Toshiba Drops Due to Accounting Probe

Tom Carlson’s Blog Post

tom-carlson-jefferies-toshiba

Toshiba Corp. fell the most in more than a year after the company made it public knowledge that it would assemble a team to look through its accounting processes. Toshiba suspected there may have been problems internally and wanted to take some precautionary measures to see what was occurring.

Toshiba fell 4.9 points and closed at 487 yen in Tokyo. This drop was the most since last January 31. The company is set to form a new group to look further into the “reasonableness of estimates” when utilizing a percentage-of-completion accounting method.

This drop is sure to scare investors as well as the public’s image of the company as a whole. Many people are already questioning the company’s integrity and credibility of it’s own processes. Yukihiko Shimada, an analyst at SMC Nikko Securities Inc. was quoted in saying, “the announcement doesn’t give us a good impression of Toshiba.”

Further investigation of Toshiba’s accounting methods and practices will continue and are estimated to take about a month.

Naomi Furuya, a spokesperson for Toshiba has gone on record saying, “Some items in the accounting method for work completed needed to be re-examined. This was discovered in March in a routine accounting survey.” Ms. Furuya would not comment any further on the subject and decline more details.

Thanks for checking back in to my site. Please feel free to share this on your own profiles or websites and spread the word. Be sure to check back again soon for more updates and articles.

-Tom Carlson

from Tom Carlson http://ift.tt/1ydrcjq

Tom Carlson’s Business Turnaround Methods

Tom Carlson’s Latest Blog Post

tom-carlson-jefferies-business-turnaround

Hello all, for those of you who might not know me, my name is Tom Carlson. I formerly worked with Jefferies and Co. and I have been in the business restructuring and turnaround business for many years. What I have learned in my time helping countless companies restructure their business is that there were missing components to their company processes. I wanted to share the best business turnaround methods that I have learned at Jefferies and Co. as well as my other ventures.

Testing the Business Model:

Simply put, a company’s business model can be defined as who you sell your goods and/or services to and who you buy materials or services from. This important part of a business is also determined by the terms on which you buy and sell goods and/or services. Just remember to keep in mind that you need to be competitively priced, while not being too cheap and cutting into your margins too deep or you will be sure to fail.

Know Your Company’s Costs/Pricing:

Any successful and smart company needs to make it a focal point of their business to know all costs and pricing across the board. A company needs to know where money in coming in and leaving for all its departments. Management needs to understand and regularly maintain the cost and pricing in regards to the company’s product, people, marketing, distribution, and administration.

Brand a Winning Proposition:

Customers do not have spare time or money. Don’t assume that your customers have all the time in the world or all the money in the world. You should give them amazing service and a fair price. Keep in mind that for a customer to buy your product or service they must stop buying it from another source, its your job to convince them you are better for them.

Invest in a Great Lead Generation Accelerator:

You need to ask yourself, “how can I be put in front of potential and interested consumers and offer them exactly what they need or convince them that they need us?” A great lead generation accelerator will help do that for you and put you in a winning position.

Establish Targets:

Through the use of your lead generation accelerator you can focus more clearly on leads and move in to close sales. Closing sales is one of the backbones to propelling a business forward and increasing overall volume. The company needs to have a plan set from a daily basis to yearly basis if it wants to succeed and surpass it’s competition.

Acquire Cash:

Every business needs cash, and every business needs cash to advance forward. Don’t confuse cash with profit. Profit is great and also drives a company but if you can’t convert profit into cash, you’re missing an integral part of your company. Keep all cash accounted for and know exactly where its going and when. Use this information to better this part of your business and make positive changes accordingly moving forward.

I hope all this information helps you with your company’s business turnaround. If you have any further questions please feel free to connect with my by using the contact page of this website or clicking here. Good luck!

-Tom Carlson

from Tom Carlson: Restructuring & Turnaround http://ift.tt/1CUTm13

Is McDonald’s Doomed?

Tom Carlson’s Latest Blog Post

McDonald’s Problem:

tom-carlson-jefferies-mcdonaldsContrary to popular belief the fast-food mega chain, McDonald’s, isn’t holding up too great lately. The company has embarked on an 18-month business turnaround effort. What could stunting the seemingly endless growth of the Big Mac serving giant?

