Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Retained Earnings
The items contained in the Retained Earnings section of a balance sheet are often complex and confusing. Suggest an improvement for the reporting on this information that will help the users of the statement to have a better understanding of the activity.
There are some issues analysts have with relying on retained earnings. The most notable include: many of the strongest firms do not pay any kind of dividends. This is because these companies are reinvesting their profits back into the business and will not offer investors with added financial incentives other than higher levels of growth. Once the firm and industry has matured, is when they will pay shareholders dividends. In this case, the total returns are lower from the inability to increase the earnings of the company in comparison with the past. (Lofton, 2011)
Evaluate what a cumulative loss in the retained earnings section of a company's balance sheet might indicate about the financial performance in the future, indicating how this may influence decisions made about the company. Provide support for your answer.
Cumulative losses allow accountants to improve the accuracy of the financial results. This is taking place through making changes in the period where they actually...
However, during this process, there is the possibility their projections could be erroneous. This is because they are making predictions about the future that were incorrect. In any kind of business, certain challenges will arise which are difficult in meeting these numbers. This is the point they will have to revise them lower. Over the course of time, regulators and investors will question the validity of the information they are provided with. This makes it appear as if financial improprieties are taking place. Yet, actuaries have no control over the impact of outside events on the firm. This will influences the management's decisions by impacting their ability to deploy working capital and what areas these activities will occur. (Bragg, 2010)
Based on your research conducted in the e-Activity, evaluate the business decision to use a venture capitalist to raise funds, indicating whether or not you believe the company will benefit from this decision in the long run. Provide support for your position.
Venture capitalists have an impact on firms. This is taking place through the tremendous amounts of financing they provide to corporations. During some of the most critical stages of growth, these companies have the capacity to influence how a firm operates…
Based on your research conducted in the e-Activity, evaluate the business decision to use a venture capitalist to raise funds, indicating whether or not you believe the company will benefit from this decision in the long run. Provide support for your position.
Venture capitalists have an impact on firms. This is taking place through the tremendous amounts of financing they provide to corporations. During some of the most critical stages of growth, these companies have the capacity to influence how a firm operates and the practices they will embrace in the process. This is taking place, with venture capitalists taking an equity stake in the organization. They can use their power to influence the way the company is run by impacting the board of directors, the management and the policies which are implemented. This will have a direct impact on the day-to-day operations of the firm. These and other mechanisms are designed to provide value added propositions to enhance the overall returns for venture capitalists. In this aspect, one could argue that for the increased amounts of risk taken, they will demand more control. This minimizes risk and ensures they can shape the direction of the company going forward. As a result, this will benefit the company over the long-term, by providing them with additional working capital at their most critical stages. (Titman & Martin, 2011)
Assess the challenges for businesses using the resources of a venture capitalist, given that significant returns on the investment are likely to be impacted by the firm. Indicate how a business
However, the application of the 3% independent ownership has been restructured to make SPEs much clearer to delineate between parent company ownership and independent ownership. Another major issue that arose out of the Enron scandal is the manipulation used by Anderson of derivatives. In a BBC report, Emma Clark explains, "If you dig deep enough into any financial scandal you can usually find a derivative or two to take the
"Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods." Based on the data retrieved and the projections made, the accounting division will proceed to the development of the consolidated statements for all of GM subsidies and the overall group.
Accounting Process and Financial Statements. A reliable internal system of accounting is an essential element of a solvent profit or nonprofit business entity. By recording virtually every business activity or endeavor, with regards to the creation of monetary inflows of sales revenue and monetary outflows of expenses resulting from operating activities; an accounting system should provide the financial information needed to evaluate the profitability or effectiveness of past and operations.
Advice for the Company on the New Internal Control Requirements Internal control requirements are the policies, mechanisms and procedures that organizations should satisfy to minimize the operational risks. The internal control is very critical to deter employees from implementing fraudulent operations; an organization is required to adhere to the internal system before going public. Section 404 of the SOX (Sarbanes-Oxley) Act states that internal control is critical for a publicly
Bristol-Myers Squibb (BMS) is a multinational pharmaceutical company founded in 1989 from two other companies founded in the 1800s. It is headquartered in New York City with revenues of over $9 billion and almost 30,000 employees worldwide. The company manufactures pharmaceuticals in several therapeutic areas: cancer, cardiovascular disease, diabetes, hepatitis, rheumatoid arthritis, HIV, and psychiatric disorders. The company's primary research sites are located in New Jersey, Connecticut, Belgium, Tokyo, and
This is mainly because some funds are earned over time across different transactions making them to be recorded as adjustments. In some cases, earnings are not accounted or recorded since the revenue was earned even though the cash was not received (Frenz, n.d.). During the period of accounting, accountants usually account earnings and profits in informal ledgers. This data is later transferred to informal worksheets or formal accounting statements at