Asset Essays

The Principle of Historical Cost

Synopsis. Historical Cost Accounting is a traditional valuation method as it reflects only on the past cost of the asset, however in the contemporary business environment companies must remain flexible and transparent. This belief has lead to the creation of several other valuation methods, due to word constraints I have focused primarily on Fair Value Accounting as an alternative to Historical Cost Accounting. Although Fair value accounting is a theoretically superior valuation methodology, there are several severe problems in its…

Read >>

Guna Fibres Case Analysis

Problem Statement The problem that the firm Guna Fibres is facing is that they lack sufficient cash flow from operations to meet their day-to-day financial obligations. Guna Fibres has become dependent on a revolving line of credit from the All-India Bank & Trust Company and due to increasing operating expenses and costs of good sold Guna Fibres is no longer able to remain solvent based on their current financial practices. Situation Analysis Guna Fibres is a textile manufacturing company located…

Read >>

The Body Shop International Case Study

1. The assumptions that were used to derive the numbers in this forecast were found by taking the averages of the historical data that was given for 1999-2001. Instead of using the assumptions that were given by The Body Shop, I thought it would be more practical to use the trends shown in the historical data since that is more relevant to what might happen, rather than what The Body Shop wants to see happen. Of course it is possible…

Read >>

Dupont Analysis

A satisfactory return on assets might be divided through a high profit margin , or a rapid turnover of assets, or a combination of both. The Du Pont system causes the analyst to examine the sources of a company’s profitability. Since the profit margin is an income statement ratio, a high profit margin indicates good cost control, whereas a high asset turnover ratio demonstrates efficient use of the assets on the balance sheet. Different industries have different operating and financial…

Read >>

Hertz Global Holdings

1) Hertz makes five adjustments (ignoring ‘Other adjustments’) to net income before including the changes in operating assets and liabilities. List each of these five items and explain why each of these items is added (subtracted) from net income to calculate Net Cash Provided by Operating Activities. Answer: The five adjustments to net income before including the changes in operating assets and liabilities in the consolidated statement of cash flows of Hertz Global Holdings, Inc. are listed as follows; Explanation:…

Read >>

Inner City Paint Corporation (revised)

Alternatives 1. Management Improvement – Mr. Walsh should take up management degree. He needs to learn employee empowerment and delegation. He needs to learn employee empowerment and delegation. The plant manager needs to be trained on leadership since he has no experience in management. He should also start hiring a public relations specialist and a marketing specialist to improve on these two aspects of the business. 2. Facility Improvement – Equipment at Inner-City Paint is three large mixer, two smaller…

Read >>

Homework Assignment

1. Define the process of accounting. Accounting is the process of identifying, measuring and communicating economic information about an organization for the purpose of making decisions and informed judgments. 2. What are the three major divisions in the accounting field? Financial, managerial and cost accounting 3. What is the Fundamental Accounting Equation? Assets = Liabilities + Equity 4. What is the purpose of a balance sheet? What are some examples of typical balance sheet accounts? A balance sheet is a…

Read >>

Accounting for Leases

Abstract This paper will provide an overview of lease accounting. It will present the history, current status, and future implications of the latest proposed standard, as jointly issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). Furthermore, the paper will take into account relevant observations made by various proponents who are concerned about the standard, and conclude with a personal opinion on the standard and why it’s better than the current standard. Existing accounting…

Read >>

Financial Analysis of Hershey and Tootsie Roll

Introduction Tootsie Roll and Hershey are two similar companies with a similar product offering, but they operate on entirely different scales. In an effort to determine the better investment of the two companies we will utilize multiple financial analysis ratios to gauge the health of the respective companies in terms of liquidity (the ability to pay short-term liabilities and respond to opportunities), solvency (the long-term viability of the company) and profitability (the efficiency at which the can turn it’s resources…

Read >>

Financial Accounting Exxon Shell Case

Objective: Understanding the effect of inventory valuation assumptions on financial statements. Assignment summary: You are taking the role of a security analyst who recently started following the Oil and Gas industry. The analyst has a task to draw a comparison of several financial indicators for two industry leaders: Exxon Mobil and Royal Dutch Shell, based on their income statements and balance sheets (attached at the end of this document) as well as the information from the notes to the financial…

Read >>

Disclosure Analysis Paper

Disclosures are an essential part of financial reporting for publically traded corporations. The following analysis will look into General Motors Company’s disclosure relating to the company’s current assets of cash equivalents, inventory, and receivables. Disclosures can be found within the General Motors Company’s financial statements and they will help readers gain a better understanding of the financial data. The sections of the company’s disclosures will be analyzed in detail throughout this paper. The General Motors Company uses a table of…

Read >>

Financial Analysis on Aftab Auto

Chapter 1 Introduction & Methodology 1: Introduction Aftab Automobiles Limited has been our selected company, which is one of the largest automobile assembling plants in the private sector in Bangladesh. Aftab Automobiles Ltd. is in this business since 1967. In 1981 the Company registered itself as a Public Limited Company. The Company was listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited in the year 1987 and 1996 respectively. The principal activities of the Company throughout the period…

Read >>

What Is Alim_

Chapter 9 — Test 1 Note: Most questions can be placed in more than one of the four achievement categories. The achievement chart designation provided here indicates the category that is predominant within the question. 1.For each of the following, choose the most appropriate response. 1)A one-year insurance policy was purchased for $960 on July 1, 20-1. On December 31, 20-1, it had an unexpired value of: a.$240. b.$480. c.$560. d.$400. e.none of the above. 2)The accountant did not prepare…

Read >>

Rite Aid

1) a. The secure debt of Rite Aid is tied to specific assets. Unsecured debt is money that Rite Aid borrowed from financial institutions and has no collateral tied to it. Rite Aid distinguish between these two types of debt to give a clear pictures to investors, credit rating agencies, and lenders that they will be able to make interest and principal payments on time. b. A guarantee debt is an assurance if one party defaults; another party will pay…

Read >>

Ifrs Vs Aspe

Inventory is defined as “assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services”. The cost of inventory is measured at the lower of cost and net realizable value. The IFRS accounting for inventory is generally converged with ASPE. The only difference between IFRES and ASPE in the accounting for inventory…

Read >>