Income Statement Case Studies Samples For Students

Ronald performance remained constant for the two periods. According to the absorption costing income statement the net income increased as shown in the excel spreadsheet. The net profit increased from $438,000 in the first quarter to $475,000 in the second quarter. This shows an 8.45% increase in net income as shown in the excel sheet. However, according to contribution margin income statement; the net income remained the same in both quarters. The profit levels for both periods remained at $250,000.The increase in profits in the second quarter under absorption income statement can be explained by changes ...

1. Explain the main differences between absorption and contribution income statements. Will net income always be the same under the two approaches? If not, explain the difference.

An absorption costing income statement is created for stakeholders apart from the company’s own employees and internal management. This method ensures that all overhead costs are included in the inventory of the company. In other words, all costs that are directly linked to manufacturing including; labor and material are added to the inventory. Consequently, the cost of manufacturing is transferred from the inventory costs to ...

Question 1

The Purpose and Usefulness of the Income Statement in Assessing Business Performance
Income statement is a financial document that attempts to measure financial performance of an organization over a specified accounting period. The major purpose and usefulness of an income statement is to summarize the business revenue stream and expenses by categorizing activities into operating and non-operating accounts. Income statement is useful in business performance assessment by showing any net loss or profit earned over a specified accounting year or a quarter .
The operating section of income statement is important to assess business performance of Sportswear-Kit since it discloses information about ...

Direct versus Indirect Methods of Preparing a Statement of Cash Flow

There is a difference between the direct and indirect methods of preparing a statement of cash flow. In the direct method of preparing a statement of cash flow, the cash flows are listed in the operations part of a cash flow statement. The cash flows that result from operations is in the form of cash paid to suppliers, customer collections, and the money paid to employees among others. In this section, the cash that is paid for interest and income tax is also reported. The direct method of preparing cash flow statements is problematic for many companies. The problems that arises when the ...

A statement of cash flows, which also referred to as the cash flow statement gives an account of how a business manages its funds. It is part of the financial statements and complements other financial statements as balance sheet and the income statement. It accounts for cash and cash equivalents that enter and leave an organization. The chief objective of a cash flow statement is to offer information as regards an organization’s cash transactions in the financial year under consideration. It also provides information about an organization’s operating activities, financing activities and investing activities. This paper seeks to distinguish ...

Executive summary

Special purpose financial statements that are conventionally provided by small businesses usually offer limited information in both quality and quantity. The main reason behind this is the freedom in reporting that small businesses have. Consequently, lenders have to be careful when using these statements in lending decisions. As a small business, Boat Builders Pty Ltd’s financial statements may not be in a good state as provided to be used in a lending decision. A critical evaluation of whether they represent the true status and performance of this business is necessary before a detailed financial analysis is done. A number of concerns arise ...

D. One-statement format one of the two commonly used forms for the income statement or profit and loss statement. The one statement uses only one subtraction to arrive at the net income i.e. Net income= (Revenue+Gains)-(Expenses+Losses). The heading of the income statement conveys critical information (Fridson & Alvarez, 2002). The name of the company appears first, followed by the title ‘income statement. Income statement prepared anytime; you must inform the reader of the precise period.
The two-statement format involves above a single substation to come up with the net income, and it provides additional information than ...

About the report

The objective of this report is to assist One-World Investment Consortium, who is planning to invest £150 million in Thomas Cook PLC, a British global travel company listed on the London Stock Exchange under the ticker sign of ‘TCG’. We duly understand the impact of our professional recommendation on Consortium’s final decision making related to investment, and therefore, we intend to be comprehensive in the approach our analysis.
As for the structure of this report, it will be a two-part report. In the first section of the report, we will evaluate the past 5 year(2007-2011) financial performance ...

Management Accounting

Step 1:
Question 1:
The total variable cost for the company comprises of manufacturing costs and sales and administrative cost. Accounting both, the total variable costs for the firm was calculated at $10 per unit

Question 2:

The total production costs for any organization is bifurcated as fixed costs and variable costs. Important to note, while the variable costs and output carry a direct and proportional relationship, fixed cost is not related to output level and remains constant throughout. In other words, while the variable costs increase in proportion to the increase in output level, fixed cost does not change and ...

