Category: Uncategorized

Financial Status of My Firm: Onthehouse

Name

Institution Affiliation

Date

Financial Status of My Firm: Onthehouse

Executive Summary

The information that I am going to share in this report will reflect on my firm’s 2012 and 2013 financial statement. The information will seek to clarify that my made losses for a general decline in activities. For this reason, the report will examine the number of the subsidiaries affiliated to my firm, and this information will seek to clarify the percentage ownership that my firm owns each of the subsidiaries. This information will illuminate on the later sections of the report that will explore in depth the income statement and the balance sheet. The second section of this report will clarify on the nature of the in contemporary transactions.

Does your company have subsidiary companies? How can you tell whether your company has subsidiary companies or not?

A subsidiary company is a company that is owned partly or fully by the main company. The main company naturally acts as a holding company and provides administrative provisions, policies to the daughter corporation.

My company has plethora subsidiaries located in Australia and New Zealand. Some of these are; Subsidiary of Console Australia Pty limited and Subsidiary of Console New Zealand limited and Subsidiary of Residex Pty Ltd. These subsidiaries have been listed in the company financial statements. Besides, they have been offered equity interests and each of the revenue has been registered on the financial statements. A close example of these subsidiaries is Suncorp subsidiary and REA group (Seltzer, 2010, p. 21).

If your company does have subsidiary companies (and, yes, every listed company I have ever come across has subsidiary companies), how many subsidiary companies do your firm have? Has this varied over the past three years?

From the year 2011 to 2013, My Company has acquired nine subsidiaries. The firm’s most subsidiaries are in the property industry. As stated earlier, all subsidiaries are in either Australia or New Zealand.

Name Country of Incorporation Equity 2012 Equity 2013

Onthehouse.com.au.Pty Limited Australia 100 100

Console Australia Pty Limited Australia 100 100

Console New Zealand Limited (ii) (vi) New Zealand 100 100

PortPlus Pty limited Australia 100 100

PortPlus (NZ) limited (ii) (vii) New Zealand 100 100

Agent Apps Pty Ltd (iii) Australia 100 100

Residex Pty Ltd (iv) Australia 100

Residex Technologies Pty Australia 100

The Ad Network Pty Ltd (v) Australia 100

What activities are conducted in your company? Why does not your firm simply conduct all its activities in a single company rather than in a group?

The firm is common in the businesses providing housing Mortgages to Australians and New Zealanders people. For specialization purposes, the firm does not desire to conduct its business in one house since this is financially constraining. Secondly, the goal of profit maximization is a key objective for the firm. Most of these firms provide services to other companies/ clients, which is not part of my company business. Additionally, the subsidiary companies are not necessary mortgage companies. Most of these companies either are in service resale or involved in direct technology orientation (Investopedia. (n.d.). My company naturally consolidates a company on a single console or a double console brand. Our company subsidiaries have been full consolidated and transferred to the group. The process of acquisition is based on accounting audits that determine the value of the group to the acquiring company (Investor Centre. n.d.). Any company carrying out the process of acquisition does this always. The approach enables the development of non-controlling interests in the results and equity as demonstrated separately in the statement of comprehensive income statement and financial position. In this case, my company obtains control over the subsidiary. This can be accounted in the group as a jointly controlled entity. Additionally, the group measures the fair value of identifiable net assets as considered on the bargain price in profit or loss parameters (Seltzer, 2010, p. 34).

The group also operates interests in joint ventures. A joint venture is a contractual arrangement between two or more parties entitled to undertake an economic activity. The jointly controlled entities are incorporating the group’s financial statement by applying the equity method of accounting. This is further achieved by integrating the group’s share interests on net assets of the jointly controlled entity. The existing entity carries a statement about the financial position at cost plus post-acquisition changes of the group’s share of net assets (Rexel Worldwide. (n.d.).

Does your firm have non-controlling interests (or minority interests) in its balance sheet and income statement? Why or why not?

According to Investopedia, Non-controlling interest is a stake corporation investor has not influenced on the company’s decision. Indeed, the majority of investor positions are considered as non-controlling interest since its ownership is insignificant or relative to the total number of share being offered (Investopedia, 2014).

Our group has non-controlling interests and they are presented in the group’s financial statements. These are presented in the profit and loss controlling subsidiary of the reporting period. In this case, losses are allocated to the parent and the non-controlling interests may exceed their respective interests. Thus, the company continues to offer subsequent periods of excess as well further losses located in the parent and non-controlling interests. However, in our company, non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of comprehensive income and statement of financial positions. However, my company does not have non-controlling interests in the balance sheet. For all the eight subsidiaries, my company owns one hundred percent of all shares and this ownership has been maintained with time (Investor Centre, n.d.).

If your firm does have non-controlling interests (or minority interests) in its balance sheet and income statement, what are they? What do these items mean to you?

As stated, non-controlling stipulates that the subsidiaries in our firm do not have a decision making power. In addition, the firm subsidiaries are not accrued to losses incurred by the firm. This means that the subsidiaries are autonomous and cannot suffer from losses incurred by our firm. If your firm does not have non-controlling interests (or minority interests), identify the firm of another person in our course that does have non-controlling interests. I identified Jacob Martins choice of company Relex Holdings Australia as a firm that had non-controlling interests. This firm has invested in technology, and all of its subsidiaries are in the mining or engineering sector (Seltzer, 2010, p. 47).

Discuss with that other person in our course what they think non-controlling interests are for their firm. Describe carefully what they think their firm’s non-controlling interests mean to them. Do you agree or disagree with them?

The firm Ideal Electrical Supplies specializes in supplying complete data, and lighting services and devices to home. The firm was established in 1990 operates within five locations. The firm operates over forty-five lighting showrooms in Victoria and Queensland. Rexel holdings Australia acquired Ideal Electrical in the year 2009 on 72 percent basis. After conversing with my friend, I realized that Ideal Electrical Supplies are presented by the parent entity Rexel holding in the group financial statement. This is included in the equity section of the consolidated financial statements, albeit segregated from the parent entity stockholders’ equity interests. In addition, the long tradition of displaying Ideal Electrical supplies as subsidiary category is reflected on a double basis of debt and equity (Relex, 2014).

Additionally, I leant that under the income of each component and the comprehensive income statement is attributed to controlling and non-controlling interests. In this case, minority interest will not be displayed as a deduction in the income statement. As a result, this attributes will not be included in the equity section of the consolidated financial statement. In fact, Rexel holdings push them below debts sections (Accounting Information, 2014).

Why do firms show non-controlling interests in their balance sheets and income statements? ….. What do these items tell us?

When a firm does not control 100% of the total share, it means that the subsidiary firm does have a collective justification in the decision making process. Secondly, the parent firm consolidates all assets and liabilities. This shows the interest of the outside shareholders as a non-controlling interest. In this case, a specialty of IFRS standards requires that a non-controlling interest is indicated in the balance sheet within the group’s equity. This prompts the indication of equity on a separate section from the financing side of the balance sheet (New investor Perspective, 2014).

Secondly, it is important for the parent firm to produce the general-purpose reports. General purpose financial reporting is to present financial information about the reporting entity. This information is directed to present useful and potential equity investors, creditors, and lenders thus making decisions in the capacity of capital providers. In this case, financial reports communicate information about entity economic resources, transaction events, and circumstances that change the nature of the reports.

How are your firm’s investments in subsidiaries treated in your parent company’s accounts? … Why or why not?

In my firm, investment in subsidiaries is treated as separate legal entities. Each prepares its own financial statement, but a copy is forwarded to the parent firm for clarification. However, ownership of not less than 50 percent of voting stock required in accounting recognition of control. Because of their special relationship, they are viewed for external financial reported purposes as single driven entity. Hence, there is a derivative need to combine the financial statement into a single set of statement named consolidated financial statements.

This item appears on the firm consolidated financial statements. My company considers this a convenient for economic, legal, and tax to operate parent-subsidiary relationships. The inventory accounts include the inventory held and its subsidiaries. Hence, the consolidated income statement includes the sales account of the total revenue from the sales by the company and its subsidiaries. The overview is vital in helping management, creditors, and stockholders of the company progress in meeting its goals (Investopedia. (n.d.).

Participate in the discussion forum “General Discussion” on Moodle.