The company has addressed numerous business variables to improve the brand and forge a new future. McDonald’s has recognized they are falling behind to competitors and their own standards in terms of value, service, marketing, and menu items. The effort has focused heavily on Marketing up until this point but shows no signs of a successful campaign.

McDonald’s does however also have a certain stigma attached to it as America’s fat catalyst and its easy to point the finger and blame them. On a different front there are companies like Chipotle Mexican Grill that stand for an entirely different model of food service with their fresh ingredients montra. If more companies embrace the fresh ingredients model that is becoming quite popular among today’s youth in search of a healthier lifestyle, McDonald’s will have more problems on their hands for longer even than they thought.

The new marketing campaigns focused around the phrase “lovin” seem to be helping slightly in terms of positive sentiments however the food is becoming widely regarded as basic and outdated. There are more issues that exist with the company than the messaging, and that concept has either eluded McDonald’s or their progress has been paralyzed for publicly unforeseen reasons.

As sales decline rapidly both domestically and internationally as of recently due to “aggressive competition” McDonald’s as not set into full panic mode yet but may find themselves in dire straits in the near future.

Whats Next for McDonald’s:

McDonald’s will be unloading a custom burger menu at 2000 locations and simplifying their menu appropriately. New ordering methods, kiosks, mobile applications, and even the service of table ordering will be introduced.

The foreseeable future for McDonalds will be intense and stressful to say the least with their unrelenting competition and personal corporate goals. McDonald’s can no longer rely on the addictive taste of their french fries but must instead fight for survival.

from Tom Carlson: Restructuring & Turnaround http://ift.tt/1AhNA6i

Accounting Mistakes & Best Practices

Tom Carlson’s Blog Post

tom-carlson-jefferies-accountingAs the March tax season deadline approaches, many businesses and accounting organizations are under a lot of stress. The problem with all the stress that comes with this time of the year is that a lot of mistakes are made and people’s money falls through the cracks. Reports estimate about $7 billion was accumulated by U.S. businesses in IRS civil penalties. These penalties were rooted in incorrect reports relating to income and employment values.

Human error remains a major factor to consider during this important time of the year and it appears to only be growing worse. The mistakes being made aren’t always that complicated either. In fact its the small errors that may have the largest effects and require more attention to detail. Below you will find the best ways to combat the accounting mistakes that may cost your company and clients countless dollars.

1. Manually Inputting Incorrect Data Into an Enterprise System:

Seeing as how there is already an uncountable amount of data entry in every accounting department or company, it shouldn’t be too much more effort to help fix the problems currently happening. It would only take a little more effort to input the incorrect data to help out. Mistakes happen but doing your part to catch them by reviewing, will help out everyone involved in the process.

2. Saving Files With Corporate Financial or Tax Data to a Personal Device:

Data breaches occur each and everyday to some capacity and with personal and organizational finances on the table, use of personal devices with company data on them is a huge problem. Its extremely easy to save items to your phone, laptop, or tablet and take your work home, however this could lead to a data breach costing millions or billions. Not only would money most likely leave the companies door but it would also damage the firms reputation among the public.

3. Accidentally Deleting a Custom Excel Formula:

Excel still plays a major role in many companies, especially in accounting as it keeps track of the numbers and formulas for achieving certain yields. Many times companies will have custom formulas set up to expedite certain process and make employees jobs more efficient. Employees need to be conscious that those formulas are there for a reason and should not be tampered with or deleted. As a side note, companies should probably use accounting or tax based software systems so that employees cannot edit the formulas provided.

4. Working on a Non-Secure Public Wi-Fi Network:

This goes back to the security issue I brought up earlier with using personal devices in tandem with company data. No accounting business should be running their Wi-Fi on a non-secure public network. It is easy for hackers to gain access to these types of networks and wreak havoc. Don’t invite potential dangers to your company’s doorstep. This also goes for doing work around the corner at Starbucks because the data is no safe. Most companies should have this as a policy of theirs in the contracts employees sign, however it is easily overlooked.

5. Overriding Data in an Enterprise System With Figures Calculated Outside of The Program:

On special occasions an employee may need to override an enterprise system, but it should not be a regular occurrence. This mistake really leave a company open to making more small mistakes that have big consequences. One error could cause a collapse in the system or how other employees work. It is suggested that companies include the accounting department in the decision to implement new systems or softwares before a problem is created.

