Pros and Cons of Police Gratuities Essay Example | Topics and Well Written Essays - 750 words

Pros and Cons of Police Gratuities - Essay Example accord to Richard Kania, in that respect are both(prenominal) particular situations where natural law officers should be encouraged to accept gratuities. He supports his scene on the fact that individuals who offer police officers gratuities do so as rewards, but not with the intension of corrupting the police force (Barker 47). He overly gives an example of a evade who offered him a ingenuous meal in exchange of frequent visits he made to his (cook) establishment. Police officers are r asideinely obligate to provide such services to the community, and they should not be rewarded at all for providing such services, however the cook felt a sense of indebtedness to Kania for security services he offered, and the cooks reception was a personal one a free meal (Barker 51). The problem he noted is that some of his colleagues when offered such gratuities will make it a routine to collect them on a daily basis. This turns out to be the beginning of corrupting the police system. Therefore, police gratuities that are offered with the aim of rewarding the officers for hard tame should be accepted, while those offered with the aim of corrupting the police system should not be accepted. Accepting gratuities is also a way of integrating fresh police officers into the police force system. John Kleinig notes that the issue of police corruption is highly emphasized during police training, therefore, officers who accept gratuities may feel that they are already corrupted, and there is no reason why they must not accept gratuities from the public.

In the UK, ethical businesses are not as successful as less ethical Essay - 5

In the UK, ethical businesses are not as successful as less ethical business - search ExampleCustomers sometimes pay premium prices for products from socially responsible organizations nevertheless may also retaliate those businesses that are not socially responsible. However, I am in full support of the argument that in the UK, Ethical businesses are not as successful as less ethical businesses.McMurrian & Matulich (2006) say that changing business environment as a result of competition is reservation business organizations to change their strategies so as to achieve strategic fit. Ideally, being ethical is supposed to help businesses to gain consumer trust. This is aimed at change magnitude sale of products (p.11). An ethical business not only cares about its perception by the society but also cares about its employees. This means that if it treats its employees ethically, they become satisfied, loyal and productive, produce quality service and reach their highest take aim o f capability. An ethical business also cares about their customers and for this they gain customer satisfaction and loyalty which translates to profitability (p.12). However, in that location are some organizations in the UK which do not operate ethically yet they continue making profits year after year. Reese (2010) gives McDonalds as an example this organization has a negative impact on the environment in many ways. To start with, it usually consumes large amounts of energy in form of electricity in order to run its multiple retail outlets. Pollution from the factories which produce its products is another and not mentioning the wastes as a result of the food produced. However, it still continues to rack profits annually because people cant help themselves when it comes to eating their fast foods. McDonalds also purchases their products from privatized farmlands which is good. However, some of these farmlands at some point had been a rainforests. This cannot be directly attribut ed to

Management Business Plan of Bar Restaurant Assignment

Man maturement Business Plan of Bar Restaurant - Assignment fontThe sales forecast is for about $200,000 for year two, which is estimated for year three to $290,000. Net profit is expected tobe negativein the start-off year and then make out %in years two andthree.1.1 Keys to SuccessBoschetto has identified several telephone line factors that must be implemented in order to succeed in this competitive market.1. Design effective Logistics procedures. This is especially important for a bar restaurant where, without logistics on that point entrust be problems in strike and supply and in addition, employ theft could cause the business a lot of damage.2. Offer particular(a) customer service.3. Improve continuously the business model.1.2 MissionIt is Boschettos mission to become a premier run into blip for London professionals who are interested in high calibre lighthearted cuisine and wine. Boschetto pass on accomplish this by offering abundant Italian finger aliment and win e, at reasonable prices. By providing the London market with the opportunity to gather and have an arouse meeting allude go forth become a London favorite. The business strong belief is that a successful business is based on satisfied customers.1.3 ObjectivesTo become one of the premier meeting points in London that offers Italian finger food and wine. To grow thetrend of drinking wine and enjoy light food with it in contrast to beer and sandwiches. Become paying by year two.Market Analysis SummaryBoschettos target customers are working people age 30-45 yrs old. Upper diaphragm and middle class and Dinkies of the same characteristics. Both groups are interested in light Italian food Both groups are interested in having a regular meeting point which will look rather exclusive and posh but they have some differences therefore they rent to be reached differently.2.1 Target Market... This essay describes a Boschetto, that is a new bar restaurant, that is located in London. Boschet to is a combination of a bar and a restaurant serving Italian finger food. While there are many Italian restaurants in London, there are no Italian bar restaurants withal though the demand is quite apparent. These restaurants are always filled with people. The researcher states that Boschetto is aimed to meet the unmet demand in London with a bar restaurant offering an extensive wine list and high quality Italian finger food fine. Boschetto will be lead by Chiara Mastroianni. Chiara received her undergraduate gradation in Business Management from University of Wales. It is also Boschettos mission to become a premier meeting spot for London professionals who are interested in high quality light Italian cuisine and wine. Boschetto will accomplish this by offering abundant Italian finger food and wine, at reasonable prices for middle and upper middle class. The researcher hopes that by providing the London market with the opportunity to gather and have an exciting meeting point will become a London favorite. The business strong belief is that a successful business is based on satisfied customers. Boschetto is planned to open in the first quarter of 2009. It is concluded that prior to the opening, all appropriate market research, concerning the targeted market segments, will be conducted as salubrious as all the necessary promotion such as advertisements that inform the public about Boschetto will be executed.

