Wednesday, May 6, 2020
Homework Example
Essays on Homework Essay Finance accounting homework External factors. In understanding the winery business, there are factors that affect the business either internally or externally. These factors affect the profitability of the business and some affect the management and day to day operations. For instance, Chateau Americana a winery firm is affected by some of this factors. After interviewing key personnel in the company that includes the vice president, the chief financial officer, and the vice president of marketing they brought out some of these factors. Firstly in the winery business the industry its self is faced by many challenges. For instance, the anti-alcohol campaigns reduce their sales and also make marketing of their products complex. The awareness of individuals in relation to alcohol makes it expensive to market a product from the winery company. In addition, the government has imposed high regulations on the winery business. These regulations include the quality of wines production, high taxes for sale of wines and expensive licences introduced. Furthermore, there are other external factors that also affect the operations of the winery business. Competition for customers in the winery business has advanced to extremely high levels. This makes it expensive for the marketing department. Notably high competition implies high production costs for the company in general. These factors, however are not in the control of the business. They happen externally, and the business can do little about them Nature of the company Chateau American is wine a brewery company that is mainly dwells in production of beer and wines. The company has major departments that include the management, production, finance, and the marketing departments. The company has seen significant growth in its profits over the recent past. This is despite the challenges faced by the winery business. However, the company has not fully achieved its desired goals and objectives. Objectives and strategies For instance, the company has various objectives that are yet to be achieved. For example, the company aims to maximize the returns to shareholders and at the same time preserve funds that maintain the working of the company. The company also aims at expanding the distribution of their products internally and externally. The company also aims at providing a good working environment for its workers and a proper rewards and remuneration program. Review of companyââ¬â¢s financial performance Chateau Americana has enjoyed reasonable growth in sales over the last three years and has increased their retained earnings to an approximate of $3.7m. Their balance sheet is strong, and it is also noted that their current ratios are lower than the industry average. The accounts payable have increased, and their equity ratios are higher than the industry average. Control environment Control environment can be defined as the general attitude of the management and their awareness in the actions they take. From the interviews, the management of the company is responsible for all the financial statements of the company. Making information available to auditors and maintaining the internal control of the company. They also maintain control that the company maintains compliance with the state laws and regulations. Factors affecting Chateau Americana business risk The first factor that affects chateau Americanaââ¬â¢s business risk is the competition. With rapid competition being witnessed in the winery business, it puts to risk the achievement of the objective of maximizing the returns to shareholders. Competition leads to a reduction of sales, high marketing costs and additional operations cost. These factors put to risk the achievement of the companyââ¬â¢s goals and objectives. Another factor that affects the business risk of the company is the laws and regulations of the state. The state has imposed laws on production, sales and marketing of winery products. These laws inhibit Americana from working freely in order to achieve the goals of the objectives of the firm. For instances laws to limit production and sales will lead to fewer revenues. Fewer revenues translate to no fewer returns to shareholders that are a core objective of the firm. Technology is another factor that affects the Affect Americaââ¬â¢s business risk. To maintain high levels of technology in production, the company must forfeit most of its revenues. Therefore, the company loses large amount of cash in a move to maintain the developing standards of technology. This puts at risk the achievement of objectives such as expansion of the company. Internally also there are factors that puts achievement of business objectives of Americana at risk. These factors include innovation, incentives, politics and mismanagement, poor organizational structure, and lack of stability. These factors hinder the achievement of the goals of expansion, and provision of a conducive working environment for the employees. Misstatement risks associated with accounts Based on the knowledge of Chateau Americana, the accounts that are likely to have a lower risk of material misstatement are the assets accounts. These is because the assets accounts of chateau Americana are definite, and proper records to this asset are available. However, accounts that are likely to have misstatement risks are the ratio accounts. The operations of the company are faced by major fluctuations that will put at risk the recordings made for ratio accounts.
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