6. Closing the Books Before All Required Data Has Been Collected & Modifying Asset Information From Past Years:

This mistake can have major implications that affect the organization as a whole. A big danger that can be associated with this would be errors that are carried over years and not noticed until its too late or not noticed at all. All data needs to be present before the books are closed to avoid potentially enormous risks.

7. Incorrectly Applying Unitary State Tax Rules & Not Keeping Track of or Adhering to City-Specific Tax Regulations:

Staying alert and attentive to changing laws is also part of the job. Staying on the ball in this regard will allow your company to move seamlessly and without any problems or penalties coming your way. It is well known that different states and different cities differ in their tax laws, so companies that are up to date will excel past the ones that make simple mistakes.

Organizations that routinely look for and address problems will avoid major risks and problems for the company as a whole. Each and every company depends to every employee and rely on them to put their best foot forward even if it means a little more effort. With stronger procedures in place businesses can further themselves and be more accurate.

from Tom Carlson http://ift.tt/1NKIdps

Basic Accounting Principles Pt. II

Tom Carlson’s Blog Post

tom-carlson-accountingWelcome back for the second edition of Basic Accounting Principles. I’m excited to see you return to learn more about accounting. Being a CPA and professional accountant is a lot of fun and there is always room for improvement or refreshing what you’ve already learned. Enjoy this article and hopefully you can take something educational away from this.

Gains: Gains are basically a net amount related to transactions that are not considered part of the company’s main operations. If a company were to somehow become involved in a  business that is not a normal or day-to-day type operation, this would be considered a gain. The company will also have to report on any financial improvements from the gain.

Expenses: When you think about expenses you think about costs. These costs are used up by the company in helping to perform its main and targeted operations. The matching principle (which I mentioned in the previous post)  requires that expenses be reported on the income statement when the related sales are made or when the costs are used up. Not in the period or time when they are paid.

Losses: Losses are essentially a net amount related to transactions that are not considered part of the company’s main operating activities. If a company sells an item they must remove that item from its accounting records and the selling price of the item will not be included in the company’s sales or revenues.

Consistency: Accountants are highly expected to be consistent in their work as they are handling money from multiple sources. They must be consistent when applying accounting principles, procedures, and practices. A good example of consistency is how a company views their cost flow assumption in terms of FIFO and LIFO. If a company regularly uses FIFO is would be a huge mistake to one day switch to a LIFO policy unless it was clearly brought up to clients and was generally accepted.

Comparability: In accounting and general business, investors, lenders, and any other person using financial statements have come to expect that financial statements of one company can be compared to the financial statements of another company within the same industry. The businesses use generally accepted accounting principles to provide comparability between the financial statements of different companies. This helps everyone in the financial pipeline or who is concerned with the financials for one or many companies involved in the same industry to easily navigate through information and understand everything as easy as possible.

from Tom Carlson http://ift.tt/1E5fPI6

Business Turnaround 101

Tom Carlson’s Latest Blog Post

tom-carlson-business-turnaroundTom Carlson is a CPA and CIRA that focuses on business turnaround. in this article you will learn the basics of business turnaround and how it can affect companies. It is true that businesses can face troubles that can occur for various reasons but it is important to have all the facts and make rational decisions based on facts and evidence. Problems can occur due to internal issues, the external market, or due solely on cash problems. Below are helpful definitions and key terms to help a business that may be facing some unfortunate circumstances.

 

Covenant Default:

  • Imminent covenant defaults lead creditor groups to organize and renegotiate terms and conditions of credit agreements

Liquidity and Cash Management:

  • Development of short-term cash forecast
  • Aggressive cash management and cash preservation
  • Liquidity enhancement
  • Working capital assessment
  • Supplier and customer reviews

Liquidity Constraints:

  • Liquidity becomes constrained limiting a company’s ability to operate efficiently

Over-Leverage:

  • Over-leverage and looming debt service payments trigger concern and trepidation from key creditor constituents

Covenant Relief & Negotiations:

  • Evaluation of pro forma debt capacity
  • Restructuring existing debt
  • Recapitalizing per new business plan
  • Raise new debt and equity financing