Drug Dealer Liability Act Essay Example for Free

do medicines Dealer indebtedness make out EssayLegislatures are passing a unique new command that provides redress for those injured by illegal medicines. This new faithfulness has greatest impact on drug-crime human relationship for the reason that, known as the Model Drug Dealer Liability Act (DDLA), makes drug bargainers civilisedly liable to those injured by a driver under the influence of drugs, families who lose a barbarian to illegal drugs and others injured by illegal drugs. It is essentially a products liability act for illegal drugs. fit to Kevin G. Meeks (1998) that Michigan, Oklahoma, Illinois, Hawaii, Arkansas, California, South Dakota, Utah, Georgia, Indiana, Louisiana, Colorado, South Carolina and the U. S. Virgin Islands have passed the Model Drug Dealer Liability Act. Existing legality in the remaining 37 maintains does not clearly establish a means by which drug dealers can be made to patch up damages for the injuries they cause. The Drug Dealer Lia bility Act fills that void.The prototypal lawsuit brought under the Act resulted in a judgment on July 21, 1995 of $1 million in favor of a drug botch up and more than $7 million to the city of Detroits expenses for providing drug treatment to inmates in Detroit jails. Two Detroit dealers were ordered to pay the damages to the drug babys siblings because the baby was born addicted to cocaine and was later bludgeoned to death by her mother while high on drugs. In Utah, the wife of a drug-using professional brought a Drug Dealer Liability Act sideslip against her husbands dealer of six years.The defendant in that case settled after losing his pretrial conference challenges to the Drug Dealer Liability Act. In South Dakota in April 2000 a jury returned a finding of fact under South Dakotas Drug Dealer Liability Act in the amount of $268 billion in favor of a woman whose husband was killed in a head on conflict with a driver under the influence of drugs. The defendant was not the driver of the car but the dealer who supplied drugs to the driver. Clinton W. Taylor (1999) said that the Drug Dealer Liability Act offers an added new approach to illegal drugs.Since it would be unsufferable to identify each person in a chain of illegal drug distribution, the Act establishes a form of market liability so a plaintiff need only prove that a defendant was distributing illegal drugs in the community of the user who caused the plaintiffs injuries, that the distributor was distributing the same persona of drug used by the user and that the defendants distribution in that community was during the stage of time that the user was using. The plaintiff need not prove that the drug user received a limited defendants illegal drugs.Cases can be brought by guardians of drug babies, those injured by a drugged driver, families of adolescent users, employers and public hospitals that pay for treatment of drug babies and others. The principles of market liability or market-share liability in existing case law allow civil recovery from manufacturers of hazardous materials for accidental injury caused by those materials that affect health, even if the source of the particular product that caused injury cannot be identified. The cases involving the pharmaceutical diethylstilbestrol are examples.The DDLA is a legislatively created form of market liability to cause illegal drug dealers to pay damages for the injuries caused by their illegal drugs. According to Mark Hansen (1996) that the Act permits parents of children in drug treatment, those injured by drugged drivers, state and county public agencies that pay for drug treatment and/or illegal drug link up medical care, hospitals caring for drug babies, insurers, employers and others who are injured because of illegal drugs to recover in a civil action any(prenominal) assets in the hands of drug dealers who have distributed drugs in their communities.Existing federal and state drug forfeiture laws require that the money seized from convicted drug dealers be returned to them unless it is directly connected to their drug crimes. In contrast, a dealers assets, income and future inheritance or other income are subject to honorarium to the plaintiff who successfully brings a lawsuit under the Drug Dealer Liability Act. As with any other civil tort liability, those assets do not have to be forfeitable in order for them to be recovered by a successful plaintiff.The Drug Dealer Liability Act is the first law of its kind to hold dealers who intentionally distribute illegal drugs liable for the injury they cause. It has received national prudence on Larry King Live television program, CNN and the Wall Street Journal. The Act promises a new lane for those who have suffered because of the sale of illegal drugs in their communities who just dont want to take it anymore The problem of illegal drugs merits attack from every source and with every available tool. The civil justice body is a po werful weapon.The approach outlined in the Drug Dealer Liability Act relies on the foundation of traditional tort law in a constrained and reasonable way to heading this weapon at one of the greatest challenges our society faces. The Act establishes reasonable limitations to balance the removal of pragmatic obstacles to bringing a suit relying solely on traditional tort law. By enacting a specific cause of action against those who participate in the illegal drug market, the Drug Dealer Liability Act can work in tandem with the criminal justice system and drug education programs to jockstrap achieve drug free communities.Reference Kevin G. Meeks, Georgia Law Review, Fall, (1998), Note FROM SINDELL TO STREET PUSHERS IMPOSING commercialize SHARE TORT LIABILITY ON ILLEGAL drug DEALERS. Clinton W. Taylor, Oklahoma Law Review, Summer, (1999), THE OKLAHOMA DRUG DEALER LIABILITY ACT A CIVIL REMEDY FOR A VICTIMLESS CRIME. Mark Hansen, (Dec. 1996) Just secernate See You in Court Drug Users Can Seek Dealers Cash Under New Liability Laws, A. B. A. J. , at 30.

Comparing the Mesopotamia and Egypt River Valleys Essay Example for Free

Comparing the Mesopotamia and Egypt River Valleys EssayThough Egypt and Mesopotamia were both(prenominal) river valleys they pack a lot of differences, but some similarities. Such as they have precise different hearty and political fascinates while the deuce river valleys had a quite a bit of similarities when it came to religion. The difference between the both valleys social views were that in Egypt women were treated with respect and as equals where in Mesopotamia women were treated resembling property and didnt have the same privileges as men. Both Egypt and Mesopotamia based their social culture through religion, but the Mesopotamians believed that the gods penalise them for their wrong doings and thats why the river flooded unpredictably giving them a pessimistic view of the gods and eternal life. The people of Egypt didnt fear the gods because the world was always good to them by the river always deluge at the same time of year helping the soil be good for their a griculture which gave them a more cheerful and hopeful outlook of the world and the gods they worshiped.The main difference between the two valleys socially were that in Egypt it was more of a positive and well being environment, while in Mesopotamia the atmosphere was very unequal between sexs and they were never happy because the gods were never happy with them. Egypt and Mesopotamia had different ways of politics since Mesopotamia was a democracy it had a king who claimed to be patron deity and who controlled the affairs of the walled city and surrounding agrarian area.In Egypt they had a centralized government which means the pharaoh was treated like a king, but everyone below him was fairly equal (even the women, though they were still slightly below the men). The main difference between the two valleys politically is that Mesopotamia had a king that made the rules and was the one in charge of everything while in Egypt the Pharaoh was like a king except the people below him had a voice and were treated more equally. faith is very similar in Mesopotamia and Egypt by both being polytheistic and the fact that the king/Pharaoh was supposively the adpressed to god in the valley, the king/Pharaoh would have many sacrifices when something bad happened. They also had animism and used carvings, drawings, and statues to show their beliefs towards the gods. And though their gods were not the same the views of the afterlife and beliefs were very similar.The main similarities between the two valleys religion was theyre both polytheistic and that their beliefs were very similar towards the gods and the afterlife. In conclusion the two main differences were social and political views when it came to gender equality, classes (rank), and the way the gods treated the people. The main similarity was religion in the way they showed their beliefs in gods and what would happen when they do wrong things and when they die.