MEMORANDUM

Best Buy Co., Inc Analysis
Introduction
Best Buy is an accredited consumer electronics retailer. The company has a strong presence all over the world. That makes it a very interesting consideration for investment since the demand for consumer electronics will not slow down any time soon. Investors will always take a keen interest in a company’s nature of business, major costs, management style as well as financial performance before deciding on the company to invest in. This memo attempts a detailed analysis and description of the Best Buy’s activities, financial performance and future outlook, (Business, 4)

Revenue Generation

Best Buy Inc generates revenue ...

Economic evaluation involves the business aspect monitoring and analysis in a company. This analysis is intended to carry out comprehensive auditing of the profit and/or loss making aspects of the company. The end result is expected to put the management of the company in the know that theirs is a profit or loss making venture. During such evaluation, several aspects are considered especially the financial aspects. The analysis is intended to identify the various needs of the company and try to propose practical solutions to the identified needs of the company. Such solutions may include a change in the structure of the ...

Evaluation of the appropriateness of the treatments in Carter’s 2015 financial statements

Treatment of exclusive rights
Carter capitalised the amount paid for exclusive distribution rights. Distribution rights are intangible assets. In this case, the asset is not internally generated hence it should be capitalised in the year the cost is incurred. If the asset has a definite useful life, it should be amortised over the useful life. When an intangible asset is acquired, its reasonable useful life should be estimated to determine the amortization expense. However, an intangible asset whose useful life is indefinite shall not be subjected to amortization. Instead, it shall be tested for impairment and any losses recognised ...

Executive Summary

The case is regarding the recapitalization plan of Moe Miller, the new managing director at M&M Pizza. Miller is concerned about the stagnant share price of his company at around F$25 per share. Miller plans to issue F$500 million debt to repurchase shares.
He thinks that by repurchasing shares and changing the capital structure of his company would be beneficial to both the company as well as the shareholders. A higher proportion of capital to debt would result in lower cost of capital while share repurchase would result in higher share price due to higher dividend per ...

Introduction

Continuous development and expansion are some of the major aspects from the viewpoint of an organization and organizations would get certain apprehension with the help of effective development based strategies in particular. There are a number of companies in the world which are in the favor of expanding their networks in order to increase their product portfolio and financial belongings in particular. The flow of funds is the main thing and an aspect which deem important for an organization while having the preposition of investment. There are certain tools which could be used for the same purpose as it relates ...

Part I.

It goes without saying that reliable and objective financial reporting is vital for any business entity. Adequate financial reporting is important in order to be able to track, analyze and implement changes in business operations. In addition, financial reporting gives managers the opportunity to take appropriate measures if financial performance of a company does not meet the expectations. Most of the financial reporting in the world is conducted according to one of the two standards - United States Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS). Understanding both approaches is extremely important in international business and ...

Reconciliation Income Statement

For the year ended 31 Dec 2011 .
Profit as per GAAP $1,000,000
Add
Inventory (realizable) 190,000
Deducted impairment loss 6,000
Gain from sale and lease back 150,000
Total income 1,346,000
Deduct
Inventory (historical) (152,000)
Impairment loss (5,000)
Net Income (IFRS) 1,189,000

Reconciliation Statement of Stockholder’s Equity

For the year ended 31 Dec 2011 .

Stockholder’s equity as per GAAP $8,000,000

Add

Revaluation gain 720,000

Intangible assets fair value adjustment 1,000
Total 8,721,000
Deduct

Development cost capitalization adjustment (120,000)

Stockholder’s equity as per IFRS 8,601,000
Notes
The addition of ...

Credit Analysis

The special purpose financial statements are financial statements that are only limited to specific users. They are prepared using a special purpose structure to meet the special needs of particular users of a financial statement. Addition their use are limited and are not prepared for the general public. Special purpose statements are in most cases prepared for the internal users such as management and there are these made for the specific users such as banks and government. For instance, those financial statements that are prepared for tax purposes are prepared in accordance to the regulatory framework. Therefore, the special purpose financial ...

Individual Case Complete: Bank of America

Executive summary
Mission and Vision Evaluation: The Company has maintained a plausible vision and mission statement that focuses on ensuring that it develops customer centric financial products and services that are innovatively based. Thus, through the company vision and mission statement, it has managed to ensure growth and market capture.
Milestones: Among the most fundamental milestones, the organization has sustained a top position in the banking industry despite the prospect of financial crisis across US. The plausible performance has been as a result of effective policy statement that is centered on operational Excellency. With millions of customers across US, the ...