My company has eight subsidiaries companies which six of them in Australia and two in New Zealand. The direction of my discussion was centered to investigate whether my company subsidiaries were presented in my company and whether the benefits were instrumental to the development of the firm. In the year 2012, my company acquired three companies and integrated them into business. This was impressive since the revenue was impacted on EBTDA growth. In fact, growth met 2012 prospectus forecasts. This led to an increase by 19% and continued strong operating cash flow. In fact, my company has realized that periodically investment to potential firms adds the total value of reinvestment (New investor Perspective, 2014). Now my question is, according to this result, do you consider my firm profitable to the nature of investments?

For the part of the answer, my company has consistently demonstrated strong financial performance in the year 2013 financial year. In the year ending June 30, 2013, the operating revenue had increased by 19 percent to 24.1 million up from 20.3 million. This was after acquisition of the three companies. Secondly, the decision to expand our workforce by a magnitude of 40 percent resulted to an approximately 8 million increase in revenue.

Discuss the issues on how your firm shows a group of accounts rather than simply the accounts of a single company

Group accounts should comply with regulations 5 (1) (b) as if the undertakings included in the consolidation were a single company excepts where the group will qualifies as a small or medium-sized group. These groups of accounts are presented in the company financial statement. Firstly, the firm request for separate disclosures in respect to the auditing of the accounts in questions and each of the services. Separate disclosures are required in respect to the services supplied to the company and its subsidiaries. Secondly, there was a disclosure is not required of remuneration of receivable for the supply of service.

According to the discussion from the income statement, the amounts on the balance sheets inventory naturally differs based on the subsidiary. In this other words, the inventory is reported on the amounts. Thus, in my company, the interpretation of what should constitute of a fair and genuine view varies with time on the requirements of accounting standard being pursued by at the time.

How helpful did you find these discussions… What insights have you gained?

After discussing with others, I realized the differences in having non-controlling interests and not having them. I discussed with my friend Jennifer to determine the understanding of non-controlling interests. The discussion later found out that the advantages of that my firm is accrued to for owning 100% of a firm.

Step 2: Intercompany transactions

After closely looking the consolidated income statement for the year ended 2013, one will notice that my company combined revenues and expenses of the parents and subsidiary companies. This means that my company had complex activities between the company and its subsidiaries. Combining was essential since it would prevent double counting of revenue and expenses. This list of transactions is notable after observing my company performances and they are included in the group’s financial accounts. Firstly, income and expenses related to receivables, loans, bond indebtedness between my company and its subsidiaries. Secondly, there is a complex interrelation between income and expenses. Thirdly, there are sales and purchases of goods and services parents and subsidiary (Seltzer, 2010, p. 63).

My company realized that the only way to maximize earning is by jointly participating in cash management plan. This has allowed the intra-company borrowing in order to reduce reliance on third party loans. When you look closely at the balance sheet, you will realize that subsidiaries were either borrowing from each other or borrowing to the main company. This has aggregate maximized the total earning that my firm has with time generated (New investor Perspective, 2014).

Does your firm’s parent company and subsidiary companies have the same balance date?

Yes, since the companies are owned entirely by my company on a 100 % basis, it is appropriate to have the same balance date. Since both my company and the firm subsidiary operate on the consolidated balance sheet, goodwill will appear on the assets representing the portion. Running the same balance data is based on the knowledge that cost of investments over book will not be allocated to any specific assets. Indeed, my company pays less than the book value for its investment in the subsidiary. This is derived from the reason that the marketable securities are among least reliable of estimates. Thus, my accounting principles board advises from applying negative goodwill but this is not applied in all cases.

Does your firm have Goodwill in its balance sheet? Why or why not?

Yes, my firm improvises goodwill on its balance sheet, and since it owns the subsidiaries 100 percent. Our valuation expert accepts 10 percent of the net earnings as takeover price. This then added as goodwill amortization. This then implies that earning is adjusted upwards to include net annual earnings of all subsidiaries plus the parent firm (Investopedia. (n.d.).

If your firm does have Goodwill in its balance sheet, what is this item? … If so, why? If not, why not?

The items on the goodwill provision include the foreign currency translation. According to the balance sheet, my company made profits. Profits were attributed to the owners of the Onthehouse holdings limited. The firm offered and identifiable net assets of 295; hence, goodwill arising on acquisition stood at 1,502. In 2012, my firm earned 2141 and 2013 was 1008 in profits and this could be attributed to a shortfall in general operations. This means that my firm made a loss of 1,133. This further means that each subsidiary is treated independently from one another.

Did your company acquire (or dispose of) any companies or businesses during the past three years? …

My company acquired three companies courtesy of Residex Pty Ltd (iv), Residex Technologies, and The Ad Network Pty Ltd. The firms have showed good prospects of success as seen from their financial performance. The financial statements were also clean and had not involved themselves in any underhand dealings that would later mar the reputation of my company.

Clear description of your firm’s disclosed inter-company transactions If the company does not disclose the information, students could either talk about the intra-group transactions of other person or their understanding of intra-group transactions.& Identify and discuss takeover/acquisitions/business combination & Describe and reflect on your discussions with others

Intra-group transactions refer to activities that are carried between the group and the parent company. For the parties, these transactions refer to members of the same groups who conduct similar transactions in the general intra-group entity. In relation to my companies, it is notable that transactions between entities in an economic environment are recorded in separate accounts. This will require any minimum amounts owed to, or are receivable between members of a given economic entity within my company inter-entity transactions. For this reason, the inter-entity transaction creates loss or profits realized by the economic entity which are eliminated when developing consolidated accounts.

After conversing with my friend Audry Hao, I realized that the consequent acquisition of the parent company to subsidiaries was primarily responsible for increasing existing capital stake reaching desirable thresholds. These increases in overall stake portfolio were primarily responsible for the expansion of limited liabilities within companies. In fact, Hao made me understand that his company choice losses were evenly distributed reducing the overall risk involved in the production. However, different subsidiaries are at given thresholds in terms of financial development. As a result, intra-group transactions result to deductible or assessable temporary differences. For this reason, Hao made me understand that these differences are caused by adjustment of the amount of assets for accounting purposes. Hence, eliminating entries causes temporary differences between accounting and accrued tax.

I had to explain to Hao that taking acquiring new business was for the best interests for my company. Taking over and acquiring Residex Pty Ltd (iv), Residex Technologies Pty, and The Ad Network Pty Ltd (v) was a collective strategy since it allowed welcoming of investors and entrepreneurs. New investors and entrepreneurs will expand the capital base for financing other ailing firms within the holding. As a result, this year is expected to be prosperous in relation to total growth in assets and activities.

Bibliography

Money Instructor. 2014, Accounting Relationship: Linking the Income Statement and Balance Sheet | Money Instructor. (n.d.). Money Instructor. Retrieved May 16, 2014, from http://content.moneyinstructor.com/1496/linking-income-balance.html

Investor Centre. (n.d.). â onthehouse.com.au. Retrieved May 16, 2014, from http://investors.onthehouse.com.au/

New Investor Perspective. 2014. Dynamic risk management-accounting in an age of complexity. IFRS -. Retrieved May 16, 2014, from HYPERLINK “http://www.ifrs.org/Alerts/Publication/Pages/New-“http://www.ifrs.org/Alerts/Publication/Pages/New-Investor-Perspectives-article-Dynamic-risk-management-accounting-in-an-age-of-complexity-April-2014.aspx

Investopedia. (n.d.). Non-Controlling Interest Definition | Investopedia. Retrieved May 16, 2014, from http://www.investopedia.com/terms/n/noncontrolling_interest.asp

Rexel Worldwide. (n.d.). Rexel – Electrical Supplies Distribution – Rexel – Electrical Supplies Distribution – Rexel Worldwide. Retrieved May 16, 2014, from HYPERLINK “http://www.rexel.com/en/rexel-“http://www.rexel.com/en/rexel-worldwide/ideal-electrical.php?do=2&id=5

Seltzer, J. C. 2010. An Approach to Issuance Modeling Of Financial Statements. Revista Universo Contábil, 6, 114-128.



Financial Reporting and Compliance by Oil and Gas Companies in UAE

Student Name:

University:

Subject:

Instructor:

November 4st, 2013.

