If the company does not take this step, to improve its product line and offer a better future option the company is likely to lose significantly more than the internal offset erosion of the existing brands. In fact the cash-flow question would only be an issue if another company were about to produce a product that would erode current sales of traditional products. Without the development of new products and the utilization of surplus production space the company is not only likely to lose but sure to lose market share in the niche they produce products for. Though the case study does not make clear that an outside threat exists it can be assumed that if this company has gone into full development of a new product that better meets the needs of consumers any other industry company could and would likely erode...
New products are being developed all the time and as an industry the challenges are many. This company would seem to be in the dark ages with its two product line. Though it shows conservatism that has served the company well, especially with regard to streamlining production the company would seem to be poised to produce, market and sell a new possibly better product itself rather than fade out as its products become less functional for the consumer.
New capacity would have to be bought or built when capacity runs out or production would have to be cut back on one of the product lines, leading to a loss in cash flows that would have been generated by the lost sales runs. Thus, Blast would result in incremental cash flows for facilities and these should be included in cash outflow calculations. However, the case states that Blast will
Earning Growth Model This third method considers primarily the increase in organizational earnings and the decision to purchase a stock is pegged to increases in organizational incomes. Valuation through this method is generally less challenging than the previous two models and often extremely practical. It commences with the estimations of future earnings, based on relevant and viable information about the expected trend in the future of the assessed company -- the growth
The balance sheet presents the three elements of financial position namely, assets, liabilities and equity. The balance sheet highlights the accounting equation which provides: Assets = Liabilities + Equity. In a balance sheet presentation, assets and liabilities are further classified into current and non-current to distinguish those used directly for operations as to those for long-term usage. An income statement is a formal statement prepared for a given period
Accounting Theory Over the year, the world scholars continue to evaluate the economics of the world to understand their functioning. In this course, they developed the subject of accounting to assess the frameworks of financial principles. The accounting theory in discussion involves reviewing the historical foundations of financial reporting and creating new models of reporting the financial developments and exchanges (Richards, 2009, p. 17). Accounting theory evolves continually; thus, there are
These are considered to be unrealized gains, but for hold-to-maturity securities these gains/losses are not expected to be realized at any point. The company will note the fair value change in a footnote, but will not record such a change on either the income statement of balance sheet (Spiceland, et al.). If, however, it becomes necessary to sell investments previously classed as hold-to-maturity, then the following adjustments are made. The
Accounting Standards? Over time, quite a number of accounting guidelines and rules have been developed by bodies like FASB and IASB. Do these standards serve any meaningful purpose? In this text, I concern myself with accounting standards and their relevance. In so doing, I will amongst other things discuss why we need accounting standards. Wahlen, Jones, and Pagach (2012, p.1-20) point out that "the FASB and the IASB operate so that
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now