Memo for ABC Complete Kitchens Inc Essay

Great organizations demand a high train of commitment by the people involved- Bill Gates. IntroductionHaving the objurgate man for the right job is controlling for merged success. The person that inst completelys the cabinetwork for first rudiment Inc. is probably not the same person you want managing the m startary responsibilities and obligations. Employees of ABC round out Kitchens Inc. encompass a similar work ethic, professionalism and right however their skills vary and need to be accommodated suitably inside the beau monde. Maintaining this level of expectation is imperative to achieve organizational success. Maturity, health, monetary st skill and the ability to compensate accordingly to authorized and eagle-eyed enclosure fiscal ch onlyenges is the righteousness of the financial coach and deep down this organization or for ABC Inc. the drumhead Financial Officer (CFO).The CFO assesses, directs, monitors, controls, develops strategies, plans for incumbent and long term financial goals and most grandly determines the organizations investment decisions. The CFO and/or financial manager must(prenominal) weigh the cost and benefits of every investments and projects and decide which of them qualify as good utilizes of the money (Northcentral University, 2011. 7 709). This is money invested by opposites as closely as yourselves within this smart set. There be three main tasks financial managers ar responsible for beyond applying management standards to financial capital or income of this conglomerate. These consist of making (preferably good) investment decisions, financial decisions and managing the orders specie flow on a day to day and a long term basis. In order to stand behind these investment decisions, it is imperative to understand the terminology and processes within the financial systems development. AssetsAssets be items of possessorship that give the bounce be converted into gold or birth an exchange nurse . They atomic number 18 investments this caller-up has made. From an bill point of view, additions can be divided that into two categories, real and long-term assets. topical assets are specie or other liquid items that can be turned into cash within one year. Marketable securities are curtly term, low find investments much(prenominal) as, the current stock you hold and what it is worth or can be sold at. Accounts receivable are debts owed to this company by con aggregateers for products and services provided already on credit. Inventories are assets comprised of raw materials such as cabinetry, sinks, and appliances including kitchens being before long installed that ABC Inc. still owns.There are other current assets that we go out view on our balance stable gear later on and they are mostly prepaid expenses and deferred assets as well as expenditures for future costs such as insurance, rent and concern. Intangible assets have no fleshly existence. These can includ e intellectual property or employees who attain familiarity and skill (NCU, 2011. 713). If the employee leaves to go to some other 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 experienced intangible assets. Copyrights, patents and good bequeath are too intangible assets. Recently, I was asked if I was firing 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 indebtedness is an obligation to creditors, an entity arising from away transactions, where the settlement can result in the transfer of assets, services or other yielding of benefits in the future. They include any type of acquire from persons or banks for improving on a business or change magnitude personal income. Liabilities of this company are duties or responsibilities that require settlement by future use of assets at or by a specialised date, over a short or long time power point or possibly on demand. Liabilities are categorized as current and long-term classification. Classifying liabilities as either current or long term allow for 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 evaluate to be taken care of with current assets or with the use of other current liabilities.Accounts payable are considered the measure 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 otherwise 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 gain ground that has been received for products that have not been distributed are separate within the current liability grade (NCU, 2011. 723-24). Long-term liabilities are debts payable over a weeklong 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 organ ization to make scheduled payments in exchange for the use 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 possess as a company asset. Deferred taxes are taxes this company owes but has withal to pay. They appear as a liability because eventually they will be paid for however currently the company has exceeded its financial income. Owners candour or Shareholders EquityOwners or shareholders equity is the ownerships interest in a crapper in the form of common or preferred stock. This amount is reckon and identified as shareholders equity, net worth 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 cl assified as net worth or net assets its your interest as owners in this company. Equity can be considered as the tally 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 equal to equity plus liabilities, thus indicating how much of the companys assets belong to or are owned and by whom. The Balance flat solidThe balance or logical argument of financial position lists the companys assets and liabilities, providing a model of the corporations financial position at any given time. The balance sheet summarizes the remainder of all the assets, liabilities and boilers suit worth of a companys accounts as of a particularized date, usually the die hard day of the report period or the last day of the quarter or fiscal year (Thomsett, 2011). The fundamen tal accounting equation is the sum of all asset account balances is equal to the 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 for descend 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 compendious of a companys financial situation or configuration at a ad hoc point in time, including but not limited to assets, liabilities and net worth. The first part of a bala nce sheet shows all the productive assets a company owns, and the second part shows all 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 continuously 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 debit and a credit and these are equal in value. They whitethorn also be thought of as a plus and a minus. At any time, the sum of all accounts in the corporate bo oks will add up to zero, because debits and credits offset one another (Thomsett, 2013). It is important to remember that creditors often compare a companys current assets and current liabilities to evaluate whether or not the company has adequate running(a) capital to endure their short-term financial needs. This comparison can be summarized in the companys current ratio. The current ratio is the section 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 StatementThe 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 P&L 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 income statement outline explains how the profitability of the company relates to the companys shares. Different ratios are utilise providing information on ABC Incs operation and worth (NCU, 2011). closedownThis 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 detect on the map while increasing profit, employment opportunities and as the venire 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 fundamental advancement within all of the departments. If everyone involved collaborates cohesively, c ommunicates respectfully and complies with ABC Complete Kitchen Incorporateds mission and vision, the finality will be a company that ultimately produces an exceptional 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 key accounting terms and definitions. InvestorGuide Staff.Retrieved from http//www.investorguide.com/ condition/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/ word/12689/the-balance-sheet-ws/