Financial Reporting and Compliance by Oil and Gas Companies from United Arabs Emirates (UAE)

Abstract

This study proposal intends to investigate the level of financial reporting and compliance with the IASs (International Accounting Standards) by oil and gas companies from the UAE. Based on the study sample of 60 oil and gas companies, the study establishes that financial reporting and compliance has improved overtime, from 60% in late 90S to 90% in 2010. In spite of strong cultural and economic ties among UAE states, there was considerable variation in financial reporting and compliance among oil and gas corporations based on the internationality, leverage and size. The study offers de jure evidence as opposed to de facto harmonization within the region.

Introduction

Speedy globalization of financial markets has resulted to increased demands for more globally comparable accounting and financial reporting. Harmonization of financial and accounting reporting is one approach of promoting a more consistent and transparent reporting and in that aspect, IASB (International Accounting Standards Board) generates global accounting standards for utilization by private sector companies or entities across the globe. Generally from 2005, there has been extensive adoption of International Accounting Standards Board standards on compulsory basis. Accordingly, there is growing interest in reporting comparability being attained as well as the role of enforcement bodies and auditor promoting compliance.

This paper aims to investigate the level of financial reporting and compliance with the IASs by gas and oil companies from UAE and the factors related to compliance. The UAE states has from 1986 progressively made IASs mandatory for all or some listed companies. This background enables us to examine the application of IASs in various economically important states that were early IASs’ adopters. Compulsory use within the UAE states offers an opportunity to explore the role of enforcement bodies and external auditors in promoting IASs financial reporting and compliance.

The UAE setting has a number of features that are important for the study of compliance. Some states within the region have been early compulsory IASs adopters, which imply their firms have greater experience with the application of IASs in a compulsory as opposed to voluntary environment. Within the UAE setting the study can examine the relationship of the state regulatory frameworks and compulsory compliance over a period of time. In some nations such as the European Union, companies have more recently adopted the IASs or their application has been voluntary as in the case of Germany and Switzerland in the early 90s. This study contributes to the literature by examining financial reporting and compliance within a mandatory setting. Moreover, it offers useful insights regarding the relationship of compliance levels, IASs adoption and the effectiveness of enforcement bodies and independent auditors. As a result of the extensive adoption of the IASs, the focus has now been geared toward the level upon which firms comply with IASs within the mandatory setting. This study is among the few if not first to offer empirical evidence regarding this matter. Although the study only looks at UAE states, the findings highlight issues that may be equally important in other nations where the IASs have been utilized.

The rest of the paper is structured as follows. The following section explores the institutional framework for financial reporting and compliance within the UAE member states, literature reviews as well as the research question. Section three describes data collection, sample selection and statistical methods. The last section summarizes the study.

Literature Review

Earlier studies examining the adoption of IASs indicate that differences between firms in the level of financial reporting and compliance reflect their state of origin, meaning that there are important elements within the frameworks of national financial reporting that affects their compliance. The framework of a nation’s financial reporting (that is the practices and laws that govern or regulate financial reporting) has a fundamental role in outlining the requirements of financial reporting, creating a due process for enforcing and monitoring accounting and financial reporting standards, and in influencing the level of compliance with such standards. Oil and gas companies within the UAE share a number of common features, for instance company law require that audited accounting and financial reports be developed and submitted to a department of the government. The enforcement bodies, such as the central banks, stock exchanges and government departments are in place and there are provisions within the law for noncompliance penalties. Likewise auditors must be licensed and could be culpable for penalties for violation of the company law.

Jensen and Meckling (1976) agency-theory model argues that minimizing information asymmetry between firms manages (insiders) and capital providers (outsiders) reduce agency costs (residual loss, bonding, and monitoring). The purpose for reducing agency costs offers an incentive for IASs adoption because adoption results to more transparency and greater disclosure in comparison to the situation within the GAAP. Nonetheless, to optimize benefits from implementing higher quality standards, firms have to exhibit compliance to the standards. The incentive to seek compliance benefits may systematically differ between oil and gas companies, founded on their individual features. The study explores below various firm features that could be associated with the compliance level. Large oil and gas firms are more visible and hence, could be highly expected to comply with IASs. Hussain, Islam, M Gunasekaran & Maskooki (2008) state thatlLarge oil and gas firms act to avoid state intervention and to safeguard their reputation. Whereas the scholars base their arguments on advanced markets, they as well apply in UAE states, where large oil and gas corporations are economically important and politically visible. The privatization of large state-owned oil and gas corporations imply that are a focus of investor and government attention. Besides, large oil and gas corporations have huge resources to utilize on compliance and are less probable to be affected by proprietary information disclosure as opposed to their smaller counterparts. The other important point is that large oil and gas firms could be older, with well developed financial and accounting reporting systems, implying that compliance is affordable to them.

In addition, large oil and gas companies are more likely to be international, meaning, to have more international sales, foreign investors, or have international listing on stock exchanges. Ahmed (2009) demonstrate that oil and gas companies cross-listed have greater compliance levels. Within the UAE most oil and gas companies are not cross listed outside their region, nevertheless, they seek international investors. This could offer motivation for greater compliance, to render accounting and financial reporting more comparable and transparent and to enhance the credibility of the company. Oil and gas companies with greater leverage could be anticipated to disclose more financial and accounting information minimize agency cost, thus reassuring debt-holders that the company safeguards their interests.

Within the UAE setting, three shareholder entities characteristically have significant ownership equity in oil and gas companies list on the UAE stock exchanges. These shareholder groups include the institutional investors, dominant families and government together with its agencies all of whom can influence the quality and level of disclosure and IASs compliance level. In UAE these shareholder groups are considered insiders since they normally have representatives in the board of directors of these companies and hence have greater access to the companies’ internal information. As a result, this study anticipates that oil and gas companies with more insiders (i.e. greatly held ownership) has little incentive for financial reporting compliance to the IASs that oil and gas companies with extensively held ownership share.

Method and Data

Selection of Sample

The purpose of this research study is to investigate financial reporting and compliance to the IASs by oil and gas companies from the UAE during the period between 2001 and 2010. We selected 2000 as the beginning point because all the UAE states had adopted the IASs.

Financial Reporting and Compliance Measurement

Financial reporting and compliance with the IASs is evaluated using self-developed compliance index, as this is in conformity with prior financial reporting and compliance studies( Hussain, Islam, Gunasekaran, & Maskooki, 2008).. The checklist is founded on 14 standards comprising, IAS 1, 10, 14, 16, 18, 21, 23, 24, 27, 28, 30, 32, 33 and 37. Initially, all the IASs were considered to be factored in, but some were omitted since they were not applicable to the UAE oil and gas companies (such as IAS 12, 15, 19, 26, 34, 20, 11, 38, 35, 31). Since a number of reporting years for every state were factored in the study, various standards were applicable for every state. Each applicability standard to companies’ annual financial report was established and the relevant section of the checklist was applied in data collection. The entire financial annual report was perused and data obtained. Every disclosure item within the checklist was allocated a value of (1) when it was disclosed and (0) when it was to disclosed by applied. The items, which were apparently not applicable, were assigned N/A. The items that did not have sufficient information were provided to determine applicability was denoted as do not know (DK). The principal index is the general compliance measure, with the DK and N/A items excluded, and comprising a measurement and disclosure-compliance measure. Robustness test were conducted to establish the results’ sensitivity to the treatment of possible ambiguous DK and N/A items. The checklist items were not weighted since this procedure could introduce bias and subjectivity.

A multivariate evaluation was deployed to analyze differences between states in levels of compliance as well as relationships and time trends between the compliance level and company features. Due to the fact that dependent variable (compliance index score) ranges between 0 and 1, it was rearranged by taking the odds ration logarithm. For instance, if the overall compliance level to the IASs for firm is given by P, then the odd ratio logarithm Y is given by;

Summary

The study has established that the average level of financial reporting and compliance by oil and gas companies in 85% of the checklist index items in the study period, but the level of compliance has steadily increased. In spite of the strong cooperative economic and cultural ties, there is considerable variation in compliance level by the oil and gas companies across the UAE member’s states. Oil and gas companies from Saudi Arabia recorded the highest level of financial reporting and compliance. Companies from Oman and Kuwait substantially improved their compliance than any other states, and this could be attributed to improved enforcement and monitoring in Oman and Kuwait.

