...Shannon Carl ACC 310 Cost Accounting 1 Analysis of Cost Accounting Jess Stern 5/28/2012 “Cost accounting is a type of accounting process that aims to capture a company’s costs of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment.”( Cost Accounting, 2012). By analyzing the importance of cost accounting to the success of a firm, we will get a better understanding as to why companies use this type of accounting process. Becoming knowledgeable about the various methods of cost accounting and how they are used will enable the company to operate the process appropriately. Understanding how an operating budget works to discipline a firm’s management is also useful information when running a company. To do so, one needs to know the actual elements of the budget and how they are constructed. Lastly, one more beneficial piece of information to comprehend would be what a variance analysis is and how it is used. In the midst of discussing the previous items, there will be various elements that relate to the above topics in which there will be further detail provided. First, why is cost accounting so important to the success of the firm? “Managers rely on cost accounting to provide an idea of the actual cost of processes, departments, operations or product which is the foundation of their budget, allowing them to analyze fluctuation and the way funds are used socially for profit” (Llango, 2009)...
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...Financial Analysis This report is prepared to provide a financial picture of Empire Industries Ltd, and draw a conclusion whether EIL will be a value investment. We have analyzed the financial performance, financial position, cash flows, and management effectiveness. We compared EIL to Canam Group Inc. (CAM), and ADF Group Inc. (ADF). Financial Performance Revenue Growth EIL’s revenue has increased dramatically year-over-year. It increased from 8.11% in 2011 to 54.82% in 2012. It outperformed both competitors and the industry. EIL experienced a negative growth in the past. From 2008 to 2011, revenue growth was well below the competitors. The negative growth in the industry was due to the global recession, since steel in general is considered to be a good indicator of how the economy is performing, a positive correlation exits between the economy as whole and demand for steel in general. Still EIL was not well prepared to overcome the recession compared to its competitors. EIL’s revenue growth was (62.28%) in 2009 vs. (21.38%) for CAM and (33.5 %) for ADF. From this observation, we can conclude that EIL’s risk management practices were not par with the industry. Nonetheless EIL appears to be on the right track in terms of growth. In the last two years, they have improved and positive growth was reported. We have noticed that EIL’s revenue growth in the last five years fluctuated across a wider range compared to ADF and CAM. Hence, we are required to look deeper...
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...CEC International Holdings Limited Listed company on HKSE (759) From an investor point of view, CEC International Holdings Limited (CEC) has been doing good in business in maximizing profit, however the operation efficiency and liquidity need to have some improvements. The financial statements are prepared in accordance with Hong Kong Accounting Standard (“HKAS”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and has been consistently used throughout all financial years. The framework used to develop the financial statements is the indirect method, which discloses an overall summary (consolidated financial statements) then follows by detail breakdown of individual items such as the change in capital assets, which is a widely adopted way of presentation. CEC has changed its core business from electronic components manufacturing to retail since 2010, which has a higher profit margin and is the major profit contributor now. From 2011 onwards the cost of sales to revenue ratio reduced from 82% down to 76% then to 72% showed a great improvement in controlling the operation efficiency, eventually contributing to the gross profit. The ROSF and ROCE first dropped from 2011 to 2012, then slightly back up again in 2013. The cause of the drop may be because of the investment at early stage of business change whereby the return of investment has not been accounted. However, the operating profit margin and EBITDA margin were kept lowering. The selling...
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...companies manage earnings? 3 (c) What are the means of detecting earnings management? 6 * Aggregate accruals/ Discretionary accruals 6 * Specific accrual 7 * Earnings distribution 8 2(a) Why do companies fail? (Causes of company failures) 9 * The Main Causes Of Business/ Company Failures 9 * The Solutions 10 (b) Comment on 6 corporate failure models, discussing their relative advantages anddisadvantages 11 Quantitative models: * Beaver 11 * Altman 12 * Taffler and Tishaw Model based on Z sore 14 * ZETA and Performance Analysis Score by Altman and Taffler 14 * H Score 15 Quantitative Models: * Argenti Model- A Score 15 References......................................................................................................................................18 1(a) What is Earnings Management? Earnings management, often referred to as creative accounting, is a pressing practice which is still getting more and more widespread nowadays. But to understand what earnings management is, it is important to realize what we mean when we refer to earnings. Sometimes called the “bottom line” or “net income”, earnings are referred to as the single most important item in financial statements. They are in fact the profits of a company. They indicate the extent to which a company has engaged in value-added activities. They are a signal that helps direct resource allocation in capital markets. Companies with poor earnings prospects...
