...Impacts to the Profit and Loss Statement AB299-02 Associates Capstone in Management January 21, 2013 As we can see, Tim’s Coffee Shoppe is one of the more successful businesses in town; being located near the local university gives Tim a great customer base. Tim’s Coffee Shoppe seems to acquire most of its business from the college students along with the people who work in the area. Once we begin to take a look at Tim’s income statement, greatest expense is the supplies for the coffee shop. Since there are new businesses that are moving in and around town, it is safe to say that Tim’s business will probably pick up. If his business picks up then Tim’s income will increase. But there is a price to pay with the increase in his income; there will be an increase in his expenses. We can see that Tim’s highest expense is his supplies, so this also means he will have to put out more money to increase his supply of supplies. It seems the second highest expense was salaries. Being that Tim will be gaining more business, he’s going to need more manpower to help serve the customers that will be coming in. This means Tim will have to pay more employees and in turn, his salary expense will increase. As expected, taxes, rent, depreciation, leasing, insurance and interest follow. In the year 2008, Tim’s Coffee Shoppe earned $400,527 while his total expenses were $326,016. This leaves Tim with a net income of $74,511. So the question is asked, will Tim’s business grow and increase...
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...regulate, proscribe and provide. (Reference: http://en.wikipedia.org/wiki/Legislation accessed on 23/01/2015) Companies Act 1985 contains important documents. The important financial statements are Directors’ report, auditors’ report, and duty to prepare operating and financial review, approval and signing of operating and financial review. This statement has to be signed by the board of directors, as well as behalf of the board of directors. Partnership Act 1890 is another document which contains important documentation. The important documents that have to be in this Act are the name and position of all the partners in the organisation, ratio of profit and loss sharing, the capital that each partner has brought into the business, power of each partner. It is important to know what power each partner has in the business, because some partners might not be able to do activities like their partner. Accounting concepts Accounting concepts are the rules in accounting. These rules must be followed by every accountant, whenever they are preparing financial statements or reports. These accounting concepts are important because they provide true and fair view. There are four accounting concepts going concern, consistency, prudence and matching (accruals) concept. Going concern is when financial statements...
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...successfully. It resulted in the financial statement of 2010 also, the company went on to make a loss of 73000 in a good business year. So Joe Magers decided to appoint Brandon Cook, an experienced man to help him to revive the company from this difficult situation and to train him in all aspect of the company’s business. The Board of Directors has appointed SWIN HBC606 consultant to review the current financial situation of the company independently and to give recommendations for company’s future financial viability. The purpose of this report is to review and analyse the financial and operational aspects of the company to give the company a better direction in this tough and challenging market condition. The report covers detailed analysis and recommendations on the product line, overall profitability, financial impact of different cost and pricing. The company’s product line consists of three product line 100 series, 200 series and 300 series. Among these 100 series is the most profitable product line in the company. Now the company has to make a serious decision as to whether to reduce the price of 100 series to 2.25 in line with Bosworth, market leader in the industry. After a careful consideration of different aspects, it has been recommended to reduce the price. Joe Magers suggestion to drop the 300 series with immediate effect has been analysed carefully and recommended not proceed as such. In fact dropping 300 series would increase the loss of the business. Other options like...
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...Judgement Assessment 1 Financial Analysis (Part 1) Accounting for Managers Executive Summary The financial statements are used for providing information on the financial position of a company to various stakeholders, who are associated to the company directly or indirectly. These statements help them to make decisions about their future association with the company. This makes it necessary for the financial statements to be accurate and verifiable and the essay discourses some key areas in financial accounting where judgement is required to be applied. The financial statements of an enterprise comprises of primarily the balance sheet that summarises the assets, liabilities and shareholder’s equity at the end of a year or a specified period (quarter / half year etc.), the income statement also known as the profit and loss statement summarises the revenues and expenditures incurred during a specified period (year / half year / quarter) and statement of cash flows. There are various stakeholders who are interested in the financial statements. Stakeholders can be shareholders, trade creditors who have supplied material to the organisation, banks & financial institutions who have lent money, government and statutory authorities for taxes and other compliance of various provisions of law. Therefore, the objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise...