Conclusion

The International Accounting Standards Board standards have been established for application as national standards in nations across the globe regardless of the economic development level and culture. Since extensive compulsory adoption is comparatively new, not much is known concerning the effectiveness of IASs adoption in different nations. Investigating the financial reporting and compliance by oil and gas companies within the UAE is of great interest due its distinctive characteristics for instance strong association between UAE member states, developing country statue accompanied with significant wealth and considerable cultural differences in relations to most western nations. The study shows that financial reporting and compliance of oil and gas companies within UAE is de jure as opposed to de facto, implying that IASs as implemented by law as opposed to practice, a significant noncompliance is imminent.

The financial reporting and compliance framework by oil and gas companies within the region are established on company-law regulations that are enforced by government agencies and has penalty provisions for violation for those requirements. Their framework places excessive dependence on independent auditors and feature just only limited operations by the stock exchanges as well as enforcement agencies in compliance checks and taking measures for non-compliance.

References

Ahmed, K. (2009). Disclosure policy choice and corporate characteristics: Journal of

Accounting, 3(1), 183-203.

Hussain, M., Islam, M. M., Gunasekaran, A., & Maskooki, K. (2008). Accounting standards and

practices of financial institutions in GCC member countries. Managerial Auditing Journal, 17(7), 350

International Accounting Standards Board (IASB) (2010). International Accounting Standards

and SIC interpretations. London: IASC

Financial vs economic table & linking impact to valuation technique of Namadgi National Park

Financial vs economic impacts ofNamadgi National Park

Impact Financial (money) Economic (real) Cost Labor

Land

Search and rescue service

Conserving the Natural

Environment

Conserving cultural

Heritage

Planning – controlling development

Planning – policies and communities

Recreation management and transport

Animal Welfare

Standards

Wages

Market price

Market price

Market price

Market price

Market price

Market price

Market price

Market price Time lost

Time lost

Cost effective solution

Time lost

Time lost

Time lost

Time lost

Cost effective solution

Benefits

Souvenir shop Market price Social profits

Honeysuckle Campground Market price Social profits

Water suppliesMarket priceSocial profits

Trees and Forests Market priceSocial profits

Biodiversity resourcesMarket price Social profits

Provision of recreational opportunitiesMarket priceSocial profits

Tourism expenditures Market price Social profitsCost-Benefit Analysis of the Namadgi National Park

(1991-2010)

Net Present Values in 1991. $ million

Definition Valuation Present Value

Benefits Souvenir shop Passengers can buy some souvenirs everyday The souvenirs value are average 5 dollars , 30 passengers per day . 300

Water supplies Less time spent in flight waiting for a landing slot: minutes per plane times annual landings. This cost 11 millions from 1991 to 18 millions 2010. 220

Forests and Trees

They can supply fresh air, andProtect the soil This is economic value, it can provide much value than the money provide. Biodiversity resources

Research can make a new achievement and profits Social value Provision of recreational opportunities People can do some sports here e.g. bushwalk, fishing, ridebikes. This is all for humans’ health value Costs Land Maintenance costs of land It will cost 450 millions per year for maintenance 520

Labor They can Labor fees is 420 millions per years 500

Increased aircraft movements * Prevention of animal diseases

It can make the animals safe and health. It will cost 220 millions per year 430

Search and rescue service

Recreation management and transport

This service is that when passengers miss the way or get some trouble,somebody will find you and take you to a safe place.

Some event or functions held, and need some people management or bus to pick up

This will cost 48millions per year in national areas

Time lost 443

Net benefit

Financial Reporting Disclosure in Australian Corporate Sector

Name of Student

Institution

Financial Reporting Disclosure in Australian Corporate Sector

Introduction

Within Corporate sectors and some small and medium enterprises, financial statements and reports for documentary purposes which they consolidate to track and evaluate how much finances in respect to profits or losses the investment operations are making. The purpose of financial reports is to pass on this information to the stakeholders and the investors of the company (Deegan 2010). Thus, financial statements and reports is component of the critical contract between the external investors and the business because they have the right to be informed and to know if the fiscal investment is being spent shrewdly and at a significant return. The objective of this assignment is to develop a report based on two chosen corporate Australian groups. The report entails evaluating the yearly reports of the identified corporate groups focusing on their accounting practices and operational management.

The two companies being analyzed are Endeavour International Inc and Firefax Media Limited. The subsidiaries of Endeavor International are 8, while Firefax has five subsidiaries and it’s the major player in the media industry.

The goodwill methods:

Both the two companies have deployed business combination as a method of goodwill. In this case, the transactions and proceedings in which two or more subsidiaries or entities of an organization group are assigned to a common control as one accounting body. The accounting practices are observed by both companies for their investment amalgamation, regardless of whether equity assets or other resources are acquired (Deegan 2010). The regulation for the attainment of a controlled entity entails incurred liabilities; relocate assets and the equity interest offered.

For both Endeavor International and Fairfax, the goodwill reflects the surplus of cost of acquisition beyond the logical price of the share of the Group for the ultimate reasonable assets of the purchased entity at the acquisition time. Hence, the two corporate groups integrate goodwill on the acquisition of subsidiaries in indefinable assets. In view of the goodwill linked to the associates, it’s incorporated in business in associates. It is stretched to the reportage section for the purposes of impairment testing. For example, the investment impairment in associate for Fairfax group is $ (1,060) million while for Endeavor International Plc the sum is $98.8 million. Fairfax didn’t have a significant investment in acquisitions or associates for the financial year because it reflected nil figures in its financial consolidated statement.

Endeavor International on its side recorded some significant acquisition of the topical financial year, the Group managed to end the fiscal year with $2.1M investment from the intangible assets. Thus, the goodwill is rather retained to harm assessment in yearly basis as oppose to paying it off. This assessment could also be carried out more routinely when the variations is in scenario that is indicating some signals of impairment, and can be handled at a cost less accrued losses in damage.

It is also imperative to emphasize that, losses or additions towards the clearance of entity comprises of the haulage amount of goodwill subjected to the disposed entity.

On the grounds of impairment evaluation, assets are huddled on the lowest points where there are detached specific cash flows which are mainly independent of the cash inflows from the rest of assets. In assessing the in use value, the projected cash flows are discounted to the present value by way of post tax positioned down rate so as to reflect the present market approximations.

These companies assess at the end of every fiscal year period whether there is determined substantiation that a fiscal assets are damaged or not. As a result the Endeavor International and Fairfax, there fiscal asset is impaired and the relevant losses are sustained subject to injury indication (Endeavor International Plc 2010 financial report).

Impairment being the outcome of supplementary events which transpired after the initial recognition of the assets; that the loss events influence the projected position cash flows of the monetary assets which can be constantly anticipated. In respect to the equity investment grouped as available for sale, a protracted or considerable fall in the fair value a security below its cost is considered to the pointer of which the assets are impaired.

Concerning the acquisition by acquisition framework, the Endeavor International differentiates any non controlling interest (NCI) in the acquisition at costs reasonable or at the NCIs’ share balanced of the entity’s net limited assets. The addition of the deliberation transferred, the amount of any NCI in the subsidiary and the fair price tagged on the acquisition date of any pre equity venture in the subsidiary beyond the reasonable cost of the Endeavor’s share’s of the net tangible assets bought is indicated as goodwill in the fiscal statement. For example in the consolidated financial statement, Endeavor group reflected $12.5M in NCI. This result is the amount of Endeavor’s generated equity and sustained income of $10M and $2.5M respectively which is desirable compared to the performance of the previous year.

As Deegan (2010) puts it, when the amounts are under the reasonable value of the definitive tangible assets of the entity acquired and the level of all sums have been evaluated, the variation is recognized openly in the profit or loss as price cut on the investment consortium. In situation where any component of cash deliberation is in arrears, the sums that are supposed to be paid in the future are discounted to their present cost at the acquisition date.

Similar trend is also evident at the Fairfax Group whereby the deliberation is arrived at through acquisition by acquisition framework and they recorded $2,082M. The impairment losses were receptively nil figured of which is a desirable scenario for the Fairfax group. Nonetheless, this simply came to be true not very long ago since under the earlier guiding standards, the NCI was at every time recognized at its share of the entity’s sum assets. The fiscal year balance stood at $1,833M which indicates that no substantial acquisitions or investments were realized within that specific financial year.