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...[pic] FINANCIAL ACCOUNTING ANALYSIS ON VIDEOCON INDUSTRY ANNUAL REPORT 2007-08 [pic] INTRODUCTION Videocon Industries was founded in 1987 by Mr. Nandlal Madhavlal Dhoot. At that time they only used to manufacture TV and Washing Machines. Then after in 1989-90, they started manufacturing Home Entertainment Systems, Electric Motors & AC. Videocon entered Refrigerators and coolers segment in 1991. In 1995, Videocon started manufacturing Glass shells for CRT and in 1996 it ventured into Kitchen appliances and crude oil segment. In 1998, Videocon started manufacturing Compressors & Compressor Motors. They introduce Colour TV Videocon took over Philips Plant. In 2005, Videocon took over 3 plants of Electrolux India and acquired Thomson CPT. Today, it has evolved into a giant conglomerate with annual revenues of over U$4.1 billion. They have diversified their business in different segments. Now along with Consumer Durables they are also engaged in Oil & Gus, Telecom and Power Sectors. DIRECTOR’S REPORT 1. The Net sales of the company registered an increase of 17.72% over the previous financial year. It increased from Rs. 82,854.24 Million as on September 30, 2007 to Rs. 97,536.Million. Profit after tax amounted to Rs. 8,542.95 Million as against Rs. 8,552.19 for the previous year. This was a difference of Rs. 9.42 Million. 2. Operations of the company in various sectors: A.Consumer Electronics and Home Appliances: The Company consolidated its position in...
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...General Motors Accounting Analysis and Business Solution | | Table of Contents Introduction2 Hypothesis and Methodology 3 Analysis of Problems4 Variables5 Primary and Secondary Sources6 Resources6 Sample………………………………………………………………………………………………………7 Test Statistics……………………………………………………………………………………………….8 Final Recommendations…………………………………………………………………………………….9 Conclusion………………………………………………………………………………………………...10 Appendices………………………………………………………………………………………………..11 Survey……………………………………………………………………………………………………..12 References…………………………………………………………………………………………………13 Introduction Every time you pick up a newspaper and read the business section, you hear about a major company having some sort of financial problems. These problems are most likely a result of accounting errors and in some instances because of these errors, companies have had major financial issues they could not recover from. Over the years General Motors has been one of those companies. General Motors Company, commonly known as GM, is an American Multinational Corporation, headquartered in Detroit, Michigan. GM designs, manufactures, markets and distributes vehicles and vehicle parts and as well as sells financial services. General Motors produces vehicles in 120 countries under ten different name brands (General Motors Corp.). Recently, management at General Motors has decided to start tracking the number of errors in the accounting department. The number of errors will be tracked per accountant and...
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...This report aims to provide a potential investor with relevant information␣ in the form of overview, business strategy, accounting policies, and financial ratios␣ to make an informed decision regarding investment in ABR holdings Limited. The report will first present to you a brief outline of the ABR holdings and It’s core functionalities, followed by a comprehensive SWOT analysis of it’s business strategy in the context of it’s portfolio of brands. This view will be further substantiated by an analysis of it’s accounting policies as well as a evaluation of it’s financial position by using relevant financial ratios. Executive Summary ABR holdings were started in 1979 to manage the Swensen’s franchise in Singapore. It holds the franchise for Asia and Oceania. The franchise itself founded by Earle Swensen’s started in 1948 focusing on Ice creams and it has grown since then. In Singapore itself there are 24 outlets of Swensen’s. Apart from it’s flagship franchise, ABR holdings also manages a portfolio of other brands such as Season Confectionary, Gloria Jean’s Coffees, Focus Network Agencies, The Cocoa Trees, Oishi Japanese Pizza and Yogen Fruz. It’s business interests are segregated into three main categories; restaurants & confectionary and chocolate retails and distribution segment (Focus Network Agencies) and it’s wine and spirits segment (Global Vintage). (I suspect that ABR here has something to do with American blue...
