast. The paper concludes that Riordan Manufacturing seems well-poised to continue its growth in the plastic injection molding industry, and appears to adhere to sound financial planning strategies, leaving little doubt that its shareholders are being appropriately represented.
Outline:
Strategic Planning
Economic Forecast
Master Budgeting Process
Assumptions
Conclusion
From the Paper "The formulation of any projected financial data must naturally include some assumptions. In the case of cash budgets, one important assumption of that of sales compared to collections from sales. Riordan quite clearly expects to collect revenue from sales during the month following the actual sale. For example, projected sales for July total $5,350,200 whereas projected collections from those sales are expected to be received in August under the cash budget.
"Another assumption appears evident in interest income. Given that collections from sales occurs up to a month--and possibly later--after the actual sale, Riordan has anticipated the interest income to be a fairly steady amount; as the figure does not change at any point throughout the fiscal year."
Tags: shareholders, stockholders, investors, plastic, injection, molding, industry
Abstract This paper looks at the new rules passed by the SEC, how and why they came about and discusses how they will affect the big accounting firms and business in general.
From the Paper "On November 22, 2001, the Securities and Exchange Commission's new rules that will modernize its auditor independence standards for management consulting and other non-audit services offered by accounting firms, took effect. These new rules were put into effect because of the fast growing consulting services offered by the Big 5. Companies often hire Big 5 firms to audit and consult them at the same time. The SEC believes that this will lead auditors to give into their clients out of the fear that they will lose them for their consulting business. "
Abstract This paper analyzes the rise and slight fall that Wal-Mart has taken since its founding in 1962. It gives a breakdown of the company's holdings and their balance sheets for January 31, 2000. One of the problems Wal-Mart has to deal with is meeting political demands from several groups and institutions. It also details another problem regarding Wal-Mart's growth and a petition that has been distributed to hundreds of people in the United States. It concludes that in order to survive, Wal-Mart must consider the environment in which they have stores.
From the Paper "Since its founding in 1962 by Sam Walton, Wal-Mart has had a nearly flawless track record of growth, eclipsing all other U.S. department store retailers by the early 1990s and succeeding during both lean and flush economic times. However, even Wal-Mart has begun to look a little battered in the recent economic downswing: In the spring of 2001, Wal-Mart showed a huge market capitalization of over $230B, down from nearly $300B in early 2000 (www.walmart.com). Much of the loss in its capital was due to its recent struggles in its Internet-based operations as it tried to make a transition to the Internet ? and found (as have so many other companies) that the transition would not be nearly as smooth as it would have liked. During the last year, Wal-Mart has continued to experiment with both its Internet and corporate strategy. It remains a strong company, however, with much of its strength deriving from its shareholding structure as well as from the fact that the company has always invested very deeply in infrastructure, being among the first to use point-of-sale Uniform Product Codes scanning, and intra-store radio frequency transmission of product UPC to allow exchange of information between central store inventory systems and personnel with scanners on the store shelves along with a satellite system connecting each store, headquarters, and distribution centers, and suppliers."
Tags: Wal-Mart, petition, Balance, Sheets, Consolidated, Sharehoders, shares, company
Abstract A paper on accounting and tax software. The author examines the various programs available and states the functions available with each of them. He notes that although the accounting functions are good what really make these products exciting are the business management tools for creating customized reports and financial statements.
From the Paper "Peachtree Complete offers all the standard accounting functions. It also includes a powerful job-costing function that lets you analyze job costs and track current job estimates. In addition, Peachtree offers tracking capabilities to keep tabs on back orders and partial shipments. This program can also alert you when inventory gets low or you're going over budget. The Administration section lets you manage tasks such as creating job descriptions and tracking sales reps and handling contact management. Peachtree has numerous easy-to-modify reports that let you analyze data and includes a form designer so you can create your own forms (Cavanah 1997)."
Tags: Peachtree, Quickbooks, ?, Cyma, IV, Maint, Turbotax, TaxAct, Abacus
Abstract This paper provides an analysis of the conditions and events that led to the near collapse of Long Term Capital Management (LTCM) in September 1998. The author discusses the mistakes made that ultimately led to this downfall and outlines lessons to be learned by the hedge fund industry.
From the Paper "Three years before energy industry giant Enron Corp. sought protection from creditors and came under the harsh light of scrutiny for the complex web of off-balance sheet deals that masked the firm's huge debt, a very similar scenario unraveled among some of Wall Street's most celebrated financial players. But while Enron unsuccessfully sought eleventh-hour aid from the power brokers it has bankrolled in Washington D.C., a "who's who" of global financial institutions stepped up to bail out hedge fund Long Term Capital Management (LTCM) in September 1998. Not coincidentally, the bankers arguably had more to lose from the impending collapse of LTCM than they faced in the more recent debacle."
Abstract The collapse of Enron, which represents the largest bankruptcy in U.S. history, led to thousands of employees losing their life savings in 401(k) plans tied to the company's stock. Arthur Andersen, Enron's auditing firm, has been indicted for obstruction of justice for allegedly shredding thousands of Enron documents. This paper explores to what extent a business disaster could have been averted by using modern database technology such as knowledge management tools or data warehousing applications to create a safer working environment.
From the Paper "But what could have prevented so many individuals from losing their life savings? Is there any database application that could have prevented that? Probably not from a user perspective but certainly for an auditing perspective. Data mining allows for the extraction of particular information based on defined goals. Once the attributes are created, the user can extract hidden predictive information from large databases. In the case of Enron's auditing practices, perhaps a data-mining tool would have been able to unearth hidden information. Remember, data mining is data-driven, not user or verification-driven. A user formats a theory about a possible relation in the database and converts this hypothesis into a query."