By critically assessing the financial statements and the whole annual reports of the two groups, it is correct that they were prepared with keen compliance to the Australian Accounting Standard Boards, AASB 3 and the AASB 27 (AASB3 and AASB 127). This is true since at the preliminary sections of the financial statements there is a clear indication that the company directors issued a declaration that the financial statements have been done in accordance to the stated regulatory accounting standards. In view of the AASB 127, did not consider the accounting systems for investment amalgamations and their effects on consolidation, also the goodwill cropping up from investment grouping. The principle requires that the mother company will deliver the consolidated financial reports in which it combines or merges its investment in entities or associates in accordance with the AASB 127 standards. According to the financial reports of the two companies, they have entirely consolidated their financial operations of the entities under one fiscal statement for the given financial year (AASB3 and AASB 127).

AASB 3 checks the acquisition modality where every event or transaction is an investment transaction, and for every case the appropriate subsidiary is to account for each within their fiscal reports. All the subsidiaries are also projected to apply acquisition procedure in to account for each investment amalgamation. In the financial statements delivered by the two companies, it is mostly indicated that all the activities or transactions of the mother with the entities were investment combination.

The two corporate groups have shown that every entity makes their individual financial statements prior to the consolidation. Nonetheless, certain disparities were observed from these disclosures. For example the Endeavor International Plc in their disclosure highlighted the other segments of investment in their operations; wearers Fairfax did disclose a consolidated statement which is general. When comparing the 2 financial consolidated statements, it appears that Fairfax group didn’t conduct meaningful investment or acquisition in other entities and associates in comparison to Endeavor International which did disclose significant investment and acquisition is associates.

References

Deegan, C. (2010). Australian financial accounting/Craig Deegan,6th ed, Australia: McGraw-hill.

Fairfax Media Limited Annual Report 31st December 2010, Retrieved from : HYPERLINK “http://www.fxj.com.au/shareholders/AnnualReport_FXJ_100921.pdf” http://www.fxj.com.au/shareholders/AnnualReport_FXJ_100921.pdf

Endeavor International Plc. Group Annual Report 30th June 2011, retrived from:

APPENDIX:

  Jun-10 Jun-09

(i) Carrying amount of investment in associates  $M  $M

Balance at the beginning of the financial year 14, 819 14,764

Investments in associates acquired during the year 0 477

Adjustment for foreign exchange revaluation 8 20

Share of associates’ net profit/(loss) after income tax expense 685 55

Dividends received/receivable from associates -350 -387

Impairment of investment in associate 1060 0

From Fairfax consolidated Financial statement Intangible Assets.

(A) Asset revaluation reserve  $M  $M

Balance at beginning of the financial year 32 801

Revaluation of available for sale investments 2082 1358

Impairment losses transferred to net profit 0 2191

Tax effect on available for sale investments 281 0

Balance at end of the financial year 1833 32

From Fairfax consolidated financial statement, NCI p. 96

2011  

Management rights — indefinite life 32

Goodwill 69.4

Other intangible assets 2.1

Balance 30 June 2011 74.4

2010  

Management rights — indefinite life 10.5

Goodwill 44.4

Balance 30 June 2010 3 54.9

From Endeavor International Inc. consolidated financial statement.

27 NCI 2011 2010

Interest in:  $M  $M

Contributed equity 10 8.2

Retained earnings 2.5 2.8

Total 12.5 11

From Endeavor International Consolidated financial statement, Non Consolidated Interest:



Financing and Expansion

Student’s Name

Institution

Financing and Expansion

1.I have been running a hair salon business which is now successful, and my focus is to buy a competitor (privately owned hair salon) as part of expansion plans for my business. There are various business valuation methods that one can use to estimate the value of a business in terms of the present value and the business economic future potential. In calculating the present values, we look at all aspects of the business such as capital structure, market value, future earnings prospects and even the management of the company. All these are important to potential investors like me in making the right investment decisions. The methods of valuation are;

( i) Discounted Cash Flow Method

(ii) Market Valuation

(iii) Multiples Method

(iv) Comparable Transaction Method

Discounted Cash Flow Method

Under this method there are two approaches that can be used namely; Adjusted Present Value (APV) and Weighted Average Cost of Capital (WACC)

For example, assuming that the competitor is financed fully by equity then the appropriate valuation technique that I will use is the net present value (NPV) method.

For instance, if the competitor streams of cash flows say for period 0,1, 2, &3 are; $(20000 ) $10000, $8000, $15000 respectively and compounding interest rate is 10%. Then, its net present value would be determined as follows:

( FCF0/1+rd)0+ (FCF1/1+rd)1+ (FCF2/1+rd) 2+ (FCF3/1+rd)3=NPV

(20000)/1.10+ 10000/1.11+8000/1.12+15000/1.13= $6,972.2

Competitor NPV= $ 6972.2

The sum of all Present Value of cash flow is equal $6972.2, which is greater than zero hence the project is profitable and should be considered for purchase.

Based on the assumptions above, the competitor’s net worth would be $6972. It can, therefore, be assumed that to purchase this hair salon business I need to invest an amount not less than or equivalent to $6972.2 for my planned business expansion.

2. Some of the financial tools that I can use in this case may include a balance sheet, income statement, statement of cash flow, and financial leverage ratios such as debt ratio and debt-equity ratio.

a) Statement of Financial Position

I would need critically to analyze my business balance sheet in order to know what I currently own and owes, as well as the amount invested by other shareholders in my salon business. This will enable me to know my business net worth as at the time of purchase; therefore, it will indicate to me whether I can purchase the competitor through cash or borrowing.

b) Income Statement

The income statement of a company reveals a lot about its revenue and expenses during a given period. This information about the competitor’s performance will help me project the growth of my salon, the expected market share, and the overall profitability of my business after the competitor’s purchase, therefore, I will be able to know my affordability level to buy the company.

c) Financial leverage ratios

These will provide me with the information on my capabilities in meeting the long term debt payments without becoming insolvent or spending more than the business I can raise in revenue.

A debt ratio of less than 1 will show that my business has more assets than debt, while a debt ratio of more than 1, indicate that the business has more debts than asset, therefore, it will not be wise to purchase it if the latter is true.

d) Cash Flow Statement

As an analytical tool, statement of cash flow is very useful in determining the viability of a company to pay its long-term debts as it shows the liquidity and solvency of a firm.

3. Debt Market- also known as bond market

In this market, business can rely on borrowed funds to finance their investments plans for future growth, e.g. to buy a competitor, it can happen through the following ways:

i)Issue corporate bonds to public

Under this option, my company can decide to issue corporate bond to the public investors. In order raise the additional amount in debt though it will require me to make regular interest payments to the bondholders, until the maturity date upon which I will be obligated to pay back the full amount borrowed.

ii)Notes Payable

This is a written promissory note, under this agreement I can decide to borrow the $ 100 million from a willing lender with a promise to refund the full amount including the agreeable interest over a given period.

iii)Securitization through Asset Backed Securities

Under this alternative, my company can enter a contractual agreement with a competitor by issuing them with asset backed securities such as home equity loans, credit cards and auto loans to finance the $ 100 million deficit.

iv)Acquire bank loan

Another way that I can use to fund the deficit is through taking a bank loan worth $ 100 million and repays the amount plus interest over an agreed period.

Recommendation

Under this market the best alternative that I would recommend to use is to issue corporate bond because:

a)It does not dilute the value of the existing shareholders

b)Bonds offer a way of stabilizing company finances through having debts on fixed-rate interest.

c)It will enable my business to retain more cash since the bond’s redemption date can take many years.

4. Equity Market- this is a market where equity instruments are traded. Options include.

(ii) Issuance of Preference shares that are a special class of shares whose features and characteristics are not possessed by common stock.

(iii) To issue ordinary shares worth $ 100 million to the public or as an offer to the competitor company.

Recommendation

As a result of my analysis and further investigations, the best alternative here is to finance the deficit by issuing the ordinary shares worth ($100 million) to the public. Offering the competitor shares will mean that the competitor will claim part of ownership in my business and may want to have a position such as that of director, so as to have impact on the decision making process of my business which may not be a better decision.

5. Due to many challenges accompanying the issuance of corporate bonds such as regular interest payments determine whether the business make a profit or loss. A potential decline in business share value whenever there is a reduction in profits, having to fulfill various listing regulation in order to improve the tradability of the bond in the stock market also plays a paramount role. Then, the best alternative that I will use to raise this funding is by issuing of new shares to the potential public investors, through the approval of existing shareholders. By doing this my business will be able to raise enough funds for the expansion plan, attracts new investors who will work hard to ensure that the business become profitable so as to get higher returns for their investment in the form of dividends.

