Memo for ABC Complete Kitchens Inc Essay Example for Free

Memo for rudiment Complete Kitchens Inc EssayGreat organizations implore a high level of commitment by the people involved- Bill Gates. IntroductionHaving the right man for the right job is imperative for merged success. The person that inst every last(predicate)s the cabinetry for ABC Inc. is probably not the same person you want managing the pecuniary responsibilities and obligations. Employees of ABC Complete Kitchens Inc. encompass a connatural change by reversal ethic, professionalism and accountancy expertness however their skills vary and need to be accommodated suitably inside the comp all. Maintaining this level of expectation is imperative to achieve organizational success. Maturity, health, fiscal stability and the ability to compensate accordingly to incumbent and long term fiscal challenges is the responsibility of the financial manager and indoors this organization or for ABC Inc. the Chief fiscal Officer (chief financial officer).The CFO assesses, directs , monitors, controls, develops strategies, plans for sure and long term financial goals and most importantly determines the organizations investment decisions. The CFO and/or financial manager must fight the costs and benefits of all investments and projects and decide which of them qualify as good intents of the money (Northcentral University, 2011. 7 709). This is money invested by others as swell up as yourselves within this company. in that location be three main tasks financial managers ar responsible for beyond applying managementstandards to financial capital or income of this conglomerate. These consist of making (preferably good) investment decisions, financial decisions and managing the companys cash flow on a day to day and a long term basis. In order to stand keister these investment decisions, it is imperative to understand the terminology and processes within the financial systems development. AssetsAssets argon items of ownership that can be converted into ca sh or have an central value. They are investments this company has made. From an chronicle point of view, additions can be divided further into two categories, current and long-term assets. Current assets are cash or other liquid items that can be turned into cash within one year. Marketable securities are short term, low risk investments such as, the current stock you hold and what it is cost or can be sold at. Accounts receivable are debts owed to this company by consumers for products and operate provided already on credit. Inventories are assets comprised of raw materials such as cabinetry, sinks, and appliances including kitchens being currently installed that ABC Inc. still owns.There are other current assets that we will view on our proportionality sheet later on and they are mostly prepaid expenses and deferred assets as well as expenditures for future costs such as insurance, rent and interest. nonphysical assets have no physical existence. These can include intellectu al property or employees who attain knowledge and skill (NCU, 2011. 713). If the employee leaves to go to another organization, this is considered an impalpable asset. Perception of the company within the community is important. Take for example the communities perception of the company. Wal-Mart and most recently Target with their credit card theft issue experient intangible assets. Copyrights, patents and goodwill are also intangible assets. Recently, I was asked if I was going to fire an employee who made a mistake that cost the company $600,000. No, I replied, I just spent $600,000 training him. Why would I want somebody to hire his experience?-Thomas J. Watson (founder of IBM).LiabilitiesA liability is an obligation to creditors, an entity arising from past transactions, where the gag rule can result in the transfer of assets,services or other yielding of benefits in the future. They include any type of borrowing from persons or banks for up(a) on a business or increasing p ersonal income. Liabilities of this company are duties or responsibilities that require settlement by future use of assets at or by a specific date, over a short or long time period or possibly on demand. Liabilities are categorized as current and long-term classification. Classifying liabilities as either current or long term will assist ABC Incs CFO assess if the risk of these liabilities will involve disbursement of cash or further company assets in the near or distant future. A current liability will be satisfied within one year. Diving deeper into the definition of current liabilities, a company also identifies them as debts that are anticipate to be taken care of with current assets or with the use of other current liabilities.Accounts collectible are considered the total sum of monies or obligations owed to purveyors for goods and/or services purchased with credit. When accounts payable are paid off, it represents a negative cash flow for the company. Short-term debt otherw ise known as notes payable is the reimbursement that will occur within the next year to satisfy a debt. Items that are known monies of the company that have not been paid such as the salary for employees or taxes and deferred or unearned earnings that has been received for products that have not been distri saveed are classified within the current liability category (NCU, 2011. 723-24). semipermanent liabilities are debts payable over a longer period of time and unlike current liabilities, extend beyond one year. Examples of these are long-term debts, a capitol lease and deferred taxes. Long-term debt involves the obligation of our company to compensate our providers for a period of time that extends beyond one year.Currently, ABC Incs long-term debt consists of the construction of buildings overseas as well as most of our products utilized in the assembly of the kitchens. A capitol lease is a contract that requires this organization to make scheduled payments in exchange for the u se of a certain asset. An agreement is made between ABC Inc. and another proprietor to compensate for use of things such as equipment, the plant or property. ABC Inc. needs to bear this risk and act as if it is owned as a company asset. Deferred taxes are taxes this company owes but has yet to pay. They appear as a liability because eventually they will be paid for however