Internal environmental analysis

Overview of Sara Lee’s market performance and developments
Every business is driven by key objectives that it uses to evaluate the extent to which it has progressed since its inception. These key factors are Market share, profitability and value of a share. Sara Lee Corporation‘s management used these key indicators to assess its progress until they resolved to strategize its business segments to manageable sectors. (Thompson & Gamble,2010).
Sara Lee has extended its growth over the last 70 years through acquisition of different enterprises to increase its pool of risk and projected revenue basket. Appointment of ...

Management finance

Part A:

According to the case, Charles Ltd. Department, because of the implementation of the new budget system is faced with the increased workload. This is because the system is effective, the department's power to enact budget Charles Co. said their goal is to estimate and predict facts (Fabozzi and Peterson Drake, 2009, pp.15-25). These must be analyzed by the selected company's management to ensure that they can achieve a reasonable and reflect reliable data. This concept would increase work that was previously absent in the departments.
In many cases, this requires expert who is an estimate of the ...

Introduction

The thing that categorize among a powerful and weak company is their strategies and complying behavior with the regulations and regulatory authorities. Apart from the general operations, organizations have to consider a strong behavior with their accounting department as well. Accounting department is known as an important department with its core adherence with the productivity of a corporation, and it is usually addresses the day to day transactions of a company (Leung, Coram & Cooper, 2007).
In the current economic scenarios, there are certain restrictions and suggestions that are essential for the accounting department of a company, but still there are bulk of examples can ...

Company’s financial statements provide crucial details on different aspects on its operations. That includes information about its performance in terms of profitability, assets utilization and management efficiency, business liquidity as well ability to provide a suitable return for its stockholders. Thus, understanding the statements is crucial in all planning including operations, financial and marketing. In that respect, this analysis seeks to demonstrate how the statements can be used as a guide on marketing planning and general business management. To achieve that objective, the analysis uses the case of Abercrombie & Fitch and analyzes its financial statements for the year 2012 and ...

International Business

International Business

The Walt Disney Corporation was established in the year 1923, in Los Angeles, California by two brothers Roy Disney and Walt Disney. It is in their small office that they first produced their first series of short action animated films called the Alice Comedies. The rent to their small office was approximately $10 a month, but within four, months, the brothers together with their growing staff members moved to a larger office next door (Wale, 2009). In 1925, the brothers made a deposit for a Hyperion Avenue lot located in the Silver Lake District. Construction on their new studio began shortly ...

Walt Disney Corporation

The Walt Disney Corporation was established in the year 1923, in Los Angeles, California by two brothers Roy Disney and Walt Disney. It is in their small office that they first produced their first series of short action animated films called the Alice Comedies. The rent to their small office was approximately $10 a month, but within four, months, the brothers together with their growing staff members moved to a larger office next door. In 1925, the brothers made a deposit for a Hyperion Avenue lot located in the Silver Lake District. Construction on their new studio began shortly afterwards. Many changes took ...

A cash flow statement can be prepared in two distinct methods namely direct and indirect. The direct method records of all transactions and make a direct entry into the cash flow statement. This would include the amount of cash that received from the customers or paid to the suppliers. It ends up with a reconciliation of the total net income to the cash incur due to the operating activities. For example, an entity agglomerates the entire sales receipts subtracting or deducting the cash payments that took place for items such as inventory and the salaries. The indirect method involves recording of ...

Financial Analysis for Riley’s Supply

This report is intended to examine and identify Riley’s Business issues. The report provides an analysis of the current and projected liquidity, profitability and financial stability of Riley’s Supply. The Methods used to analyze Riley’s Financials are CCC (cash conversion cycle), cash flow statement analysis and common size income Statement. A ratio analysis has also been conducted. Other calculations include ROA, ROE, payables period etc. All calculations are available in the appendices. The report also contains recommendations to the management to achieve the targeted sales and to counter issues related to the cash flows.
The ...

Mike Mayo takes on Citigroup (A) and (B)

Do you agree with Mike Mayo’s concerns about the extent of Citigroup’s DTA’s? Why or why not?
I agree with Mike Mayo’s concern about Citigroup’s Deferred Tax Assets (DTA’s). Citigroup’s DTA’s increased from $4.7 billion at the end of 2006 to $38 billion by the third quarter of 2009. Citigroup would use the huge DTA’s to shield future profits from taxation to a tune of $38 billion. However, the accounting rules require that a firm can only carry the DTA’s if it is reasonably probable that the firm would ...