Challenges Faced by Records Centres in Zimbabwe Essay Example for Free

Challenges set about by Records Centres in Zimbabwe EssayPeople frequently turn to technology beca utilization they find they pietism negociate their paper records. Either they are swamped by too much paper on site, or they cant find the documents they carry, or both. By itself, technology cannot fix a records circumspection problem technology applications desire a lot of research and planning to be effective. While automating records can be a blue-chip tool, there are challenges to integrating these technological devices into a record system.Tennessee State Library and pull in states that, a records shopping centre is, an interim storage and retrieval facility where inactive records of more than than one agency may be administered on behalf of such agencies and may be stored and retrieved conveniently, economically, and in good order and inventory retain until their final disposition and yet remain under the access and disposition control of their originating agencies. Roper and miller (1999 6) postulates that, Records centre is a structure or part of a building designed or neutered for the low-cost storage, keep and communication of semi-current records pending their ultimate disposal. The Records Centre is responsible for protecting the records from unauthorized access, damage, and deterioration. both(prenominal) legal control and control of access to the records is retained by the agency until the records are either transferred to the Archives section or destroyed.Automating as defined by Alexis L (1999 5), is the use of machines, control systems and information technologies to perfect point of intersectionivity in the production of goods and delivery of services. The scholar also propounds that, the correct incentive for applying automation is to maturation productivity, and/or quality beyond that possible with current human labor levels so as to body forth economies of scale, and/or realize predictable quality levels. In the s cope of industrialisation, automation is a step beyond mechanization.Whereas mechanization provides human operators with machinery to assist them with the muscular requirements of work, automation greatly decreases the need for human sensory and rational requirements fleck increasing load capacity, speed, and repeatability. Automation plays an increasingly important role in the world delivery and in daily experience. In promote to the above, Dorf and Bishop (1998 8) also states that, automating is the control of an industrial impact (manufacturing production, and so on) by automating rather that manual means.Roper and Miller (1999 6) also point out automating as, the use of machines or systems to execute tasks normally performed or collected by people. or so of the challenges that are go about by records centres in Zimbabwe in automating their records systems include, upkeep and maintenance expenses, specialists are required, new hardware and software need to be purchased, local anxiety and workers need to be trained, a complete re-appraisal of specialist staffing may be necessary (the recruitment of systems psychoanalyst already familiar with the design and implementation of distributed systems) among others.In relation to upkeep and maintenance expenses, Alexis L (1999 5) propounds that, at a time technology is purchased for a records centre, the cost of upkeep and maintenance can be too great for the building to maintain. Outdated software and hardware components can be incompatible with available programs. Also, the cost of repairing broken equipment may be too expensive for records centre budgets. The researcher also notes that in order for a records centre to successfully automate its records system, there must be a rolling replacement or update plan in place to keep technology current and useful.There are also revulsion issues in automating the record systems of records centres in Zimbabwe. harmonize to Harvest (1992 57), M any(prenominal) records centres today have curricula and programs based on state or national assessments. The majority of these tests and measures are paper-and-pencil based in order to make them affable for all users. Because learning with technology involves typing input into a computer, there is a disconnection mingled with the assessments that determine government funding and the use of technology in the records centres. To adequately prepare for these tests, users need put with authentic assessments most c fall awayly imitating those of the standardized test. Waites and Knott (1992 523) states that, automating records present an added challenge to records double-deckers in records centres because they must deal with users of vary computer literacy levels. Some users enter the records centre fully versed in the applications of a computer, while others surface with no prior experience.It is difficult for records managers to deal with this vast difference and ensure that they provide users who need care with that assistance while not requiring capable users to slow their academic progress and wait. Another challenge faced by these records centres in Zimbabwe in automating their records systems is that there is leave out of support. Perderson (1987 5) states that, While technology can be a great addition to the records centres, it also can be a source of frustration for both the records manager and the user.Unless the records manager is well trained in technology and can support the hardware in the records centre, a technology expert will be needed to troubleshoot problems. If records centre cannot support the purchased technology, it essentially renders it useless in times of crisis or disrepair. Additionally from the researchers point, technology often needs frequent maintenance to keep it in good condition for use. If all these are not available it means more money will be needed for the upkeep as well as hiring experts to use the automate systems.Training the staff and patrons to use a newly automated system can be challenging. According to the Colorado Department of Education, Training is expensive and you can never pay for enough. If the staff is unfamiliar with computerized records management software, they will need many hours of education to feel comfortable operating the system. A select summate of staff will also need training to manage specialized operations, such as cataloguing or patron record management.Additionally, patrons will need assistance using the system to search for library materials. Some patrons may be reluctant to change to a new system, especially if they dont like computers. With proper training and plenty of support, users will adjust to the new system. Prythesh (1996) forwarded that, because connection problems, downloading issues, policing software and other difficulties can cause road blocks when implementing a lesson in the technology based records centre, records managers roughtimes shy away from usi ng it simply because of lack of time.With all of the demands on users, the amount of time spent in the records centre is more and more valuable. To lose a few minutes because of connectivity issues is not feasible, and its one important reason why automating records systems often fails in records centres in Zimbabwe. More time is lost due to connection problems. Technology is some other hurdle to mystify while automating a records system. When selecting records automation software, one must make sure it will work with the alive equipment or be financially prepared to purchase upgraded technology.Kerri Cox Online (2013) postulates that, Analyze the records assistants workstations, patron access points, network server, Internet access and building electrical system. Some records centres may require minor technological upgrades, while others will require an expensive technological overhaul. The technology squad, or lack of one, can be another challenge of records system automati on. Harvest (1992 57) states that, A records centre needs a strong technology support system in place prior to automation. Someone needs to oversee the automation dish and troubleshoot any software or hardware problems.The researcher also notes that once the system is in place, the technology team will need to continue to monitor and upgrade the system. Apart from the challenges, automating records system in records centres has some benefits and some of them are higher production rates and increased productivity, more efficient use of materials, better product quality, improved safety, shorter workweeks for labour. Kerri Cox (2013) outlines that, Higher output and increased productivity have been two of the biggest reasons in justifying the use of automation.Despite the claims of high quality from good workmanship by humans, automated systems typically perform the manufacturing member with less variability than human workers, resulting in greater control and consistency of product quality. Also, increased process control makes more efficient use of materials. Also an automated system results in efficiency, Alexis L (1999 5) forrad that, they get more done than humans but cost less to operate. This is because they do need breaks, wages, holidays, canteens, heating system and lighting.The quality of the work done is always of the same standard being materials are not ineffectual due to human error. The scholar in terms of speed also states that, automated systems can process information much more quickly than humans. This means they are good for controlling machinery that might need to be adjusted instantly. To sum up the researcher notes that, records systems automation is a great enhancement for a records centre, but it comes with plenty of headaches. It is a time-consuming process. Records Centres may struggle to have the proper technology for the automation. lag and patrons may need a lot of training to properly operate the new system.