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...Question 1 – Company History, Policies & Reviews 1. What is the core business of Pacific Brands Ltd? |Pacific Brands Ltd is marketing a series of brands, covering Underwear, Hosiery, Work | |wear, Home wares, Footwear, Outerwear and Sport. Its main concern is on how to allocate | |the limited resources efficiently among these brands in order to generate the most profit from | |them. | [2 marks] 1.2 What is the core business of Country Road Ltd? |Country Road is an Australian Fashion Retailer, whose main products cover clothing, | |footwear, accessories, home ware and furniture. Its main concern is on development of the | |brand Country Road and Trenery by increasing its customer base, improving its products, | |providing better shopping environment etc. | [2 marks] 1.3 What did the “Strategic Review” highlight in terms of structural changes for Pacific Brands Limited? (Refer to the Chairman and CEO Review...
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...College Number(Bottom Left of College Card) | 100724676 | Year: | 3 | Course Code | MN3245 | Course Tutor: | Professor Christopher Napier1 | Assignment No.: | 1 | Degree Title: | Management with Accounting | Question No. & Title: | Fair Value Accounting Standard | Candidate Number: 1401240 Fair Value Accounting International Accounting Standard Board defines Fair Value and it gives a guide on how to measure it in the IFRS13 section. Fair Value is “ the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measure date”. (Financial Accounting Series, 2006) In IFRS13 dictate the measurement, which is market value, meaning assets and liabilities should be adjusted to a value which reflect the actual market value. On the fair value basis, balance sheet provides timely and reliable information as compared to other measurement basis like historical cost. Similar to historical cost fair value accounting method also ignore the transaction cost and only consider the asset itself. (Financial Instrument Working Group, 2007) According to IFRS13 fair value price is an exit price not an entry price. Exit price means the price for an assets or liability which is different from the contractually transaction price or entry price. The main objective of fair value measurement of exit price applies to all assets regardless the company intended to use or sell the asset. (Fair Value...
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...Correspondence To: Mr. T.J. Cerrillo From: De'Lisa L. Davis Subject: Companies Financial Statement Analysis BYP2-8 Date: September 17, 2013 Mr. Cerrillo, as the new Chief executive officer of Tomorrows Products, the Accounting Department would like to welcome you to the company. We would also like to stress how important it is for our company financial statements to be accurate as possible for our Board of Directors meetings at the end of every month. As the Chief Financial Officer, I would like to extend any help from the Accounting Department to assist you at anytime you feel you have any discrepancies in our statements. The owner brought to my attention in our last board of directors meeting that you were having minor issues with the reports; I want to setup a meeting with you to show you specific tools that you can use to analyze the companies financial statements. I would like to point out the three main ratio analysis we use for analysis of primary financial statements, the profitability, liquidity, and solvency ratios. Profitability ratios measure the income or operating success of a company for a given period of time. For example, from the last income statement I emailed to you Wednesday, you will notice that the companies sales increased by net income decreased during the period. To evaluate the companies profitability we will use ratio analysis. The liquidity ratio measures the short term ability of the company to pay its maturing obligations and...
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...Incremental Analysis 1. (Segmented Analysis) Consider the following data regarding two product lines: Clip Art Sales | 75000 | Computer Game Sales | 125000 | Variable COGS: Clip | 20000 | Variable COGS: Computer | 40000 | Other Variable: Clip | 5000 | Other Variable: Computer | 15000 | Traceable Fixed Expenses: Clip | 30000 | Traceable Fixed: Computer | 40000 | Common Fixed Expenses | 10,000 | a) Create a Segmented Income Statement by product line. b) Which product line produces the most net operating income? 2. (Residual Income, Turnover, ROI, margin) A company’s operating statistics are below: Item | Value | Sales | $1,000,000 | Net Operating Income | $220,000 | Average Operating Assets | $500,000 | Minimum Required Rate of Return | 20% | a) What is the division’s margin? Margin = Net Operating Income/Sales [note: net operating income is EBIT] b) What is the turnover? Turnover = Sales/Average Operating Assets c) What is the division’s ROI? (Net Operating Income/Sales) X (Sales/Average Operating Assets) d) What is the division’s residual income? Net Operating Income – (Average Operating Assets X Minimum required Rate of Return) 3. (Incremental Product Analysis) Tjelmeland Corporation is considering dropping product S85U. Data from the company's accounting system appear below: All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation...