currently the company has exceeded its financialincome. Owners Equity or Shareholders EquityOwners or shareholders law is the ownerships interest in a corporation in the form of common or preferred stock. This amount is calculated and identified as shareholders equity, net expenditure or book value (Averkamp, 2013). The equity a company has is determined by taking the total assets and subtracting the total liabilities. Equity is the quantity of ABC Incs assets that you as shareholders own, as opposed to what the company borrowed. Owners equity is also classified as net worth or net assets its your interest as ow ners in this company. Equity can be considered as the calculation of a companys money that is left over if an asset were converted to cash and all of the current and long-term liabilities against it are paid. Equity is the stock this company and you as individuals possess, it is the value of the assets that you the proprietor actually own. Assets are adequate to equity plus liabilities, thus indicating how much of the companys assets belong to or are owned and by whom. The Balance SheetThe residuum or statement of financial position lists the companys assets and liabilities, providing a model of the corporations financial position at any given time. The ratio sheet summarizes the remainder of all the assets, liabilities and overall worth of a companys accounts as of a specific date, usually the last day of the accounting period or the last day of the quarter or fiscal year (Thomsett, 2011). The fundamental accounting equation is the sum of all asset account balances is equal to t he sum of liabilities plus net worth accounts. It can at times be utilized and analyzed as an estimate of the liquidation worth of the corporation, aiding in foreseeing the value that would be left if the assets were bought and liabilities remunerated. A balance sheet must provide a fair and valid view of an organizations state of affairs as well as abiding by the provisions of GAAP in its preparation. A balance sheet statesWhat assets the company ownsHow assets are paid forWhat the company owes or what they are liable forAmount left after satisfying their debtsBalance Sheet Analysis and Current RatioAnalyzing the balance sheet assesses the companys value, control and short term cash needs. The balance sheet is a quantitative summary of a companys financial situation or condition at a specific point in time, including but not limited to assets, liabilities and net worth. The first get out of a balance sheet shows all the productive assets a company owns, and the second part shows a ll the financing procedures, the liabilities and the shareholders equity. This is better seen from the table demonstrated on the next page. The asset accounts are added together, providing the total amount of the corporations properties prior to being decreased by debts and obligations. The balance sheet is comprised of assets and liabilities, each with similar sub-groups providing a final explanation of the balance sheet subsection for reference.The total of all liabilities plus net worth accounts is always equal to the total of all assets, WITHOUT EXCEPTION How is the balance accomplished? The sum of liabilities and net worth is always equal to the value of all asset accounts because of double-entry bookkeeping. Every entry has a calculate and a credit and these are equal in value. They may also be thought of as a plus and a minus. At any time, the sum of all accounts in the corporate books will add up to zero, because debits and credits offset one another (Thomsett, 2013). It is important to remember that creditors often differentiate a companys current assets and current liabilities to evaluate whether or not the company has adequate working capital to endure their short-term financial needs. This comparison can be summarized in the companys current ratio. The current ratio is the percentage of current assets in relation to their current liabilities. A higher current ratio gives the implication of the company experiencing less risk of a cash deficit in the near future (NCU, 2011. 7727).The Income avouchmentThe income statement shows the companys net income or profitability during a specific period of time. The income statement can also be referred to as the profit and loss, or PL statement, and the net income is also referred to as the companys earnings (NCU, 2011). The income statement is based on the accounting equation that income equals revenue minus expenses which in turn illustrates the value of the owners equity as increasing or decreasing. The i ncome statement analysis explains how the profitability ofthe company relates to the companys shares. divers(prenominal) ratios are used providing information on ABC Incs operation and worth (NCU, 2011). ConclusionThis leaves us now analyzing not only the national but also the international fiscal aspects of ABC Complete Kitchens Incorporated. Generating sales overseas is taking this company to new heights within the business world. The income statement or statement of financial performance catalogs the companys revenues and expenses. It is putting our name on the map while increasing profit, employment opportunities and as the Board of Directors you are responsible for maintaining this stature. This position is not only exciting, it is manageable as well. As a project manager I foresee significant advancement within all of the departments. If everyone involved collaborates cohesively, communicates respectfully and complies with ABC Complete Kitchen Incorporateds mission and vision , the finality will be a company that ultimately produces an extraordinary product with complete customer and corporate satisfaction.ReferencesAverkamp, H. (2013). What is owners equity? Accounting Coach, LLC. Fort Atkinson, WI Retrieved from http//www.accountingcoach.com/privacy-policy (2011). SKS 5000- Business strategies for organizational effectiveness within the global perspective. Pearson Learning Solutions ISBN 9780558870447 (2013). List of anchor accounting terms and definitions. InvestorGuide Staff.Retrieved from http//www.investorguide.com/article/13789/list-of-key-accounting- terms-and-definitions/Thomsett, M., C. (2013). The balance sheet. Getting Started in Stock Investing and TradingRetrieved from http//www.investorguide.com/article/12689/the-balance-sheet-ws/