M&A/Transactions:

  • Assess non-core asset disposal and monetization strategies
  • Deal process and marketing coordination
  • Negotiation and execution of LOIs, term sheets, asset purchase agreements and POR
  • Deal financing
  • Post-merger integration

General Economic Weakness:

  • General economic weakness can lead to a deterioration of profitability

Capital Structure Solutions:

  • Evaluation of pro forma debt capacity
  • Restructuring existing debt
  • Recapitalizing per new business plan
  • Raise new debt and equity financing

Operational Inefficiencies:

  • Operational challenges and inefficiencies, combined with a lack of internal controls can lead to a deterioration in performance

Operational Improvements:

  • Efficiency improvement
  • Process streamlining
  • Cost reduction initiatives
  • Organizational effectiveness
  • Supply chain optimization
  • IT modernization

Business Model Challenges:

  • Volatility in raw material and energy prices can cause unforeseen business model challenges and margin compression
  • Failure of a company’s business model to accurately forecast results can lead to credibility issues

Strategic Alternatives & Business Planning:

  • Strategic review of business
  • Corporate turnaround management
  • Development of long-term business plan
  • Execution of turnaround strategy

from Tom Carlson: Restructuring & Turnaround http://ift.tt/17joKv7

Basic Accounting Principles Pt. I

Tom Carlson’s Blog Post

tom-carlson-accounting

Everyone involved in accounting has heard these terms a million times but for those who are just learning the basics or are brushing up on old knowledge I have laid out some of the basic terms involved in the industry. All of the definitions below are directly quoted from the GAAP. Please feel free to let me know if there are other terms you would like me to define. Enjoy!

1. Economic Entity Assumption:

The accountant keeps all of the business transactions of a sole proprietorship separate from the business owner’s personal transactions.

For legal purposes, a sole proprietorship and its owner are considered to be one entity, but for accounting purposes they are considered to be two separate entities.

2. Monetary Unit Assumption:tom-carlson-coins

Economic activity is measured in U.S.$, and only transactions that can be expressed in U.S. dollars are recorded.

Due to this of this basic accounting principle, it is assumed that the dollar’s purchasing power has not changed over time. Accountants thus ignore the effect of inflation on recorded amounts.

3. Time Period Assumption:

Time Period Assumption assumes that its possible to report the complex and ongoing activities of a business in relatively short, distinct time intervals. The shorter the time interval, the more likely the need for the accountant to estimate amounts relevant to that period.

It is very important that the time interval is shown in the heading of each income statement, statement of stockholders’ equity, and statement of cash flows.

4. Cost Principle:

For an accountant, the term “cost” refers to the amount spent when an item was originally obtained, whether that purchase happened last year or 20 years ago. For this reason, the amounts that appear  on financial statements are referred to as historical cost amounts.

Because of this accounting principle asset amounts are not adjusted upward for inflation. Asset amounts are not adjusted to reflect any type of increase in value. An asset amount does not reflect the amount of money a company would receive if it were to sell the asset at today’s market value. If you want to know the current value of a company’s long-term assets, you will not get this information from a company’s financial statements. You may need to contact a third-party appraiser.

5. Full Disclosure Principle:tom-carlson-full-disclosure

If certain information is important to an investor or lender using the financial statements, that information should be disclosed within the statement or in the notes to the statement. This is due to the basic accounting principle that numerous pages of “footnotes” are regularly attached to financial statements.

A company will generally list its significant accounting policies as the first note to its financial statements.

6. Going Concern Principle:

The Going Concern Principle assumes that a company will continue to exist long enough to carry out its objectives and commitments and will not liquidate in the foreseeable future. If for whatever reason the company’s financial situation is such that the accountant believes the company will not be able to carry out its objectives and commitments, the accountant is required to disclose this assessment.

7. Matching Principle:

This accounting principle requires companies to use the accrual basis of accounting. The matching principle requires that expenses be matched with revenues. Wages to employees are reported as an expense in the week when the employees worked and not in the week when the employees are paid. The expense is occurring as the sales are occurring.

Because there is no way to measure the future economic benefit of  advertisements for instance, the accountant charges the ad amount to expense in the period that the ad is run.

from Tom Carlson http://ift.tt/1wrbryr