percentage of total sales. PROCEDURE OF COMMON SIZING In preparing common-size income statement‚ the following procedure is to be followed : • Total sales revenue or total revenue is taken as hundred. • Each item of cost or expenses is represented as a percentage of total revenue. • Profit or loss also shown as a percentage of revenue. Similarly‚ balance sheet is common-sized as follows : • Total of assets side or total of liability side is taken as hundred. • Each item of asset is expressed
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Exercises 1. Synergy Valuation a. Cost and revenue synergies Managers of an acquiring company anticipate cost savings pretax of $50 million in the first year of the deal and $100 million the next and that thereafter the savings would grow @ inflation‚ 2%. Marginal tax rate is 30%. The firm must invest $1 billion to achieve these savings and starting in the third year must spend 5% of the pre-tax savings to sustain the rate of savings. As part of rationalization of operations‚ some assets will be
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performance—the formal audited financial statements‚ an earnings press release‚ pro forma earnings disclosure‚ and comparative stock charts. Google is a prime example of how good news is in the eye of the beholder! In Q4 2007‚ Google announced continued revenue growth and strong earnings. The press release was upbeat and optimistic. Yet‚ the stock plunged the following day. Evaluating how the business press interprets a firm’s performance can help build students’ confidence in their own ability to evaluate
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seller delivers a product that the customer has not yet agreed to purchase or delivers a product that does not meet the specifications of the customer’s order - Revenue should not be recognized (sale has not occurred) a. Acceptance provisions in arrangements that purport to be for trial or evaluation purposes. In these arrangements‚ revenue should not be recognized until the earlier of when acceptance occurs or the acceptance provisions lapse. b. Acceptance provisions that grant a right of return
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4011 APRIL 7‚ 2009 CRAIG CHAPMAN Biovail Corporation: Revenue Recognition and FOB Sales Accounting Background Late on October 9‚ 2003‚ David Maris‚ an analyst at Banc of America Securities (BAS)‚ was trying to interpret the shocking events of the previous few days and finish the write-up of his first report on the Canadian pharmaceutical firm‚ Biovail Corporation. Maris didn’t like what he saw at the company‚ but he never liked writing “Sell” recommendations. In any event‚ he wanted to make
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Intel is an American multinational company with headquarters in California. Intel is one of the world leaders in semiconductors chip makers. The company created the x86 series of microprocessors. In addition‚ Intel provide processors for computers manufacturers like Apple‚ Samsung‚ Dell or HP. The company also produces motherboard chipsets‚ network interface controllers‚ flash memory‚ graphics chips or integrated circuits. Situational Analysis (Industry) The semiconductor industry is divided on
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Statement For The Year Ended December 31‚ 2012 Sales Revenue Net Sales $1‚200‚000 Cost of Goods Sold 780‚000 Gross Profit 420‚000 Operating Expenses Selling Expenses $65‚000 Administration Expenses $48‚000 113‚000 Income from operations 307‚000 Other revenues and gains Dividend Revenues 20‚000 Interest Revenues 7‚000 27‚000 334
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acquire the necessary fitness equipments. Rosemary hired Kate Hoffman as a business manager. Kate’s primary tasks included marketing‚ facility upkeep‚ scheduling of appointments‚ and record keeping. Kate was paid a salary plus a commission based on gross revenues. Kate was proving to be an effective marketing manager because the number of clients was growing‚ and Rosemary hoped that by the end of the year the business would be earning a profit. However‚ Rosemary became suspicious of Kate and gradually realized that Kate wasstealing
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COMPARE FINANCIALLY? YEARLY REVENUE‚ GROSS MARGIN‚ REQUIRED INVESTMENT AND PROFIT POTENTIAL. WHAT ARE THE STRATEGIC ADVANTAGES AND RISKS OF EACH OPTION? CHANNEL MANAGEMENT‚ CONFLICT ISSUES INVOLVED. The Problem Natureviews main problem is that they have to make strategic marketing decisions to grow revenues to $20‚000‚000 from their current $13‚000‚000 before the end of the 2001fiscal year. Channel Analyses Supermarket channel offers more potential for sales and revenue but also is very costly
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Company‚ Salem Data Services Accounting Analysis Salem Telephone Company recently established Salem Date Services‚ a computer service subsidiary of the telephone company. The new subsidiary was established in efforts to earn the company increased revenues in order to relieve pressure to increase rates for the regulated telephone company. Salem Data Services accounting has shown profit loss for the subsidiary over the past three months. Peter Flores‚ president of Salem Telephone Company‚ is preparing
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