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...guide, construct a pro forma (forecasted) profit and loss statement for the clinic’s average month for all of 2014 assuming the status quo. With no change in volume (utilization), is the clinic projected to make a profit? The below pro forma profit and loss statement states that the clinic is currently operating at a loss of $3,173 per month, considering that subtraction of fixed and variable costs. The contribution margin per month totals $48,138 or divided out equals to $35.67 per visit. The hospital is not sustaining itself at this point or even paying for its fixed costs. Pro Forma Average Month: | | | | | | | | Number of visits | | 1,350 | | | | | Net revenue | | | $54,888 | | | | | Salaries and wages | | $13,542 | Physicians fees | | 18,000 | Malpractice insurance | | 3,215 | Travel and education | | 602 | General insurance | | 843 | Subscriptions | | 0 | Electricity | | | 1,077 | Water | | | 139 | Equipment rental | | 105 | Building lease | | 12,500 | Other operating expenses | | 8,038 | Total operating expenses | | $58,061 | | | | | Net profit (loss) | | ($3,173) | | | | | Gross margin (%) | | -5.8% | Total Revenue | | $ 54,888.00 | Total variable costs (1350*5) | $ 6,750.00 | Total CM | | | $ 48,138.00 | Total Fixed Costs | | $ 51,518.00 | Profit | | | $ (3,380.0) | 2. Now consider...
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...is value asset, due to the financial globe crisis impact Australia market, company have a low level of asset impairment, some company disclose the minor information which could mislead the investor’ decision making. The AASB introduces the AASB 8 which required segmental results to be regularly reviewed by the relevant division’s “chief operating decision maker. The second problem is the indistinct information will make the chosen of accounting policy, financial instruments such as derivatives contracts will have to be examined, ASIC says company have to provide more information to users, rather than boilerplate disclosures. The third problem is some resources are uncertainty to be estimated ; it is about many companies write down the intangible asset. In order to solve these problems. ASIC decides to focus on segmenting and reporting in which profits are identified by geographic region or by type. It can help investor understand the financial position and performance for the company and avoid these problems happened. In this article, we can see ASIC play a regulatory role in the accounting profession. ASIC is Australian Securities and Investment Commission, it is monitoring and regulating various investment products for company. ASIC is Australia’s corporate, market and financial service regulator. The function for ASIC is requiring directors whether large company or small company has to provide true and fair financial statement for a given financial year. Secondly is maintenance...
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...Managing Financial Resources And Decisions INTRODUCTION 1.1 The sources of finance available to Phan 3 1.2 The implications of the different sources of finance to Phan 4 1.3 Appropriate sources of finance for Phan 6 2.1 The costs of different sources of finance for Phan 7 2.2 The importance of financial planning to Phan 9 2.3 The information needs of different decision makers 10 2.4 The impact of finance on the financial statements to Phan 12 CONCLUSION REFERENCES INTRODUCTION Finance is one of the essential elements for the existence of every business. It is not only associated with the activities but also the resource for business to implement functions. Therefore, for a started business enterprise, effectively understanding the sources of finance will help Phan perform well and develop sustainably in the market today. This report is performed to evaluate the different sources of finance as well as providing information on the implication of finance as a resource in the business. 1.1 THE SOURCES OF FINANCE AVAILABLE TO PHAN In the current market mechanism with the increasingly fierce competitions, enterprises must continuously improve plant and equipment as well as modernizing technology. In order to achieve all these factors, the enterprises must have a large enough financial resources and use them effectively. It is believed that source of finance is a significantly important prerequisite for business process of the enterprise in general and of Phan in particular...
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...whole fair value of the net assets of the subsidiary to give the whole goodwill of the subsidiary, attributable to both the parent and to the NCI. Parent’s cost of investment at the fair value of consideration given $500 Fair value of the NCI $100 Less the fair value of the net assets of the subsidiary acquired (100% x $400) ($400) Gross goodwill $200 Given a gross goodwill of $200 and a goodwill attributable to the parent of $180, the goodwill attributable to the NCI is the difference of $20. In these examples, goodwill is said to be a premium arising on acquisition. Such goodwill is positive goodwill and accounted for as an intangible Following the revisions to IFRS 3, Business Combinations and IAS 27, Consolidated and Separate Financial Statements in January 2008, there are now two ways of measuring the goodwill that arises on the...
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...1. Using the historical data as a guide, construct a pro forma (forecasted) profit and loss statement for the clinic's average month for all of 2014 assuming the status quo. With no change in volume (utilization), is the clinic projected to make a profit? The below pro forma profit and loss statement states that the clinic is currently operating at a loss of $3,173 per month, considering that subtraction of fixed and variable costs. The contribution margin per month totals $48,138 or divided out equals to $35.67 per visit. The hospital is not sustaining itself at this point or even paying for its fixed costs. 2. Now consider the clinic's situation without the new marketing program. How many additional daily visits must be generated to break even? Construct a breakeven graph that can be included in your report. Without the new marketing plan, the clinic will need an additional 19.8 - 20 patients each day to break even. 40.66(net revenue/visit)X =79,059 X= total number of visits that are needed to break even X= 1944.39 1944 Average # of JanFeb 1,350 visits 3. Repeat the Question 2 analysis, but now assume that the new marketing program is implemented. With the new marketing plan, the breakeven point is at an additional 32 patients visits per day. 40.66(net revenue per visit)X =93,861 (92,511-1350,)/30days= 31.94patients per day 32 patients per day 4. Now focus solely on the expected profitability...