Competition Bikes, Inc. (CBI) Financial Analysis Report Essay Example for Free

Competition Bikes, Inc. (CBI) Financial Analysis Report EssayIn order to correct a fellowships performance, epitome must be done for key metrics, including the energy to ceri forega on that pointm debts, how more bullion or new(prenominal) still assets atomic topic 18 available, and the ships orders viability to continue ope symmetryns. These analyses shoot the check up on of income statements and oddment sheets, where flow rate and past performance go unwrap be studied with the goal of predicting how the fede ration will perform in the hereafter. Upper-level management at CBI come to the forehouse use this information to calculate in decisions in line with the troupes goals. This report for CBI will include four sections. First, Ill tumble the comp eachs fiscal say-sos and weaknesses by doing a horizontal analysis, vertical analysis, trend analysis, and ratio analysis of CBI pecuniary results for days 6, 7, and 8. The second section will include an analysis of the familiaritys running(a) capital of the United States, including suggestions on ways to improve figure outing capital and use additional works capital to amplification lucre. The third section will none any weaknesses in the companys interior(a) applys, and how those can be corrected. The fourth and final section details SarbanesOxley requirements and how the company can subside essay and mark off compliance with the requirements within that legislation.A1a. Horizontal AnalysisHorizontal analysis is specify as the comparative de call(a)ine of a balance sheet or income statement for deuce or to a greater extent accounting system periods, to cipher both check and relative variances for distri stillively line token (businessdictionary.com, n.d.).For CBI, we will be comparing days 6 and 7, then geezerhood 7 and 8. This will allow us to gauge the performance all over a three socio-economic class period of clock time to see if the organizations business is rising, occlusioning staunch or falling.Net gross revenue for CBI products change magnitude 33.8 per centum mingled with divisions 6 and 7. This is a support of authorization for the company and a signal that their cycle per seconds ar head received by customers. However, authorize gross gross gross gross sales dropped by 15% mingled with divisions 7 and8. This is a weakness for CBI, as utmost sales affect the bottom line, and they will absorb to find a way to break up for this sales defraudfall elsewhere in their budget (such as cutting expenses). This trivialfall is collect to the particular that the receding market that purchases the majority of the bikes, professional riders, experienced a reduction in sponsorships cod to the economic situation. and then they purchased fewer bikes than in previous social classs. The company expects to recover from the up-to-the-minute category sales decline within three categorys.The represent of right-hand(a)s interchange includes all direct greets attri bargonlyable to the production of nices change by the company. Cost of well-groundeds interchange and sales revenue move in tandem. In this courtship, the cost of goods sold profitd 31.8 % amidst social classs 6 and 7. The cost of goods sold accession was jolly humiliate than the net sales add of 33.3%, which is a sign of strength for CBI as it indicates that management is doing a good art handleing production costs at a manageable level. In socio-economic classs 7 and 8, the cost of goods sold precipitated by 14.5%, which is similar to the decrease in net sales, kill 15% in that selfsame(prenominal) time period. pure(a) profits, which is net sales less the cost of goods sold, attach by 37.5% mingled with social classs 6 and 7. This is a strength for CBI. An increase such as this signals that management has made a virile commitment to growth while at the same time tameling the operational and prod uction costs. tax income profit was down(p) by 16.3% between classs 7 and 8. This is a result of falling sales in the new socio-economic class.Under General and Administrative expenses, there atomic number 18 two argonas of interest that blurb further analysis decision maker recompense and utilities. Executive compensation rose by 29.4% in divisions 6 and 7, which makes sense given the unfaltering sales increase during that period. Executives made good business decisions during this time and should be compensated for these results. However, executive compensation stayed flat during historic period 7 and 8. Granted, sales and profits were down for the year, so a outstanding increase would non be warranted. However, no increase in compensation could be considered a weakness for CBI, as salaries and compensation ar a significant tool to come ab away talent. Morale may suffer if after a years worth of hard work, they get no increase at all. Utilities were up a modest 3.8 % between years 6 and 7, with an increase to 11% between years 7 and 8. With CBI building fewer bikes in year 8, a credible assumption is that utility usage would decrease also. Therefore this increase in utilities should be examined further. Some of this increase could be beyond CBIs control (such as rate adjustments by the utility company) just a couple of options for the company to explore to manage this expense and be more(prenominal) than than efficient would be an zip fastener audit, and/or negotiating with the utility company to pre-pay their utilities for a certain time period to get a discount. operational income is the amount of profit realized from operations after removing in operation(p) expenses such as the cost of goods sold and employee salaries. For CBI, operating income increased strongly (154.6%) between years 6 and 7. However, operating income between years 7 and 8 is strongly forbid, with a 69.1% decrease. This is due to the fact that gross profits dropp ed by 16.3% during this time period, but core operating expenses decreased by only 3.6%. This is not sustainable over the long marches and is a weakness for CBI. They need to reduce their production expenses wherever affirmable, become more efficient in their operations, and find ways to increase sales revenue ideally, a combination of these.The last item on the income statement is net honorarium the so-called bottom line both as a citation to its position on the income statement, and a reflection of the fact that total revenues minus total expenses. CBIs net earnings rose a remarkable 313.4% between years 6 and 7, which is a reflection of the fact that profits grew at a untold gritty rate than expenses during that period. Net earnings declined by 81.6% between years 7 and 8, which is due to total revenues dropping to a greater extent than total expenses. This is a weakness for CBI as it is not sustainable for long in the first place the company runs out of specie. As me ntioned previously in the operating income section, this is an issue that CBIs management team must address if they demand to stay in business.Cash and change equivalents declined 64.6% between year 6 and year 7. This is aweakness for CBI, oddly in light of the fact that sales were up during that period. The company should seduce more cash or cash equivalents on hand, not less. In years 7 and 8, cash and cash equivalents increased by 348.2% this during a period where net sales were down by 15% comp bed to the previous period. While this appears on the surface to be a positive as cash and cash equivalents sponsor with the companys liquidity it can actually be interpreted as a weakness as CBIs large amount of cash and cash equivalents may make some analysts question the companys ability to manage their cash flow in a way that maximizes profits and efficiency.CBIs accounts due, which represents property owed to them by their customers, increased by 164.3% in years 6 and 7. W hile accounts receivable are classify as assets, this is a potential weakness for CBI as it signals that a lot of the assets they are claiming on the balance sheet are tied up in receivables that are not as liquid they cod not yet received payment. Accounts receivable was -15% in years 7 and 8. This reduction is a strength for CBI as it signals that they are improving their cash flow by more usefully get ining money owed to them.The large scale change in numbers game year over year for both cash/cash equivalents and accounts receivable at CBI signal volatility year over year. This could be a red flag for investors looking for consistent levels of performance. CBI also might find it tough to continue to hire the trounce salespeople, who work on com electric charge and are apt(predicate) looking for a company with solid sales that will provide a steady paycheck. be topical assets, or those that are formerably expect to be converted to cash within one year in the course of b usiness, include cash, inventory, accounts receivable, vendable securities, prepaid expenses and other liquid assets. CBIs original assets rose 31.5 percent from year 6 to year 7. Growth in current assets is generally regarded as a strength and a sign the company is growing. However the picture changes when current liabilities for the same period are analyzed, which I will do in the contiguous