Use of Baumol Model The Baumol model enables companies to find out their desirable level of cash balance under certainty. And this theory relies on the tradeoff between the liquidity provided by holding money (the ability to carry out transactions) and the interest foregone by holding one’s assets in the form of non-interest bearing cash. The main variables of the demand for cash are then the nominal interest rate, the level of actual income which resembles to the amount of desired transaction and to a fixed cost of transferring one’s wealth between liquid money and interest bearing assets. Evaluation of the model Useful in determining optimal level of cash
Memorandum to the File Date: February 1, 2017 From: Mayra Ramirez Caicedo Re: The proper accounting treatment for investments debt and equity securities Facts Orange Corporation, our client, acquired four security investments during the year 2016. First, on January 1, 2016, Orange purchased a 35% interest in Canary, Inc. for $800,000 and it paid Orange a dividend of $60,000. The fair value of the interest was $1,000,000 at the end of the year. Second, on July 1, 2016, Orange acquired 5%, 10 year bonds of ABC, Inc. for $200,000 and received semiannually payments at the end of the year. The fair value of the bonds on December 31 was $204,000.
Month 1 2 3 4 5 6 Forecasted Demand 600 750 1000 850 750 700 Month 1-6 if added equals to 4,650. Currently there is 50 units in inventory, ending inventory is 25 with a current worker of 20. The hiring and lay off cost is $100 each and an inventory cost of storage per unit is $5. So 4650+25-50= 4625 units. With that being said we use the formula in which total units/number of periods give us 4625/6= 770.8 units.
Even though the accounts receivable ratio is often a good indicator of a company's payments collecting ability, it could be misleading. It is an average and because of that customers that carry high balances and pay quickly could skew the average, concealing a problem with the majority of accounts with small balances. ▪ Accounts receivable aging report – lists unpaid customer invoices by date ranges. The purpose of this report is to show the business owner what receivables need to be dealt with more urgently because they have been overdue longer. Companies can use an aging report to determine whether it is taking on too much risk, because past due tend to get more difficult to collect the older they become.
Inditex Sales (million Euros) 1H 2012 1H 2011 % Change 12/11 Sales (Press release) 7239 6209 +17% Online sales (Estimated) 432 310 +40% Table 1: Inditex’s Press release 19.09.2012 Within consideration involving Zara’s proportional business share involving approx. 65% at Inditex sales good financial report 2011, we considered it in this objective. With the online revenue calculation for the second thing 2012 people estimated 6% of sales and often will extrapolate around 7% sales by the end associated with 2013. In attention of Zara’s fresh launched online store in China to the 5th of September 2012 (Inditex press release 2012) efficient estimating a significant increase inside online gross sales. The level of ambition shall be defined inside EUR 840m with the end of 2013.
Counterfeit intellectual property and product 5. Fraud on both companies and individual called as data compromise fraud. 6. Fraud which involves the conversion to his own use of funds or property by servant, an employment, an agent or any person who is entrusted al these by other person or company. 7.
As mentioned previously, this means that for a PayPal purchase, an aborted transaction would return buyer and seller account balances to their values before the initialization of the transactions. An abort can be triggered by failures in the PayPal transaction such as hardware failure, network outages, and software bugs. In addition, factors influence the completion of a PayPal transaction, such as the amount of funds the buyer has, whether or not they have a backup funding source, which countries and account types the seller accepts orders from, whether there are holds or disputes on either account, and any evidence of
(FPPFS) Timeliness: Accounting information must be presented in a timely manner to be useful. If the information is not presented to users in a timely manner, its usefulness is diminished. For example, income is recognized over the period of time when its actually earn and same as expenses, a period in which they incur. Financial reports should be made on time and available to the users so that they would be able to make their decision considering the present situation of the company. Understandability: Clearly presenting the information and classifying it, can make the accounting information understandable.
Secondly, the company recognizes revenue when the deliver occurred that means the products had been shipped. Then the risk of loss can be transferred. Thirdly, the company usually defers revenue until the customer receives the products through the online sales to individuals, which will be recognized as counts payable. As a result, the assets of this period would increase and it also has influence on asset structure. There are also other subjects which required by company accounting policies would have a material impact on the financial report, such as the inventory, income taxes and warranty