Submitted by: Submitted by gycp
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Words: 500
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Category: Business and Industry
Date Submitted: 03/29/2014 10:42 AM
Case Study: Harnischfeger Corporation
1)
* The corporation included in its net sales products purchased from Kobe Steel Ltd., and sold by the corporation. In previous years, only the gross margin on Kobe-originated equipment was included.
* Increased revenue by $28.0 million.
* The financial statements of certain foreign subsidiaries are included on the basis of their fiscal years ended July 31.
* Increased net sales by $5.4 million.
* The depreciation method was changed from accelerated to straight-line, applied retroactively to all assets.
* Increased net income by $11 million
* The corporation also changed estimated depreciation lives on certain U.S. plants, machinery and equipment and residual values on certain machinery and equipment.
* Increased net income by $3.2 million.
* Inventory reductions and changes to the use of LIFO resulted in liquidation of LIFO inventory quantities carried at lower costs compared with the current cost of their acquisitions.
* Increased net income by $2.4 million in 1984.
* The corporation changed its rate of return assumption for determining pension expense to 9 percent and restructured its pension plan.
* Reduced pension expense by approximately $4.0 million.
* $3.93 million pretax gain from amortisation of $39.3 million cash gain from pension restructuring.
2)
* Performance compared to competitors
* Depreciation method and depreciation lives were changed to conform to those used by other competitors to compete on a level ground.
* Debt covenant requirements
* Specified minimum levels of cash and unpledged receivables, working capital and net worth.
* To improve financial figures from loss to profits before the public offering of debentures and common stock.
* Unlikely to be able to raise such a substantial amount of capital with negative news and financial figures.
* Executive Incentive Plan
* All persons...