section. resume assets represent total current assets plus net property and equipmentand give a complete picture of all ill-judged term and long term assets. Total assets for CBI increased by 2.2% between years 6 and 7, due in large part to the large increases in accounts receivable and work in plow inventory. When a large amount of accumulated depreciation was factored into assets, it brought the total assets run across down intimately. Between years 7 and 8, total assets decreased by 0.2%. After brushuping the balance sheets I placed that while current assets decreased substantially between years 6 and 7, then 7 and 8 (down 15%), long term assets stayed flat (down 0.5% over the same period). Overall, assets, liabilities and stockholders virtue were all down between years 6 and 7. This is a weakness for CBI as investors will review these negative numbers and question the companys ability to be profitable and grow.Total current liabilities are debts that are due within one year in the course of business. They include accounts and notes due, accumulated salaries, and other accrued expenses. Current liabilities increased by a whopping 122.4% between years 6 and 7, largely in part to the large increase (192%) increase in accounts and notes payable. Between years 7 and 8, accounts and notes payable increased by 33.3%.This is a serious weakness for CBI, as it signals that they are winning on a disproportionate amount of debt compared to their sales growth rate. CBI would need to generate substantial sales increases in future years to pay the interest on this debt and continue to cover their expenses. The fact that total current liabilities continue to trend upward year over year while sales actually went down between years 7 and 8 is a warning sign. CBI could contract trouble meeting its debt obligations (and get any further funding from creditors) if sales are flat or continue to trend downward.Total long term liabilities those that come due more than one year in the future are memory steady at CBI, diminish 5.6% between years 6 and 7, and decreasing by 5.9% between years 7 and 8. This is a sign of strength for CBI as it shows they are managing their long term debt responsibly. carry earnings represent the amount of assets created through profits that are retained in the business and are part of owners paleness. Retainedearnings increased by a healthy 17.4% between years 6 and 7, which makes sense given the strong sales results. Retained earnings rose by only 2.7% between years 7 and 8, which is not surprising in light of the fact th at sales are down in the current year. This decrease is a weakness for CBI, as retained earnings is part of stockholders equity. Those invested in the company (or those considering doing so) will note the sharp decrease in funds available for reinvestment in the company and possibly question the prospects for growth unless the company can telephone number things around quickly.A1b. Vertical AnalysisThrough a vertical analysis, we review entries for assets, liabilities and equities. These are represented as a percentage of the totals for any given year. The main advantage of a vertical analysis is that it is lax to read, clearly escortable and charts changes in the operations of a business on a yearly basis. By reviewing vertical analysis data, a person can see fiscal performance over a set period of time.Cost of goods sold decreased from 73.4% of net sales in year 6 to 72.6% in year 7. This is a strength for CBI because a reduction in CGS leads to higher profit. This is leaven that management is doing a good job controlling product costs. In year 8, CGS increased slightly to 73% a minor increase but this could be considered a weakness for CBI as it signals that the costs to produce their bikes are going up.Gross profit was 26.6% of net sales in year 6, and increased to 27.4% in year 7. This is a strength for CBI as it signals that the company is doing a good job of selling their product and keeping costs at a manageable level. In year 8, Gross Profit dipped slightly to 27%. This is because the cost of goods sold went up slightly during this time, and sales were down. A gross profit reduction is normally a weakness however, in light of the 15% decrease in sales in year 8, the fact that gross profit only decreased by 0.4% from the previous year should be considered a strength for CBI as it indicates that the company has minimized the impact of the sales downturn on their gross profit allowance accounts.Upon reviewing the general and administrative expense s, all of the line items followed the trend of decreasing as a percentage of the total in year 7, and then increasing as a percentage of the total in year 8. This makes sense given that these expenses are part of the cost of goods sold figure. ane lawsuit is the Other general and admin expenses which was 2.7% of the operating expenses total in year 6, decreasing to 2.6% in year 7 and then increasing to 3.3% in year 8. While these make up runty percentages in the companys overall operations budget, this is a weakness for CBI, as these types of expenses should not be going up if there are not sufficient sales to support the increase. CBI management should keep an eye on these expenses to en certain they do not creep up year over year, which would have a negative effect on their profit margins. When looking at the individual numbers, for representative administrative salaries, we see that there is no change in the percentage of the total between year 7 and year 8. Administrative sa laries did not increase at all in year eight, and neither was executive compensation. This could be a weakness from an employee morale standpoint, as they worked hard all year and did not see any raise in their pay. However, this data is not surprising given the difficult economic conditions in year 8. There was a purchase of 25,000 shares treasury stock in year 7, and its possible that management offered this stock to employees in lieu of a pay increase.Operating income was 2.8% of the total in year 6, increased to 5.3% in year 7 and decreased to 1.9% of the total in year 8. The decrease in year 8 is largely due to the increase in operating expenses, which factors into the operating income equation. The fact that CBIs operating expenses are trending up year over year without accompanying sales increases is a negative trend for CBI and should be considered a weakness. This is something the companys management should be monitoring closely and taking action to control expenses and pro mote sales.Net earnings were 0.9% of the total in year 6, rising to 2.8% in year 7 (not surprising given the increase in sales) and decreasing to a three year low of 0.6% in year 8. Since this bottom line number is a key indicator of a companys profitability, this decrease should be something that thecompanys management should make a brighten priority to fix.Cash/cash equivalents were 6.2% of total assets in year 6, decreasing to 2.2% in year 7. This is a weakness for CBI as this is a sign that the company may have trouble compensable their debts and expenses. In year 8 this figure improved substantially to 9.7% of total assets. However, the company needs to make sealed they are not sitting on too much cash, but investing it to grow the company and maximize profits.Accounts receivable represented 6.5% of total assets in year 6, and increased dramatically to 16.7% in year 7. Although accounts receivable is considered an asset, it should be storied that the cash is not collected r ight away. This asset is less liquid than cash or other short term assets and CBI should contain that they are collecting payment from customers in a timely manner. Accounts receivable decreased slightly to 14.2% in year 8, which would be interpreted as strength as it indicates that CBI is doing a good job collecting payments from customers.Total current assets represented 24.5% of total assets in year 6, rising to 31.5% in year 7 and 36.8% in year 8. Reviewing the line items for current assets, this increase is attributable to the increase in accounts receivable as well as cash/cash equivalents. This could be interpreted as a strength for CBI, as an increase in current assets essence the company is in a split up position to pay debt obligations and use assets to grow the company. However, its worth noting that the majority of CBIs current assets are tied up in less liquid assets accounts receivable and inventory. These are more difficult to convert to cash should the need arise .Total long term liabilities (mortgage payable and other long-term liabilities) decreased steadily year over year at CBI. In year 6 they represented 45% of total liabilities and equity, decreasing to 41.6% in year 7 and 39.2% in year 8. This is a strength for CBI as it shows they are paying down their long-term liabilities. A reduction in liabilities improves liquidity ratios and the companys ability to pay operational expenses as well as their debt obligations.Total current liabilities for CBI followed the trend of current assets and rose steadily year over year 2.5% of total liabilities and equity in year 6, 5.4% of total liabilities and equity in year 7, and 7% of total liabilities and equity in year 8. Looking more in-depth