The Harnischfeger Case Essay examples

Read the “Harnischfeger Corp” case study and answer the following questions. Submit your completed assignment no later than the last day of Week 2.

The allowance would have been $8.5 million if they would have had consistency on the ratio from 1983 in 1984. As a result, the pre-tax income increase is $2.6 million due to the changed ratio in 1984.

For this assignment, purchase and read the case file “Harnischfeger Corp.” You can purchase the reading from Harvard Business Publishing Web site. After reading the case, answer the questions on page three of this document. Submit your assignment by the end of Week 2.

I believe that this action was motivated by business considerations, since the accounting practices were not the best. In 1984, Harnischfeger´s reported profits during each of the four quarters, ending the year with a pre-tax operating profit of $5.7 million and a net income after tax and extraordinary credits of $15 million. As such, this made profits look positive.

would increase net income for the current year by more than would have resulted if the correction

Are these changes permissible under generally accepted accounting principles? Assuming these changes had a material effect on USSC’s financial condition and results of operations, how should the changes have been disclosed in the company’s financial statements? How should these changes have affected Ernst & Whinney’s 1981 audit opinion? (Assume that the current audit reporting standards were in effect at the time.)

The first change that we demonstrated was the percentage increase in sales. For 1993 we looked at a range of sales increases from 5% up to 15%, with 10% being the amount that the company forecasted. Once we completed this table we modeled a graph from the results and found that the results from changing the sales growth percentage we not all that sensitive when computing the effect on net income:

Harnischfeger’s corporate recovery plan was a four pronged approach that involved (1) changes in top management, (2) cost reductions to lower the break-even point, (3) reorientation of the company’s business and (4) debt restructuring and recapitalization. These changes at first glance appear to have allowed Harnischfeger to improve its financial performance from a net loss of $3.49 per share in 1983 to a net gain of $1.28 per share in 1984. In addition, Harnischfeger has appeared to have achieved a majority of its desired outcomes from each of its four changes as shown below.

Net income per common share – assuming dilution increased approximately four percent reflecting the impact of additional common shares issued, increased interest expense, and increased merger and integration costs, all related to the Folgers transaction.

1. Assess Interco's financial performance. Why is the company a target of a hostile takeover attempt?

The result of all the reductions of expenses on the revenues, takes us to the Net Earnings. This account reflects $12,266, $683 less than in 2008, but $1,690 more than 2007.

7) What was the effect on 1988 earnings per share, of the non-recurring items: area development

If the depreciation method changes from straight-line method to accelerated method then, depreciation expense would be increase and net income would decrease. The EPS ratio would represent a loss of $0.19 per share.

The pension plan changes affected Harnischfeger’s financial statements in 1984 by reducing expenses with its associated plan. The reduction in staff and the change of the plan allowed the corporation to increase net income which in turn

I will use Paladin Energy Ltd. to explain how this is done. Paladin Energy Ltd. is a company that produces uranium, and is based in Western Australia. It is also listed on ASX, and they are currently operating in Malawi, Africa. Previously, Paladin Energy Ltd. represented the exploration and evaluation expenditure against profit and loss. Now, they capitalize this expenditure as an asset. They adopted this new accounting policy on 31st March 2011. The previous policy has accounted