1.0. Introduction
Founded in 2003, Tesla Motors has undergone excellent growth in many aspects such as company size, profitability, product line, etc. Based on gradual progress, now the company has grown into one of giant industry players. It mostly deals in electric cars and trains with more focus on former (The Case, n.d.). This report sets out to analyze the company’s current strategies relating to its product line and future prospects of growth and identify the areas for improvement. In the final section, the consultant recommends the most practical strategy to the company directed towards raising its competitive ...

Volvo Group- research and development costs

Volvo’s research and development expense include costs such the cost of developing new products, production systems as well as software. New product development costs also include the cost of market research, formulating and design of the products. Besides, research and development costs include the expenditure on improving the existing products. In this case, it incurred research and development in developing new as well as improving existing products such as buses, construction equipment, among other products. Others may include research to gain new knowledge, cost of evaluating alternatives, among other costs.

Factors considered in classifying R&D expenses

Certainty of the expected benefits: If the group ...

Halloran metals company. This company was among the largest two independent regional service centers in the northeast US having seven locations in deferent states like New England, New York, and Pennsylvania. It is believed that in the period of 36 years of it foundation, the company had grown to sales of $170 million and an operating profit of $6 million.
This company was privately owned with a network of metal service centers across the northern United States through buying metals like primary steel and aluminum in plenty or bulky form. This company has its president known as Warren Hansen ...

Accounting

Background Information about AMD
AMD stands for Advanced Micro Devices, Inc. This company was registered publicly on May 1, 1969 and hence bound by law to file Form 10-K. This company is being involved in selling x86 microprocessors for all categories of the customers, video, multimedia and another different type of related products for desktop and laptops. This company holds a significant market share in the computer industry and also got many awards.

Financial Information Consideration by Any Company for Investors

In this competitive world, it becomes very important for a company to disclose the financial information to their investors in more easily understandable and full detailed way ...

Business Analysis Using Financial statement

We conducted an analysis to determine if Baidu is facing critical accounting assumptions.They represent the basic elements that should be put into consideration when preparing accounting reports.They include the recognition of the trreatment of the various items in the income statement and the cash cashflows. The treatement of various items as presented in them .inorder to prove this we carried a critical examination of Baidu financial statements and focused mainly on the income statement and the cashflows statement.both of these statements have been prepared according to the accounting standards set by the U.S GAAP which is the the accountion system ...

Company Overview

Accenture Inc. is a management consulting and technology firm. It is the biggest consulting firm by revenue in the world. Accenture was formed when Arthur Anderson and Anderson Consulting split in 2001. After splitting from Arthur Anderson, Anderson Consulting in 2001 took a new name called ‘Accenture’. Accenture currently has more than 2, 66,000 employees working in 120 countries. Accenture has maximum number of employees in India (87,000) followed by USA (40000) and Philippines (35000). The headquarter of Accenture was in Bermuda for a long time but in 2009 it was shifted to Dublin, Ireland. Accenture generated revenue of around $ ...

Part IGenerally Accepted Accounting Principles (US GAAP) GAAP are accounting standards that are used for preparation, presentation and reporting financial statements for public, private, government and nonprofit making organizations. The purpose of these rules is to ensure that the reporting of financial statements is transparent and observes consistency. This is a measure to ensure that those relying on the reporting make prudent economic decisions. Financial statements covered by GAAP include the balance sheet, income statements and the cash flow statements.

International Accounting Standards (IFRS)

International financial reporting standards refer to a setoff accounting rules developed by international accounting standards board. The standards ensure that business ...

Having been granted the opportunity to administer consultancy services to your bank specifically in regard to the new staff training and orientation towards their new roles at the Commercial Lending Department in respect of small businesses, I submit the following training manual for use. The manual explains the reasons and application of analysis and gives examples of statements to analyse. The staff is advised to incorporate other financial information and competencies relevant to the lending department.

Reasons for Bank Analysis of clients’ statements and Information

In any commercial transaction in banking, the overriding objective often is that the bank should be able to make profits. The concept of ...

Competition Bikes Inc. Storyline

Horizontal Analysis
Horizontal analysis involves a comparison of companies’ performance over a specific duration. The intent of this paper is to analyze the performance of Competition Bikes Company using various methods. There is a commendable performance in Competition Bikes Inc as is shown by the analysis done on the income statement and the balance sheet. There is a decrease in sales in the year 7, as well as 8 by 15 percent, but an increase in net sales by 33 percent was achieved in year 6 and 7. The decrease in sales could have been attributed by a general increase in prices, recession ...