at CBIs current liabilities shows that this increase year over year is due to the rise in accounts and notes payable. The other line items (accrued salaries and other accrued expenses) held steady. I interpret this as a weakness for CBI, and should analyze w hy their current liabilities were rising when they were collecting more cash, particularly in year 8. The cash flow increase in year 8 was substantial and could have been utilise for accounts payable obligations. Its possible that the company was holding on to cash/cash equivalents in year 8 to weather the economic downturn.Retained earnings represent earnings not paid out as dividends, but retained by CBI for reinvestment in the company. Retained earnings represented 23.3% of total liabilities and equity in year 6, rising to 26.8% in year 7 and 27.5% in year 8. This is a strength for CBI as it shows that management is committed to retaining earnings in order to grow the company. A1c. bm AnalysisTrend analysis involves the usage of past figures for comparison. For trend analysis, information for a number of years is compared to a ungenerous year. Each item of the base year is represented as 100% and on that base, the percentage for the other years are computed. This analysis dete rmines the percentage of increase or decrease in each item with respect to the base year and helps analysts make bodes for future years. For CBI, net sales have been provided for year 6 (the base year) as well as years 7 and 8. The historical trend analysis figures for CBI are shown below, establish on net sales and establishing year 6 as the base year. year 6 $4,485,000 (100% trend percentage)Year 7 $5,980,000 (133.3% trend percentage)Year 8 $5,083,000 (113.3% trend percentage)This trend analysis does not show any surprises. The horizontal and verticalanalysis clearly showed that various metrics (net sales, operational expenses, net income, etc.) showed a large increase from year 6 to year 7, followed by a decrease between years 7 and 8. The trend here shows a large net sales increase, followed by a decrease. The large swings in sales wait to indicate volatility for CBI. This is a weakness because its more difficult to forecast accurately, which can lead to inaccurate resource pl anning and negative stock expense impacts if performance does not meet stated expectations.The forecasted trend analysis for CBI, employ year 8 as the base year is shown below Year 8 $5,083,000 (100%)Year 9 $5,247,450 (103.2%)Year 10 $5,471, 000 (107.6%)Year 11 $5,681,000 (111.8%)Theres no information given on how these forecasted trend numbers were calculated. Its a positive sign that the sales increases are only a few percentage points each year, as this is much more sustainable and likely than a large increase such as between years 6 and 7 (which is generally not sustainable in the long run). This forecast would seem to indicate that the outlook is positive for CBI for the next few years. Its likely that one of the underlying assumptions is that the economic situation will improve, and the company will sell more bikes. However, given the operational weaknesses pointed out in the horizontal, vertical and ratio analysis, if I were an investor or analyst I would want to know more about the companys plans to address the se weaknesses before taking these figures at face revalue.A1d. ratio AnalysisAs part of the ratio analysis, two important ratios to consider when analyzing a companys liquidity are Current RatioAcid-Test RatioThe current ratio is current assets divided by current liabilities, and measures a companys ability to pay their short-term liabilities. In theory, the higher the ratio the better. However, there are some limitations to the current ratio as Ill note in the next section.CBIs current ratio in year 7 was 5.79, and in year 8 was 5.25. verbalise another way, CBI could use their current assets to pay their current liabilities 5.25 times over in year 8. This would seem to be a strength for CBI, and in fact this ratio is higher than their contest dickens roam Racing (with a ratio of 4.20). However, this ratio has one fundamental flaw its conceptually based on the liquidation of all of a companys current assets to meet all of its current l iabilities. In reality, this is not likely to occur. Its the time it administers to convert a companys working capital assets into cash to pay its current obligations that is the key to its liquidity. some(prenominal) of CBIs current assets are tied up in accounts receivable, as well as work in progress inventory and fond inventory. These assets are not as liquid as cash, but are figured into the current ratio calculation. So CBIs high current ratio looks strong on the surface, but upon further analysis there is a weakness in the somewhat large proportion of less liquid assets CBI holds that factor into the equation.The acid test ratio is another measure of liquidity, and more stringent than the current ratio in that it measures a companys ability to cover their short term liabilities without selling inventory to do so. Looking at CBIs numbers, the acid test ratio in year 7 was 4.41, and in year 8 it was 4.14. These numbers are higher than that of their competitor Two single-foo t Racing (3.40) and that represents strength for CBI. However, Ill note once again that the company will need to monitor and manage their current assets to ensure that the proportion of less liquid assets (accounts receivable and inventory) does not greatly outweigh their more liquid assets (such as cash).Average collection period is the time that it takes CBI to collect accounts receivable payment from customers. This number held steady at 43.8 days in years 7 and 8. However, its higher than that of competitor Two Wheel Bikes (32.5 days). This is a weakness for CBI, as it signals that the company may be too lax in collecting whats owed to them and may eventually have difficulties meeting their short-term and long-term obligations. CBI should focus on strategies to reduce the time it takes to collect on accounts receivable.The debt ratio represents the total percent of assets financed by debt, and is calculated by dividing total liabilities by total assets. In year 7, 47% of CBI ass ets were financed by debt, which decreased slightly in year 8 to 46.2%. However this number is still substantially higher than that of their competitor, Two Wheel Bikes, at 38%. This is a weakness for CBI, and if they cannot bring this ratio down by increasing sales and profits to pay down some of their debts, they may have trouble paying their debt obligations.Gross profit margin for CBI was 27.4% in year 7 and 27% in year 8. This is lower than that of their tilt, Two Wheel Racing at 32.1%. This is a weakness for CBI, as it signals that they are not as efficient as their competitors. CBI could improve this ratio by decreasing expenses, which would in turn decrease the cost of goods sold. Another way to improve this ratio would be to increase revenues.The operating profit margin for CBI differed substantially from year 7 to year 8. In year seven the figure was a healthy 5.3%, but in year 8 it dropped sharply to 1.9%. This is a weakness for CBI as this is a lot lower than that of Tw o Wheel Bikes (5.2%) and this signals that CBI is not doing a good job generating cash flow and providing shareholder value. One way CBI could improve their operating profit margins is by auditing their operating expenses and trimming costs wherever possible. An example would be adopting lean work processes with as little waste as possible. The knifelike materials inventory in particular should be reviewed to see if efficiencies could be gained by improved internal controls for inventory.Net profit margin is the percentage of each dollar earned that is translated into profits. CBIs net profit margin in year 7 was 2.8%, and a dismal 0.6% in year 8. These numbers are much lower than those of the rivalry (Two Wheel Racing had a margin of 5.2% in year 8) and are a definite weakness for CBI, as companies with low net profits can go bankrupt in the event of a sustained downturn. This low number signals that the company is not running their operations efficiently and would be a red flag for investors.Earnings per share is an indicator of a companys profitability and ability to generate shareholder wealth, and is the most important factor when determining the companys share price. As the name suggests, its the earnings that the company generates per share outstanding. In year 7, CBIs EPS was 0.17, or 17%. In year 8 that figure declined to 0.03%, which is nearly zero. This is a serious weakness for CBI as it suggests that the company is not doing a good job of generating wealth for shareholders, and this could lead to a selloff of the stock. In a smite case scenario, the stock price would decrease and the company could go out of business.Return on total assets is an indicator of how effectively a company is using its assets to generate earnings before contractual obligations must be paid (Investopedia.com, n.d). In year 7 CBI had a 4% return on assets, slightly lower than that of their competitor Two Wheel Bikes (at 4.8%). In a year where sales were up 33.3% from th e year before, investors might expect a higher return. As