Financial crisis and banking industry

Name

Institutional affiliation

Financial crisis and banking industry

Introduction

The U.S banking industry has severely weakened as a result of the current financial crisis. The number of banks falling is rising, as financial crisis continues, and bank stocks are plummeting. As a result of this crisis, banks are tightening their lending standards and terms to exceptional levels. The tightening experienced could be detrimental as it could derail or even undermine the recovery of the economy. Financial crisis is the period when financial assets lose a greater fraction of their nominal value. Financial crisis leads to paper wealth loss but mainly not the real economy (Cao, 2012). The essay will explain how financial crisis affects the banking industry.

The current global economic downturn and financial affected world’s economy negatively and increased uncertainty. Financial crisis may have an important and the country and may lead to inflation and cause huge risks to the environment. Ciro states that the greatest organizations affected by financial crisis are the smaller banks. Banks face risks as a result of economic growth slowdown including credit risks. Default loans are small, but are increasing, and this is expected to grow tremendously. Various signs associated with credit risks include the bankruptcies reported (2012).

Financial crisis also provides a platform for banks to tighten their loan lending. The current financial crisis has made banks tighten their loan rates by lowering the discount on huge loans and increasing the risk premium for more risky loans. The price for non- commitment loans was also significantly higher in comparison to commitment loans. Financial crisis also affects shareholder’s equity (Cao, 2012). During the current financial crisis, many banks had to reduce shareholder’s equity as a way of sustaining the business cycle. Financial crisis leads to the banking industry to assume a better risk management program.

According to Ciro, credit evaluation is an important factor in banks. The current financial crisis made it possible for banks to evaluate their credit evaluation plan critically. The evaluation plan requires banks to obtain more information regarding the borrower to reduce the risks involved (2012). Financial crisis also makes banks eliminate some loan products to new loan borrowers. Financial crisis has also proved difficult to banks due to the creation of competition. The competition is attributed to deposits made making larger banks benefit and offer huge interests. Financial crisis also brings success to commercial banks as it offers them the opportunity to claim their deposits lost to huge institutions (Cao, 2012).

Conclusion

The current financial crisis proves difficult to all institutions, regardless of their conservative strategies and their capitalization. The current crisis thus brings better news and opportunities to various banks. Banks can increase their deposits, better themselves, and even gain new customers, if they strive to serve customers without drifting away from traditional practices.

References

Cao, J. (2012). Banking regulation and the financial crisis. Abingdon, Oxon: Routledge.

Ciro, T. (2012). The global financial crisis: Triggers, responses and aftermath. Farnham, Surrey: Ashgate Pub.

Financial Feasibility of Flying Cars

Name

Institution

Total Startup Cash Needed (to Make First Sale)

Capital Investments Amount

Capital Investment Amount ($)

Property 1,125,000

Furniture & Fixtures 1,131,000

Computer Equipment 1,150,500

Other Equipments 1,120,000

Vehicles 1,170,000

TOTAL 5,696,500

Feasibility Analysis

Operating Expenses Amount

Operating Expenses Amount Amount ($)

Legal, accounting, and professional services 12,000

Advertising and promotions 15,500

Deposits for utilities 115,500

Licenses and permits 112,000

Prepaid insurance 153,000

Lease payments 124,000

Salary and wages 148,000

Payroll taxes 118,500

Travel 12,500

Tools and supplies 15,000

Starting inventory 110,000

Cash (working capital) 1,200,000

Miscellaneous Expense 17,200

Total Startup Cash 2,152,000

Comparison of the Financial Performance of Proposed Venture to Similar Firms

Assessment Tool

Annual Sales

Sales Year 1 Year 2

Annual Sales 1,395,000 3,348,000

Comparison with HYPERLINK “http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&cad=rja&ved=0CH4QFjAH&url=http%3A%2F%2Fblogs.wsj.com%2Fspeakeasy%2F2013%2F01%2F23%2Fterrafugia-flying-car-is-fast-as-a-porsche-at-stopping%2F&ei=DnOFUpjzLbTA7AbH7oHABw&usg=AFQjCNFODJTl_zNh8aJPxWjnyKaQKW07rA&sig2=kLpM0-UEjAmcdQ_JGMAeNQ&bvm=bv.56643336,d.ZGU” Terrafugia

Terrafugia 2011 2012

Total Sales 13,950,000 12,624,000

The company estimates that each flying car would be sold at the prevailing market prices that is current at $279,000

In the first year of operation, the company targets selling 5 flying cars only and the number is expected to rise to 12, thus generating $3,348,000 sales revenue during the second year of operation. The company’s market share is expected to increase in the coming years and therefore more revenue will be generated from its sales.

Being a new company in the industry, it would be very hard for the firm to break-even especially over the first few years of its operations. The company must therefore be ready to spend more resources in promoting and advertising its new flying cars in order to gain market penetration. The limited but potential market is currently dominated by others manufactures with strong and sound financial strengths, hence relying on their economies of scale to restrict entry of new firms. For this reason new errant must spent more financial resources on its operations thus the $2,152,000 allocated for operational expenses of the firm.

Medical Superintendent and Doctors

Financial Impact on Universal Healthcare in the U.S

The following letter is written to pass the information that the touches on ethical practices that touch on healthcare professionals particularly with regard to financial, accounting and audit obligations. Professional ethics in healthcare go beyond what is usually emphasised in terms of practice and patient care related issues, to include more indirect practices that may compromise deliver of quality service. Besides medical profession integrity, practitioners are expected to observe other integrity issues that are incidental to the quality of health services delivered to the patients. An interdisciplinary perspective is advocated in the modern healthcare provision, which encompasses more responsibilities. With the recent developments in the interactions that healthcare providers have with drug suppliers, financial and accounting regulations have been given emphasis than ever before. In what has evolved to be commonly known as Physicians-Industry Relations, it is clear that there are a number of risks that the healthcare practitioners might be exposed to regarding dealing with the pharmacy industry. In terms of the two industries interactions, it has been observed that several financial flaws have been happening in several healthcare settings. As a result, serious accounting and audit flaws that consequently emanate from the malpractice compromise the integrity of the healthcare professionals.

Generally, the procurement of drugs for use in the healthcare facilities is conducted depending on the availability of the drugs as offered by pharmaceutical companies. Competition among drugs supplying companies has led to an environment where drugs salespeople and medical representatives for other pharmaceutical products are deployed to woo clients from the healthcare environment. In a competitive market, unfair business deals always find their way into the market in an attempt to keep off competitors. Among the major unprofessional practices that such deals apply is the bargaining element that forces salesmen to supply products at the expense of business fairness regulations. Supply of substandard healthcare products is often embarked on in order to win sales, which compromises the level of healthcare service delivered by healthcare professionals. It therefore implies that colluding is almost impossible to be avoided by healthcare facility management in order to benefit in certain ways. Due to certain conflicts of interests between the suppliers and the healthcare professionals, loopholes in internal control standards guiding procurement of pharmaceutical products are encouraged.

Healthcare professional are misguided to delivering specific medication and prescriptions in order to sustain the deal engaged with the suppliers. In terms of healthcare provision, this practice does not only expose the patients to improper treatment and the associated risks but also exposes the entire healthcare facility to financial crimes. Through the basic internal audit and accounting control standards, healthcare facilities are guided in dealing with procurement and tendering procedures. The aim of the accounting and financial standards outlined in the facility’s policy is intended to facilitate a smooth running of the ordinary operations without challenges such as running into bankruptcy. When such standards are involved in the healthcare setting, it implies that more powerful forces of patient’s health status are involved. Identification of possible conflict of interest in the procurement procedures is the mandate of every healthcare professional. This financial and accounting aspect of the healthcare industry is incidental to the delivery of services with integrity and accountability. Due to the magnitude of the financial and accounting regulations in the healthcare industry, patients’ protection and care which is the sole responsibility of the medical profession is implicated by such conflict.

