Introduction:
This report deals with the case study on Umicore N.V which is a material technology multinational. The case study talks about the impact of Income Taxes in managerial decision making and financial statement presentation. The case study starts with the company’s profile and tells about what the company is and how it is performing currently. While reading deeper you will learn about the tax depreciation method used by the company, capital gain/loss taxations, cost recovery, deferred tax and Income Tax expense. At the end we have given the conclusion in the perspective of Managers and provided some suggestions to the company.
Company Profile:
Umicore N.V is among those multinational companies which deal with materials Technology especially in metals and mining. It was found in the year 1989 and is headquartered at Brussels, Belgium. The CEO of the company is Marc Grynberg and Thomas Leysen is the Chairman. The company is centred on its four major business groups: Catalysis, Energy Materials, Performance Materials and recycling. But it is now more focused towards the recycling of non-ferrous metals and also the manufacture of specialized metallic and non-metal products. Mining, which was used to be the lifeblood of the company, now plays no direct part in the business.
Umicore is the world largest recycler of precious metals. Battery recycling is also a business unit which comes under recycling and is exclusively focused on the recycling of spent rechargeable batteries from laptops, hybrid vehicles, mobile phones etc.
Most of the revenue of the company comes from its Catalysis business unit and is divided into two divisions which are automotive catalysts and precious metals chemistry.
Recently the company acqu...
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...ny should list future tax cost of transaction’s deferred gain as liability. Company should record difference between asset gain and future tax liability as an increase in net worth.
Importance
It is crucial to company to recognize the delayed tax liability of deferred gain. if you ignore deferred gain and recognize more to the entire asset value increases as again to bet worth, company will overvalue its balance sheet.
Conclusion
Umicore’s revenue has increased by 4.7% and net financial debt has decreased by 11%. So is we look at the financial statement the company is performing well but we should consider the other factors as well. After including the deferred tax assets and liabilities the equity is 49% whereas the liabilities are 51%. So the investors will not invest in the company. Hence deferred tax assets and liabilities play an important role.
This strong growth in its downstream can be attributed to its efforts of diversifying its business to those products that have higher margins. For instance, the company’s refining and marketing margins helped the company to increase its earnings by a whopping $4.1 billion in 2015. This was however offset by volume and mix effect that led to increased maintenance costs and reduced its earnings by $200
Canandaigua’s return on assets is better than the industry standard for 1998, and just under the industry standard in 1997. The company’s management has been able to improve the company’s ROA by almost doubling net income from the prior year. Management has in the past done a good job of utilizing its assets, and by the latest results is doing an even better job. Canandaigua’s gross margin(25.62) is less than the industry standard(43.80%). It appears that the company’s production costs are greater than others in the industry. Profit margin(6.78%) is greater than the industry standard(6.64%) in 1998. Canandaigua is very good at controlling selling & general administrative expenses. Higher sales in 1998 resulted primarily from additional beer sales, largely Corona Beer sales, additional table wine sales and additional spirits sales. The company has increased its return on common stockholder’s equity(12.84%), compared to the industry standard of 10.89%. Canandaigua does a fair job of controlling borrowing. Interest expense was reduced by ...
This company has a large amount of assets, they total out at about 124,213. They have more assets than actually cash on hand. This company has no short-term debt, the only debt they have is short-term. There is a section called other assets this, has increased by a lot. The fixed assets have increased by a lot in this company.
... value, however, depreciation affects such values as operating profit and value of the company’s assets. If the depreciation is ignored, the Net Income calculations will be erroneous.
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In today's society income taxes are something in which almost everyone is familiar. However, the tax law and general purpose of income taxes is something in which the general society gives little thought. In addition, few tax preparers are aware that differences exist between the Generally Accepted Accounting Principles (GAAP) and tax accounting, not to mention the ramifications of avoiding or evading to proper complete the reporting of income taxes. This paper will discuss the objectives of modern tax law, the differences between Generally Accepted Accounting Principles (GAAP) and tax accounting as well as the differences between tax evasion and tax avoidance.
Depending on the legal parameters, countries may be required to adhere to strict laws and regulations which can leave small room for interpretation and improvising. For tax purposes, US companies are allowed to use faster depreciation and straight line depreciation for financial statements; Starbucks chooses to use the straight line depreciation. When paying taxes, adj...
In conclusion, we have realized the significance of including just the netted plan assets and the PBO and not including the full amount of the plan assets and the PBO on the balance sheet. This type of accounting flexibility by the FASB helps companies and ultimately hurts investors who are unaware of the consequences. Usually, the estimated PBO and plan assets are very large in relation to the debt and equity capitalization of the company. The financial situation is therefore skewed and is not represented correctly on the company’s balance sheet which then in turn distorts financial ratios. Investors who are unaware of these accounting rules will end up making erroneous conclusions. Also, this accounting flexibility allows managers to manipulate financial statements whether intentionally or unintentionally by influencing their actuarial assumptions.
From 1967 thru 1980, firms followed the comprehensive tax allocation procedures under APB Opinion #11 and reported deferred charges and credits. However, some problems arose from doing so. Because of the changes in tax rates and the nature of firm's investment, the balance of deferred tax credits on a firm's balance sheet began to grow in size instead of reversing and canceling out.
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The XYZ Corporation was established in 2004 and their main office is located in Vancouver, BC. The company’s main objective is to create new innovating technology for media devices, computers, and digital music players. They deal with the design, manufacturing and marketing of the products. XYZ Corporation has been providing Canadians with groundbreaking technology throughout the years and continues to create new technology to provide others with top-level technology. Although, recently their success rate has appeared to drop rapidly due to a number of factors that will be explored throughout this case study. Their main objective is to target the problems so that they can work towards having the issues resolved as quickly as possible. If they do not take any course of action, the state of the company may be in extreme danger. This case study is designed to explore the areas of the company and discover the problems blocking the XYZ Corporation from success.
The debt ratios increased by 2.7% to 57% more than double the industry standard of 24.5%. The long term debt increased from $700,000 to $ 1,165,250 an increment of 66.5% in the year 2002. The company is currently highly leveraged thus it needs to work on reducing long term debts and continue to increase assets. The times interest earned ratio dropped by 0.3 to 1.6 in the year 2003. The company could face difficulties making interest payments in case of a sales slump.