Ive pointed out in other sections, the reason this number is not higher is because CBI did not do the best job keeping their expenses under control. In year 8 the number is even worse a dismal 0.7%. This is a weakness for CBI overall as it shows the company has some work to do to control expenses and use their assets effectively.Return on vulgar equity measures how much profit a company generates with the equity shareholders have invested. This ratio is calculated by subtracting preferred dividends from net income, then dividing that number by super acid equity. CBIs return on common equity was 7.5% in year 7, and decreased sharply to 1.4% in year 8. This is much lower than that of the competition Two Wheel Racings ratio was 8.1% and is a weakness for CBI. This signals that the CBI is not doing a good job generating profit from the equity shareholders have invested, and it could lead to a stock sell off or investors dema nding that measures be taken to increase equity returns. Financial analysts and investors would likely not have much trustfulness in these numbers.The price/earnings (P/E) ratio is a measure of the valuation of a companys share price compared to its per-share earnings. Price/earnings ratios aretied to investor expectations. Investors are willing to pay more if they believe that future earnings will be substantially higher. On the other hand, if a company is stagnant and investors dont believe that future earnings will be going up, they will not want to pay as much and the P/E ratio will be lower. CBIs P/E ratio in year 7 was 29.41. This means that investors would be willing to pay $29.41 in share price for e very(prenominal) $1 in earnings. This is a strength for CBI because it suggest investor confidence in the company, which typically leads to an increase in share price. However, in year 8, the P/E ratio declined to 23.33. This is due to the companys lackluster sales and operatio nal performance in year 8. This is definitely a weakness for CBI if investor confidence continues to decline, the share price will decline also.Times interest earned represents the number of times operating income can cover interest expense. CBI generated enough profits in year 7 to cover their interest expense 5.27 times. This number is a strength for CBI as it demonstrates that the company is doing a good job of generating income while keeping expenses at a manageable level, and is higher than the 4.24 figure from their competitor, Two Wheel Racing. However, the times earned interest ratio in year 8 is only 1.77, mainly due to the large drop in net income in year 8. This is a weakness for CBI as sales and profits decreased, while interest expenses did not drop in proportion. CBI needs to do a better job managing their operating expenses, which will improve this ratio.A2. works Capital Analysis for CBIAn important measure of a companys efficiency and short-term financial health is the amount of working capital they have on hand. This is one measure of the companys liquidity, and the ability to meet short-term (current) debt obligations with current assets. Working capital is used for day to day operational expenditures to pay bills of the business including employee wages, utilities, and rent, among others. This number is calculated by subtracting current liabilities from current assets. Investors view working capital as measure of a companys operational efficiency. In general, companies with greater amounts of working capital are better able to achieve advantage by investing assets back into the business, rather thanhanging on to non-cash assets in large amounts. While a business may have a large amount of assets, it may be very difficult to convert them into cash in order to take advantage of opportunities that require fast action an example of this is an asset such as land or buildings. If current liabilities are greater than current assets, a working capital deficit is created, and a business cannot survive long-term in this scenario. Working capital numbers for CBIYear 61,029,303 105,080 = 924,223 (9.79 current ratio)Year 71,353,044 233,700 = 1,119,344 (5.79 current ratio)Year 81,575,831 300,200 = 1,275,631 (5.25 current ratio)CBI has been steadily increasing their working capital in years 6-8, with a 21.1% increase from year 6 to year 7, and a 14% increase from year 7 to year 8. This consistent rise in working capital confirms that the business has sufficient working capital to cover their short-term liabilities and invest for future growth of the company. One thing to note here is the large increase in current liabilities from year 6 to year 7 (82%) when assets rose by only 21.1%. This is largely due to the large increase in accounts and notes payable. Large increases in liabilities such as this are not a negative per se and can signal that the company is investing for growth, but should be monitored over time to make sure the company does not become overleveraged. The ideal scenario is if the increases in assets and liabilities are more proportionate (rising at a similar rate).Working capital is related to the current ratio, which measures the companys ability to pay current liabilities with current assets. Its calculated by dividing total current assets by total current liabilities. This ratio should be at least 1, which means the company has exactly enough capital to pay its short term liabilities, with no excess cash. Its preferable if theratio is higher than 1. However, a ratio that is much higher than the mediocre could be considered a weakness, as it may signal that the company has too much inventory on hand, is slow to collect on accounts receivable, or that they are hanging on their excess cash rather than investing it for future growth. Its important to note that working capital ratios spay widely between industries when analyzing a companys working capital ratio, a comparison to the avera ge ratios for the overall industry should be included in the analysis.CBIs current ratio was very high in year 6 9.79. This means for every $1 in liabilities, the company had $9.79 in assets. On the surface this appears to signal strength, but this could actually be considered a weakness for CBI as it suggests that they are holding on to cash and liquid assets and not investing to grow the company to its full potential. In years 7 and 8, the current ratios decreased to 5.79 and 5.25, respectively. This is largely due to taking on additional short term liabilities (accounts and notes payable). The ratio in years 7 and 8 is much closer to the ratio of their closest competitor, Two Wheel Racing and suggests that the company is moving toward using their current assets more effectively. If CBI can keep operating and goods costs under control and not overleverage themselves, the taking on of additional debt could be considered part of the cost of doing business and part of their growth s trategy, i.e. a positive development.Working capital could be improved in the following ways1. Decreasing the amount of liabilities in short term debts such as accounts and notes payable. 2. Converting short term debt to long term debt to free up funds for investment. 3. Increasing efficiency via internal process improvements, thereby reducing expenses and increasing profits. Examples include shortening accounts receivable collection periods (CBIs are lifelong than that of their closest competitor) and consolidating sales offices. 4. Issuing stock to generate capital for investment in assets that will help the company grow, such as the purchase of a new distribution center or bike assembly location.Excess working capital (liquid assets) could be invested in the followingways to increase profits 1. Internal systems updates such as new, faster computer systems for employees or manufacturing equipment. This investment has the benefit of improving efficiency. 2. spend in people hirin g new talent as well as training the salespeople already working for the company. 3. Investing in marketing and advertising to create compelling sales promotions and get the word out about CBI. Since the companys sales are largely through word of mouth advertising, there is considerable untapped sales potential.A3. Evaluation of the internal controls for the buy system at CBI After reviewing the purchasing system for CBI, there are a few weaknesses in the internal controls that the company should address to mitigate risk and increase efficiency.1. No receiving department currently exists to monitor incoming loadings from providers. Having no internal controls in place for this step in the put up chain is a weakness for CBI. This can result in an increased risk of incorrect orders existence processed, resulting in unused parts being sent to the raw materials inventory stores as noted in the storyline. These parts must be written off the books if they are not used in the current y ear, and this costs the company money. The other impact is damaged orders being accepted by the company. If orders are monitored upon arrival and found to be damaged, CBI can contact the supplier nowadays to remedy the situation. This will minimize costly delays in production since errors are caught earlier in the supply chain, and the company can save money if they have ensured that all orders are accurate and undamaged before payment is sent to the supplier.2. The purchasing departments procedure for selecting suppliers is not as robust as it should be. Checking for three sources of similar quality, as noted in the storyline, is a good start but not sufficient to ensure good internal controls. Suppliers should be vetted in a selection process using criteria defined and documented by CBI. If this is not done, it could lead to increased risk of fraud (collusion between the CBI acquire private instructor and the supplier, for example).3. The purchasing manager is responsible for m ultiple related responsibilities in this example, selecting the supplier, placing the order and emiting the suppliers invoice to the accounting department. There is not sufficient separation of duties throughout the purchasing process.A3a. weakness Corrective ActionsThe following scenario illustrates what a purchasing procedure policy with good internal control procedures in place could look like for CBI.1. The production department evaluates existing inventory of raw materials, then creates a list of raw materials they need for the next month and sends it to the purchasing manager. 