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...Colorscope must alter its operation sequence in order to reduce idle time during assembly. Since the company is following a sequential processing of jobs, a high idle time for assembly means that scanning is taking a significant amount of time. Colorscope may consider purchasing the technology of the next generation. Further, Colorscope must learn not to put all of its eggs in one basket: it should not allow one customer to account for more than 30% of its business. The company should attempt to retain its currently profitable clients by providing competitive pricing specialized attention to each client. Since Colorscope is not a market leader, The five departments(prep, scanning, assembly, output, and quality control) serve as appropriate overhead cost pools for Colorscope. These are the major states in the production process. Hours are not clocked in these departments in fixed proportions. In order to effectively determine the amount of overhead in each overhead cost pool, we first allocated overhead to the cost pools(the five departments), and then allocated : Before desktop publishing became popular, Colorscope possessed a competitive advantage through its expensive proprietary computer equipment that could produce complicated print special effects. Colorscope has also been able to build strong relationships with valuable customers through the years. The company has always possessed a solid reputation for providing high quality work in its field. Another reason why Colorscope...
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...ANALYSIS OF MANAGEMENT ACCOUNTING OF ANGLIAN WATER SERVICES LIMITED. EXECUTIVE SUMMARY The main purpose of this report is to know about the Management Accounting of Anglian Water Services Ltd. The importance of this report is detailed explanation of over all management accounting system of the organisation. The report is categorised into four parts. The first part consists of company’s product, processes, competitors and policies. The second part cover about the review of management accounting, what it fulfil and what are its key functions and techniques. The third part of the report is very important as it describes the key techniques of management accounting used by the Anglian Water Services Plc. Where as the last part explain the strengths and weakness of the analysis. TABLE OF CONTENT Executive Summary…...………………………………………………………………2 1. Introduction…………………………………………………………………………4 1.1 Anglian Water Service…………………………………………………………….4 2 Background………………………………………………………………………….5 2.1 Product…………………………………………………………………………….5 2.2 Processes…………………………………………………………………………..5 2.3 Competitors………………………………………………………………………..5 2.4 Policies…………………………………………………………………………….5 3. Management Accounting…………………………………………………………...6 3.1 What it fulfil……………………………………………………………………….6 3.2 Key Techniques …………………………………………………………………...6 4. Techniques Recommended…………………………………………………….…...7 5. Techniques Not Recommended……..……………………………………………...9 6. Strength…………….……………………………………………………………...
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...Statements: Foundational Accounting Principles and Terminology Shane R. Wagner TUI University Module 1 Case Study 29 August 2010 Abstract This paper will discuss the common fundamental accounting principles and analyze the financial statements of three major businesses. A basic understanding of the General Accepted Accounting Principles and the standards established within these practices, allow for investors to obtain an accurate snapshot of the financial health of a business. The different methods of documenting both current and future transactions, can have an impact on the information portrayed by the financial statements of an organization. In addition, the basic format of the financial statements can disclose additional considerations of the business, as will be discussed in the analysis of three major businesses within this paper. Information for the analysis portion was retrieved from the financial statements included in the assignment. Keywords: Accrual Basis Accounting; Cost Basis Accounting; Current Assets and Liabilities; Double Entry Accounting; Financial Accounting Standards Board (FASB); General Accepted Accounting Principles (GAAP); Historic Cost; Non-current Items; Security Exchange Commission (SEC); Financial Statements: Foundational Accounting Principles and Terminology Introduction The basic of understanding of an organizations financial statement requires one to be familiar with fundamental accounting principles. The financial...
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...RECOGNITION OF ASSETS Accountants define assets as resources that a firm owns or controls as a result of past business transactions, and which are expected to produce future economic benefits that can be measured with a reasonable degree of certainty. Distortions in asset values generally arise because there is ambiguity about whether: * The firm owns or controls the economic resources in question: * Are the ventures controlled? * Are the leased assets owned by the lessee or the lessor? * Have the revenues resulting in the receivables been earned? * The economic resources are likely to provide future economic benefits that can be measured with reasonable certainty. * the economic benefits from research and development are generally considered highly uncertain * If all firms expense R&D, financial statements will reflect differences in R&D success only when new products are commercialized rather than during the development process (less timely). The analyst may attempt to correct for this distortion by capitalizing key R&D outlays and adjusting the value of the intangible asset based on R&D updates. * The fair values of assets fall below their book values. * An asset is impaired when its fair value falls below its book value. An impairment loss is recognized when book value exceeds the greater of its net selling price and the discounted cash flows expected to be generated from future use. * Markets...
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