Economic growth issue | Business & Finance homework help

1) Sharon Jacobs is CEO of Henderson Industries Inc, a public company. Henderson makes
heavy construction equipment like bulldozers and cranes which it sells to small
construction companies. These customers are generally in poor financial condition and
must finance their purchases with banks or finance companies. Unfortunately lenders
have had increasing trouble collecting on their loans. As many as thirty percent of
customers default, requiring the lenders to repossess and resell the equipment. This
usually avoids a loss, but it’s an administrative hassle. Because of the ups and downs of
the construction industry, it is impossible at the time of sale to predict which customers
will default.
The economy is going downhill at present and Henderson has been experiencing financial
difficulties itself. The company’s problems are reflected in its stock price which has declined
forty percent over the last two years on weakening sales.
In order to boost sales, Henderson would like to sell to new customers that are financially
even weaker than its current customers. Unfortunately the banks and finance companies won’t
lend to even weaker borrowers. As a result, Henderson is considering offering product to these
new customers on deferred payment terms. That means it will receive a stream of monthly
payments over two or three years until the equipment is paid off. Defaults on this new business
will probably be worse than the finance companies are now experiencing but no one knows by
how much. The good news, however, is that Sharon thinks she can sell a lot of equipment to
these new customers.
On top of all this, the deferred payment idea presents an accounting issue. Typically
when a sale is made, the entire price of the product along with its cost are recognized on the
income statement at the time of sale. Any unpaid money is carried as a receivable regardless of
how long the customer has to pay.
BUT if there are serious questions about collecting the deferred payments, it’s more
appropriate to use the installment sales method which recognizes revenue and a pro rata portion
of cost only as cash is received from customers.
What ethical issues does Sharon face with respect to disclosure of financial information
including but not limited to the income statement.
Suppose Sharon has stock options and/or a bonus package that depend on stock price.
How might her compensation plan affect her decisions.

2) You’re the CFO of Nildorf Inc., a maker of luxury consumer goods that, because of its product, is

especially sensitive to economic ups and downs. (People cut back on luxury items during
recessionary times.) In an executive staff meeting this morning, Charlie Suave, the president,
proposed a major expansion. You felt the expansion would be possible if the immediate future
looked good, but were concerned that spreading resources too thin in a recessionary period could
wreck the company. When you expressed your concern, Charlie said he wasn’t worried about the
economy, because the spread between AAA and B bonds is relatively small, and that’s a good
sign. You observed, however, that rates seem to have bottomed out recently and are rising along
with the differential between strong and weak companies. After some general discussion, the
proposal was tabled pending further research. Later in the day, Ed Sliderule, the chief engineer
came into your office and asked, “What in the world were you guys talking about this morning?”
Prepare a brief written explanation for Ed.

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.

Read more

Free-revision policy

The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.

Read more

Privacy policy

The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.

Read more

Fair-cooperation guarantee

By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency