one possible way the organization could have defined the outcome measures for some of its key objectives for the Banyan Tree expansion project: Revenue Growth – Based on the strategy of investing revenues generated by property sales (with a stunning 254% growth - S$50M in 2005 to s$130M in 2006) to fund the expansion project‚ target an estimated revenue growth of 20% in 2007 Market Share – Establish a market share of 1% in their growing Chinese property sector to catch up with market leading firm
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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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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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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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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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Salaries paid for services rendered (90‚000) (100‚000) Utilities (30‚000) (40‚000) Purchase of insurance policy (60‚000) -0- Net operating cash flow $(20‚000) $50‚000 Income Statement Year 1 Year 2 Revenues $170‚000 $220‚000 Expenses: Salaries (90‚000) (100‚000) Insurance Policy (20‚000) (20‚000) Utilities (35‚000) (35‚000) Total Expenses (145‚000) (155‚000) Net Income $25‚000 $65‚000
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(FFP) benefits represents a significant liability on every major U.S. airline’s balance sheet. Major U.S. airlines employ one of two methods to account for the liabilities they incur when issuing mileage credits to traveling passengers. The Deferred Revenue Method recognizes a liability for the fair value of the outstanding mileage credits (with “fair value” defined under International Financial Reporting Standards (IFRS) as “the amount for which the award credits could be sold separately”). The Incremental
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Equity 2952 3243 Total Liabilities & Shareholders’ Equity 6383 6729 Total Revenues 9779 10281 Cost of Sales 8165 8727 Gross Revenue 1614 1554 Depreciation 278 278 Amortization of Goodwill 343 343 Selling‚ general & administrative expenses 430 485 Provision for income taxes 163 157 Net Revenue 400 291 1992 1993 Acid Test Ratio Cash‚ Marketable Sec‚ Prepaid Exp 1240
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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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