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...|University of Sunderland | |Managing Financial Resources andDecisions | | | | | | | | | | | | | | | | | | | | ...
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...has prepared details to address questions pertaining to the following specific elements: • Adjusting lower cost of market inventory on valuation • Capitalizing interest on building construction • Recording gain or loss on asset disposal • Adjusting goodwill for impairment The details will incorporate the reason behind why the element was established, the impact on financial reporting, current and future implications on the element, we will review each of these elements individually. Adjust lower cost of market inventory on valuation Adjusting lower cost of market inventory on valuation is a requirement of Generally Accepted Accounting Principles in the United States that inventory be recorded a the lower of either the cost to produce it, the cost to repurchase it or the market value of the inventory (www.investopedia). The lower of cost and market method has two boundaries on the valuation of inventories. The first is the inventory ceiling, which requires that inventory must be reported no higher than the net realizable value less expenses. The second boundary is the inventory floor, which required that inventory value be reported at no lower than the net realizable value plus normally attainable profit. The rule of lower of cost or market is intended to provide a means of measuring the residual usefulness of an inventory expenditure. The term market is therefore to be interpreted as indicating utility on the inventory date and may...
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...financial statements to relate and also assessitsbusiness’sgrossingcapability. Financial decision making investment and financing decision making is also required. The financial information of an enterprise is contained in the financial statements. Its usage of financial statement analysis in investment decision has been addressed by a series of authors. According to Gautam, U. S. (2005) The Financial Statement commonlydescribedby means of financial information which is related to the information to financial position of severalfirm in a case form. According to J.AOhison (1999) was defined as a written report that...
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...Initial Recognition, Measurement, Presentation & Disclosure of Liabilities and Shareholder’s Equity A liability is a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits (IASB Framework). Apart from satisfying the definition of liability, the framework has also advised the following recognition criteria to be met before a liability could be shown on the face of a financial statement: * The outflow of resources embodying economic benefits (such as cash) from the entity is probable. * The cost / value of the obligation can be measured reliably. The minimum line items to be included on the face of the statement of financial position are: [IAS 1.54] (k) trade and other payables (l)provisions (m)financial liabilities (excluding amounts shown under (k) and (l)) (n)current tax liabilities and current tax assets, as defined in IAS 12 (o)deferred tax liabilities and deferred tax assets, as defined in IAS 12 (p)liabilities included in disposal groups (q)non-controlling interests, presented within equity (r) Issued capital and reserves attributable to owners of the parent. LIABILITIES Trade payables, financial liabilities and other liabilities Recognition | Measurement | Presentation | Disclosures | Recognized if qualifications of liabilities are met. | They are initially recognized at their fair value net of transaction...
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...charges. Although the charges of securities fraud were thrown out, Stewart was found guilty of four counts of obstruction of justice and lying to investigators. She was sentenced to five months of prison, five months of house arrest, and two years of probation. ImClone case was showing unethical and socially irresponsible behavior by business executives. They are in positions of power that allow them to do damage to others. This paper will evaluate the case above thoroughly, start from the prosecution’s arguments, the defense’s arguments. Analysis will be made using four ethical theories; Rights, Justice, Utilitarianism, and Profit Maximization. Prosecution’s Arguments Five counts have been filed against Stewart. The indictment against Stewart begins with a conspiracy count andalleges that Stewart and Bacanovic conspired to obstruct justice, make false statements, and commit perjury. Prosecution states that Stewart lied to investigators during their investigation, declaring herself innocent of...
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...The Home Depot, Inc. ACC/497 The Home Depot, Inc. Management, board of directors, and potential investors gain crucial information on the status of a company by reviewing and analyzing the different financial statements. A financial statement allows users a peek into its financial well-being in order to make informed decisions in relation to that company. One of the most common financial statements is the income statement and is frequently referred to as the profit and loss statement. Following the financial statement and/or profit and loss statement is the balance sheet and cash flow statement. Both are equally as useful when making decisions and gaining insight on a company. The following analysis has been put together using the income statement and/or profit and loss statement, balance sheet, and cash flow statement for The Home Depot’s Inc 2008 fiscal year. The Consolidated Statement of Earnings gives users insight into the company’s expenses and earnings incurred during a specific fiscal year. After reviewing The Home Depot’s income statement for the 2008 fiscal year, it displays a company with strong sales numbers of $71 billion for the year. While $71 billion in sales seems impressive, The Home Depot Inc. actually had a $6 billion dollar decrease in sales from the previous year. The Home Depot Inc. attributed this considerable decline in sales to the struggling U.S. residential construction and home improvement market. Along with their drop...
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