This can affect the growth of the company. By adopting IFRS, U.S. will also be adopting a big risk, if the quality of the new standards do not match the U.S. GAAP. Looking at the various possibilities of adopting IFRS in the U.S, it can be said that it is a big decision to be made. Although, in my opinion we should adopt to IFRS in financial reporting only if the benefits outweigh the costs of transition. If adopting IFRS benefit monetarily and make the transition easy for the investors, auditors, and the public companies, then there should be no harm in accepting it for financial reporting
Managers need to be careful of overpricing or under-pricing goods due to allocation of costs to each product. As was shown with the Wilkerson case on further analysis of costs using the activity based costing method the company had been under-pricing some goods while over pricing others. This was affecting their profits and their ability to make sound business decisions on the pricing of products to meet market demands. 6. Activity based costing is more complex to use however used correctly should improve the accuracy of allocating indirect costs to cost objects.
1. What is the most compelling justification for attempting to calculate a return on marketing investment? a. The most compelling justification for attempting to calculate a Return on Marketing Investment (ROMI) is the discontent with traditional metrics, which does not allow managers to assess the future performance of their firm at any moment. While the traditional accounting methods are good to measure past performance and financial stature, it does not allow for managers to see the impact or value that marketing has on the bottom line.
Segregating the cost of materials, direct labor, and variable overhead from fixed overhead costs, management’s cost control efforts would be enhanced. The treasurer is worried about the marketing department using the same markup in price over variable costs. In other words, he is afraid that with a constant markup as the costs increase or decrease so does
This deal is only meant to act as a benchmark. - Since PDVSA has further growth on its mind, it is imperative that it maintains its cash and debt capabilities to address future requirements and uncertainties. - Especially in light of being a part of a high risk country, project financing could help better distribute the risk. Costs associated with using project finance are: - Inflow of higher funds could result in a negative carry. This could lead to interest drain, leading to a decrease in gain.
Incremental cash flow is additional revenue that is generated when a business or other type of organization launches a new project. Cash flow of this type is considered to be outside the standard and usual sources of cash that the organization enjoys, and remains in that class or status until the project is fully integrated into the normal operations of the entity. One of the benefits of identifying incremental cash flow is that it makes the task of measuring the progress, or lack of it, associated with the new project. This in turn aids in evaluating the value of the project to the organization, making it easier to determine if the project should continue or be abandoned. In identifying the true contribution of the incremental cash flow, several factors must be considered.
Your first job will be to price this acquisition using a WACC method. Once that is done, it will be useful to also find the value of CPP with and without the acquisition. The next part concerns ascertaining the prudence of the two financing methods. This will require creation of a pro forma balance sheet, which will aid in the calculation of solvency ratios. Debt servicing will need to be examined in detail to discover if one, both, or neither of these financing decisions will force the firm into bankruptcy.
3. GLC should consider if this plan would even be effective with the transportation of goods using this mechanism when there are quicker ways to ensure delivery. Also, they should consider if the customer will be faced with higher costs for the same product they were receiving before. Just because the method of transportation became more expensive, doesn’t mean the value of the product should increase. This is almost a guaranteed way to lose customers.
However single sourcing can be devastating for a firm, worst scenario the firm would not receive any products. The supplier could also lack the capacity to meet the demand from the buying firm regarding such matters as quantity and quality. Multiple sourcing is more common when the firm seeks to enhance competition and flexibility. The cost will be reduced because of competition and the risk with not getting any products will be reduced. Also the buying firm will get more
This is because according to Elliot (1986), it stated that historical cost assumes money holds a constant purchasing power. The specific price-level changes (shifts in customer preference and advances in technology), inflation, and fluctuation in exchange rates for currencies that happen in the modern economy cause this assumption less valid. Furthermore, historical cost does not consider the changes in price. In times of rising prices, the companies tend to overstate the profits and distribution of the profits to the shareholders will cause trouble to the company. This is because the historical cost does not