In light of the above issues, all healthcare professional affected by the financial and accounting element of this matter are advised to ensure that the challenge is handled with the importance that it deserves. However, a number of the practising professionals are aware of the procurement intricacies involved due to the pharmaceutical companies’ presence and lobbying through medical representatives in the healthcare facility. There are legal provisions that may guide the public to act against such improper conduct through legislation such as the False Claims Act, the Medicare and Medicaid Patient Protection Act and Stark Law in the US. Both the healthcare providers as well as pharmaceutical suppliers are bound to act in the protection of the health of the patient as financial, accounting and audit provisions support. It is important that everyone affected by these standards is advised accordingly, in order to remain focused to the medical profession. It is therefore important that any knowledge of this indecorum is corrected with immediate effect and support afforded to the management in order to eliminate improper conduct within our facility.

Work Cited

Coyle, Susan L., “Physicians- Industry Relations.” Annals of Internal Medicine, 136.5(2002):396-402

Financial Information of Kellogg Co

Author

Institution

Introduction

Financial statements have gained considerable significance in the recent times. They are mainly used to present information pertaining to the financial position of a company, which is presented to the shareholders, employees and the general public, as well as government agencies. Needless to say, the compilation and calculation of financial information in financial statements involves some level of expertise, especially considering that an individual would have to consider the existing systems, regulations and standards set by the accounting bodies of the country within which they operate. This gets even more complicated in instances where a company operates in different countries as is the case for Kellogg Company. Kellogg Company refers to a multinational food manufacturing company whose headquarters are situated in Battle Creek, Michigan. It is involved in the production of cereals, as well as convenience foods such as crackers, cookies, cereal bars, toaster pastries, frozen waffles, vegetarian foods and fruit-flavored snacks. The manufacture of its products is carried out in 118 countries while it is marketed in more than 180 countries all over the world. While its financial statement is bound to be undoubtedly complex, the accounting standards and procedures used in compiling it is always bound to be the same as any other company.

Day’s sales in Accounts Receivable

This refers to the average number of days that a company takes in order to collect the payments on the goods that it has sold. It may be used to determine whether there are any collections problems, as well as the pressure that is placed on the cash flows of the company. Numbers that exceed 40 to 50 days come as an indication of collection problems, thereby outlining considerable pressure being placed on cash flows. On the other hand, numbers that are way below the 40 to 50 range would underline overly-strict credit policies than may be preventing higher sales revenue (Wood & Sangster, 2005). These days are also referred to as debtor days or day sales in receivables. These are calculated using the formula: Average Accounts Payable x 365/sales revenue

Yearly accounts payable for Kellogg Company = 1402,000,000

Average accounts payable = 1402, 000,000/365

Day’s sales in accounts receivable = (1,402,000,000/365 x 365)/14,197,000,000= 0.0987 days x 365 = 6 days.

Days Sales in Inventory

Days’ Sales in Inventory (DSI) refers to a technique for measuring the average amount of time that is required in order for a company to convert its inventory to sales. This may also be defined as the financial measure pertaining to the performance of the company that informs or gives the company’s investors an idea as to the length of time that the company would take to turn or convert its inventories or stock into sales. This inventory would not only include the goods themselves but also the work in progress in cases where such is applicable. In general, scholars note that it is better for a company to have a lower or shorter Days’ Sales in Inventory than a long one. This, however, does not negate the fact that there will be variations between the average Days’ Sales in Inventory in one industry and the others thanks to the variations in the operations. For instance, a business enterprise that deals with perishable goods such as raw vegetables and fruits is bound to have an extremely value pertaining to Days’ Sales in Inventory as compared to business enterprises that deal with non-perishable or long-term goods such as machinery and cars, which would have high values of the Days’ Sales in Inventory (DSI). On the same note, companies such as Kellogg Co. is bound to have a higher value of Days’ Sales in Inventory (DSI) than business enterprises that deal with raw fruits, vegetable and other consumer goods especially considering that it manufactures and packages them, thereby increasing the length of time within which they would perish or expire. A significant small number of days’ sales in inventory comes as an indication that the company is extremely efficient in selling off its inventory. A significantly large number of days, on the other hand, shows that the company may have made too much investment on inventory and may be incorporating obsolete inventory in its stores (Wood & Sangster, 2005). This may also be an indication that the management of the company has made a decision to keep high levels of inventory in order to attain high rates of order fulfillment. The figure represented by the days’ sales in inventory is used by external financial analysts to estimate the company’s performance using the ratio analysis. It is rarely used within the company as the employees have access to detailed reports that reveal the inventory items whose sale is worse or better than average (Wood & Sangster, 2005). In calculating the days’ sales in inventory, the annual average inventory is divided by the annual cost of goods sold then multiplied by 365.

(Opening inventory + Cost of goods sold – Closing inventory)/ Cost of goods sold x 365

(1,174 + 8763 – 1365)/ 8763 x 365 = 357 days.

This means that the company is keeping too much inventory in its subsidiaries, probably, to ensure capacity to fulfill its high rates of order.

These may be compared with the financial statements for a multinational company such as Cracker Barrel Old Country Store, Inc. Cracker Barrel Old Country Store, Inc is a multinational company with subsidiaries in varied countries (Cracker Barrel Old Country Store Inc., 2012). It mainly deals in restaurants and gift shops unlike Kellogg Co. which deals with food manufacturing. However, both of them are multinational companies, in which case the compilation of their financial statements is bound to be more or less equally complicated or complex (Cracker Barrel Old Country Store Inc., 2012).

The company’s Days’ Sales in Accounts Receivable would, therefore, be computed as bellow. (Average Accounts Payable x 365/sales revenue)

Yearly Accounts Payable for Cracker Barrel Old Country Store, Inc = 39,704,000/365

Average Accounts payable= 108778.082

Days’ Sales in accounts Receivable = 108,778. 082/ 2,580,195= .04215886×365= 15

This means that the company has strict collection procedures, rules and regulations, which is expected for a restaurant especially considering that such enterprises would rarely provide goods and services for credit.

For the company’s Days’ Sales in Inventory

(Opening inventory + Cost of goods sold – Closing inventory)/ Cost of goods sold x 365

In ‘000

(2,532+ 827,484 -1720)/ 827,484 x 365= 365 days

The Day’s Sales in Inventory for Cracker Barrel Old Country Store, Inc are quite high, which is surprising for a company that deals with perishable goods. This, however, may be as a result of the operations pertaining to the gift shops. Nevertheless, it means that the multinational company buys in bulk, probably to ensure that it has a steady supply of items even in instances where the gods used in its operations are in short supply. On the same note, it could be dealing in manufactured or packaged goods that have a long period before their expiry.

The financial statements of Kellogg Company are extremely complex especially considering that they incorporate the operations and entries of the subsidiaries. This is the same case for Cracker Barrel Old Country Store, Inc. On the same note, it is noted that the financial statements of both Kellogg Co and Cracker Barrel Old Country Store, Inc were prepared in line with the accounting principles that are fundamentally accepted in the United States of America, especially with regards to estimates, where the management of the company is required to make assumptions and estimates that affect the amounts of liabilities and assets that are reported, as well as the disclosure of the company’s contingent liabilities as at the financial statements’ date alongside the reported expenses and revenues in the reported periods (Kellogg Company, 2012) . As it is noted, the actual results could be different from the estimates underlined in the financial statements. The financial statement captured the period between December 31st 201 and December 29th 2012 (Kellogg Company, 2012). It is worth noting that there were varied modifications in policy that were undertaken within the year, which were reported via retrospective application of new policies to all the presented periods. On the same note, the financial statements undertook a consideration of the effect of recast pension, as well as postretirement benefit expense on the balances of capitalized inventory in prior periods (Kellogg Company, 2012).

References

Kellogg Company, (2012). Kellogg Company // Form 10-K For Fiscal Year 2012 (Ended December 29, 2012).

Wood, F., & Sangster, A. (2005). Frank Wood’s business accounting 1. Harlow: Financial Times Prentice Hall.

Cracker Barrel Old Country Store, Inc (2012). Cracker Barrel Old Country Store, Inc Form 10-K (Ended 3rd August 2012)

Name

Instructor

Course

Date

Courses Structures

Accounting and Financial Management

Learning Structure This Week

19 hours per week –from Monday to Friday Classes

Weekly assessment every Friday afternoon as segment of classroom period

5 hours of organized learning weekly

Amount of Hours in General for This Course10 weeks of 20 hours each/ 200 hours

Amount Hours for Every Day

4 hours daily

I hour well-structured learning dailyAdmission Conditions

Least age of sixteen years

Elementary Accounting and Finance management Start Date and End Date

Start Date: 26th May

Closing Date: 12th SeptemberCourse Fee and other charges

Registration Fee: $150.00Tuition Fee: $950Our Teachers Skills for This Course

The credential and expertise of the teachers in this particular field is typically undisputable regarding that most of them are trained in developed and established universities abroad and also hold impeccable documents regarding their specializations.