2. The purchasing manager gets the list and consults with the policies and procedures manual for the raw materials. The manual instructs the purchasing manager to consult the trade journal for the industry, which contains a list of suppliers for the raw materials requested. 3. The purchasing manager should review the supplier list to ensure theres no difference of opinion of interest (such as close f riends/relatives working for any of the suppliers on the list, stock ownership in any of the companies, no gifts accepted from the companies). If there are conflict(s) of interest for any of the suppliers, they should be removed from the list. 4. The purchasing manager should then review the Better Business Bureau (BBB) list for the remaining suppliers to see if any complaints have been registered during the past year. Suppliers with complaints registered with the BBB should be removed from the list. 5. The purchasing manager should contact the remaining suppliers to request competitive bids. one time they are submitted, the bids should be reviewed and the lowest competitive bid selected. 6. formerly the bid is selected, the purchasing manager should send a purchase order to the selected bidder. Once this is done, the purchasing managers job is complete. 7. The supplier sends the shipment to the company upon arrival it is taken in by the CBI receiving department for inspection and documentation. A shipping note is generated by the receiving department which details each item and can be used to confirm that all items that were ordered actually arrived. 8. A copy of the shipping note is sent from the receiving department to theaccounting department, and accounting will compare that note with the invoice from the supplier requesting payment. They cross check these two documents to ensure they match. 9. Once accounting has ensure these documents match, they write a check to the supplier and the process is complete.A3b. RisksAll of the weaknesses, if not remedied, increase the risk of fraud. An example of this would be the purchasing manager colluding with the supplier to send an invoice with inflated numbers to accounting, which would result in overpayment to the supplier that does not reflect an accurate order. In a worst case scenario, if the record keeping is weak and the employees are able to subvert the system and falsify the documents, then financial state ments based on numbers in these documents are no longer accurate. Experienced financial analysts who review the companys financial statements will immediately know that something isnt right with the numbers, and will sell the stock, take to a drop in stock price. If this is left unchecked it can result in the twilight of the company and/or criminal prosecution of the companys financial executives. Given these risks, it would be very prudent for CBIs management team to take an in-depth look at the internal controls for purchasing and make adjustments to correct the weaknesses.A3bi. Risk MitigationIn the proposed purchasing system in section A3a, there are two ways that the identified internal control risks are mitigated. First, theres a good separation of duties this avoids the situation where one employee is responsible for multiple related responsibilities (which can lead to greater lure for fraud). An example of this is in step 7. The purchasing manager is not involved in this step they were without delay involved in the placement of the order and so should not also be in hinge upon of receiving the order or generating the shipping note (therefore maintaining separation of duties). Second, there are also multiple checks and balances to ensure accuracy for orders, as well as documentation for each step to ensure good records are kept. Accounting will then have accurate numbers on which to base their financial reporting, minimizing the risk of materialmisstatements on their annual or interim financial statements.A4. Analysis of compliance with SarbanesOxley requirementsAn important character of legislation related to financial reporting and internal controls for publicly traded companies is the Sarbanes-Oxley Act (SOX). After several exceedingly publicized accounting scandals among corporations in the US in the 1990s, SOX was enacted to reform companies financial reporting processes, as well as the internal and external auditing of the financial report ing process (Hilton, 2011). Its very important that companies understand and comply with the rules laid out within this legislation, as the penalties for not doing so are severe. Top executives including the chief operating officer and CFO can be held criminally responsible and go to prison if their companys financial statements are fraudulent or misstate the firms financial condition.There are two sections within SOX that are of particular relevance sections 302 and 404. Section 302 requires the signing officers of a companys financial reports (such as the CEO and CFO) to establish, maintain, and monitor the effectiveness of internal controls over financial reporting. In other words, these executives are ultimately responsible for the accuracy of the companys financial documents, and must disclose to the companys auditors any weaknesses or changes in the companys internal control system.Section 404 requires a company include an internal control report for financial reporting withi n its annual report. This internal control report must contain two key elements a statement of managerial responsibility for establishing and maintaining an effective internal control structure for financial reporting, as well as an assessment of the effectiveness of the defined internal control structure.A4. ComplianceIn regard to CBI and its compliance with SOX, the company believes they are adequately addressing the requirements of the legislation. CBIs internal audit stated that internal controls over financial reporting are accuratebased on criteria set forth by the Committee of the Sponsoring Organizations of the Treadway Commission (COSO).However, the annual report issued by the auditors to the shareholders noted that the companys internal control over financial reporting could lead to a casualty of a misstatement in the companys annual or interim financial statements that would not be detected or corrected in a timely manner. This will be noticed by financial analysts and investors, and could affect the companys stock prices as well as the increase the likelihood of close financial scrutiny and audits by the Public partnership Accounting Oversight Board (PCAOB), whose mission is to oversee and investigate the audits and auditors of public companies, and sanction both firms and individuals for violations of laws, rules, and regulations (Hilton, 2011).A4a. Noncompliance Corrective ActionsBased on this information, CBI should take immediate actions to ensure compliance with SOX, including reassessing and addressing weaknesses in their internal controls over financial reporting, possibly consulting with the Public Company Accounting Oversight Board to do so. When CBIs annual report is published, it should include an internal control report with the elements noted in Section 404 (statement of managerial responsibility over financial reporting internal controls, and an assessment of the effectiveness of the defined internal structure). The statement shoul d clearly state any and all strict action taken to bring the companys financial reporting into compliance with SOX regulations. The companys auditors need to be able to vouch for the effectiveness of the implemented internal controls.RESOURCESHilton, R. (2011). Managerial accounting Creating value in a dynamic business environment (9th ed.). McGraw-Hill. Hardcover ISBN 9780073526928.What is Horizontal Analysis? Definition and nitty-gritty (n.d.). Retrieved from Business Dictionaryhttp//www.businessdictionary.com/definition/horizontal-analysis.htmlDefinition of Return on Total Assets ROTA (n.d.). Retrieved from Investopedia http//www.investopedia.com/terms/r/return_on_total_assets.asp