Economics

Academic Structure starting Week

30 hours mp3 per week-entailed in the course of undertaking the week

Day-to-day assessment after each economics

3 hours of ordinary activities weekly

Amount of Hours in Common for This Course22 weeks of 35 (+2) hours all/ 800 mp3 hours and 40 hours of video

Amount of Hours for Each Day

7 hours daily

0.5 hour of video watching daily for four daysCharges Requirements

Entrance at learner level

There is no admission trial taken

Commencement Date and End Date

Initial Date: Every Monday

Ending Date: After 20 weeksCourse Fees

Registering Fee: $90.00Our Teachers Skills for This Course

This course has well distinguished and acknowledged panel of teachers on economics who have shown the desire to combine structured abilities in designing and innovating new ideas

Management

Academic Structure This Week

4 hours per week – from Monday to Friday Classes

Beginning test on every Monday afternoons as part of classroom hours

Sunset classes offered for transitional level

Amount of Hours common for This Course9 weeks each with 5 hours/ 40 hours

2 semesters – 90 hours

Pauses between semesters

Amount of Hours for Each Day

1 hour daily

Admission Requirements

Pre-intermediate managementcommencement Date and Ending Date

Commencing Date: September 1st each year

Ending Date: End FebruaryCourse Fees

Registration Fee: $300.00Early membership: $290.00

Our Teachers Expertise for This Course

The teaching staff members of course are well trained with expansive range of experience in teaching the segmented course following long time of exposure in the field.

Global HYPERLINK “http://www.efagcollege.co.uk/index.php/en/courses/detail/4-business-classes/10-marketing”Marketing

Academic Structure This Week

8 hours per week – Tuesday, Thursday and Friday Classes

Mid-week CAT on every Thursday

Evening lessons and early morning classes offered

Amount of Hours in General for This Course14 weeks each with 4 hours/ 76 hours

12 weeks for transitional leaners/ 60 hours

Amount of Hours for Each Day

3 hours for learning daily

Admission Requirements

No background education needed

No least age requirementcommencement Date and Ending Date

Starting Date: September 20th each year

End Date: End February 23th yearlyCourse Fees

Admission Fee: $350.00Early registration: $300.00

Our Teachers expertise for This Course

The teachers in this sector hold expansive experience in the marketing s field with relations to undertaking marketing in the conventional world.

Electronic Marketing

Academic Structure This Week

4 hours per week – Monday to Thursday Classes

Electronic marketing tests after every second week

Morning and evening classes for advanced levels

Number of Hours in General for This Course14 weeks each with 3 hours/ 45 hours

Extra 14 office hours for consultation with instructor

Number of Hours for Each Day

3 hour for each day

Admission Requirements

Advanced level or technology in marketing

English placement test before admission account for close to 70% performanceStarting Date and Ending Date

Start Date: June 4th 2014

End Date: End MarchCourse Fees

Registration Fee: $720.00Tuition Fee: $1490.00

Our Teachers qualifications for This Course

Conventionally designed tutorials are availed by the teaching staff on this

segment and the teaching fraternity has well and elaborate background regarding the wider electronic marketing

. All the teaching staff members have PHDs and master in this field.

Finance

Academic Structure This Week

6 hours/ classes Monday to Wednesday

Office management practices Wednesday

Early morning lessons for advanced level students

Number of Hours in General for This Course11 weeks each taking 6 hours/ 60 hours

Amount of Hours for Each Day

2 hours for each day

Systematic classes – 1 hour in the morning, one in the afternoon

Admission Requirements

Advanced level in finance entry tests

Start Date and End Date

Start Date: July 2st 2014

End Date: September 18 2014Course Fees

Registration Fee: $700.00Early membership: $800.00

Our Teachers expertise This Course

Teachers in this course are experienced in diverse methods of instruction including the use financial tools in the market.

Human Resources

Academic Structure This Week

6 hours per week – Monday, Wednesday and Thursday Classes

Classes on weekends and evenings for advanced levels

Amount of Hours in General for This Course19 weeks each with 5 hours/ 74 hours

Additional seven hours for practical sessions

Amount of Hours for Each Day

3 daily hours

Admission Requirements

Understanding of the critical thinking unit

Human Resource Management test upon admissionStarting Date and End Date

Start Date: July 15th 2014

End Date: October 12th 2014Course Fees

Registration Fee: $800.00Early membership: $400.00

Our Teachers Skills for This Course

Our teachers are trained both in human resource management making and in the areas they teach.

This will enable comprehensive understanding of terms so as to diverse the same understanding to students.

Project Management

Academic Structure This Week

6 weekly hours – classes from Monday to Thursday

Principles & Practice of Project Management tests on every Wednesday

Morning and evening classes for all levels

Number of Hours in General for This Course6 hours for 17 weeks/ 60 hours total

3 hours for practical session in the use of medical terms

Amount of Hours for Each Day

2 hour per schooling day

Admission Requirements

Elementary Principles & Practice of Project Management

Elementary Principles & Practice of Project Management related area within the college

Elementary Principles & Practice of Project Management placement test before admission – required 40% or above performanceStart Date and End Date

Start Date: 30th June 2014

End Date: October 20th 2014Course Fees

Registration Fee: $660.00Early registration: $630.00

Tuition fee: $ 700

Our Teachers expertise for This Course

All teaching staff holds PhD and Master’s Degrees .These qualifications are held in Project Management related fields and additional language qualifications in the English language.

Most of the staff PHDs and none of them have qualifications below masters.

Management & Operations

Academic Structure This Week

6 hours per week – Monday, Thursday to Friday

Weekly assignments on Thursday

Whole day classes entailed

Amount of Hours in General for This Course22 weeks each with 6 hours/ 110 hours

Amount of Hours for Each Day

2 hour per day

Admission Requirements

Leaving certificate or equivalent qualifications

Age 23 and above

Start Date and End Date

Start Date: January 31st 2014

Ending Date: End of AprilCourse Fees

Registration Fee: $150.00Tuition fee: $1760.00

Our Teachers expertise for This Course

The teaching staff has diverse experience in the Management & Operations

They are all assessed to ensure that they help the students develop a critical approach to Management & Operations history.

Their qualifications are also certified by famous institutions as a prerequisite before they join the institution.

Banking concepts

Academic Structure This Week

4 hours per week – 5 lectures per week

Banking assessment test on Wednesday

Full time classes for all levels

Number of Hours in General for This Course13 weeks each with 2 hours/ 34 hours

Four semesters of 12 weeks

Total of 146 hours

Amount of Hours for Each Day

1 hour on Monday and two hours on Thursday

Admission Requirements

Pre-intermediate level banking

Start Date and End Date

Start Date: February 22th 2014

End Date: November, 23th 2016Course charges

Registration Fee: $340.00Tuition Fee: $1970.00

Our Teachers Skills for This Course

The teachers are all trained by prominent institutions in their practiced banking focus areas. They have exposed experience in ensuring their students develop a critical perspective towards their studies. This is supported by the provision of course materials in their practice.

Banking & Finance Security

Academic Structure This Week

4 hours per week – 1hours Tuesday and 1 hour Friday

Principals of Banking & Finance Security on Wednesday

Full time classes for all students

Amount of Hours in General for This Course

Four semesters for the full course

11 weeks per semester with 4 hours each week/ 36 hours

Total 143 hours

Duration of Hours for Each Day

Two or 3 hours for each day

Admission Requirements

Intermediate Principals of Banking & Finance Security

Principals of Banking & Finance Security test before admission with 60% performance

Excellent A levels or equivalentStart Date and End Date

Start Date: Spring 2015

End Date: Autumn 2017Course Fees

Enrolment Fee: $760.00Early enrollment: $9700.00

Our Teachers Skills for This Course

The instruction entails the use of the professional peers and practical application

. While the peers are picked from the best performing students, the teachers are qualified staff and approved by the administrative board.