Accounting Changes

Financial records are financial statements a company produces on annual, quarterly or bi annually or even on a monthly basis. These records could be statements with the values of the firms net worth based on an evaluation of the companies liabilities as well as assets. Characteristic of financial accounting involves information circulation to the external users. This study is going to focus on the financial statements and performance of the Telkonet, Inc. Telkonet is one of the largest companies in the United States that deals with the provision of energy management technology. Telkonet is offers services such as hardware and soft ware services to commercial clients all over the world. The company is involved in the provision of Ecosmart range of products as well as the Ecocentral control platform, management of use of limited energy in building environments as well as HVAC timely and utility cost in the working environments.

Telkonet announced it’s financial, through its management has suggested, as well as the audit committee concluding that Telkonets consolidated financial statements concluded for the end of the previous year 2011 to be inclusive in the current 2012 report. All the financial reports that were carried out in the previous year are carried out in the yearly financial quarters being March, June and September should be revisited due to some adjustments that had previously not been included and as such, the reports should not be used for any references. In the report it was included that financial released reports had in them a release of a reliable sales tax report that it had a total of 159,000 dollars.

The company also noted that it would seek consent from a nationally reputed sales tax consultant who would be able to advice on the tax potential exposure. This was concluded after the observation that involved discrepancies in the calculation of the financial statements, which was laborious and arduous with very many complexities that included the large figures from all the operating states (Tokhi, 2009). An average of 825, 000 dollars was accrued in the penalties, interests as well as in the sales tax and this was inclusive in the prior to this year’s report. This report given out warranted the audit committee to conclude that the financial reports given out needs to be re instated.

The company also noted that there are various areas in the financial management that needs to be adjusted, which the management was already getting them worked on. The president of Telkonet Company issued an assurance to the company’s shareholders noting that the company is committed to providing a prompt and a trusted resolution to the conflicts in the matters while coming up with more disclosure that is reliable. This statement proves another initiative in the current efforts to give a new dimension to Telkonet while putting the company strategically for a long-term developments as well as profitability.

Financial assessment statements are always a documented historical performance or a financial record that elaborates the company’s financial status at a specified period or point of time. When these financial statements get to the public domain, a number of changes happen in various market sectors (Campbell, Grossman & Wang, 1993). These include such changes as market conditions, changes in market currency exchange rates, as well as factors of inflation that is the main determinant of prices of goods and services in the market. In such cases, there is always witnessed a conflict in the book values as to that of the market values. When such cases are witnessed in a company, there are companies that are healthy enough to experience a financial distress, with the main fear factor not being able to take care of the debt obligations.

The initial indicator for the financial distress would be witnessed when a company is not able raise a sufficient amount of liquid asset that can take care of the current liabilities. When a company is faced with such a situation, then the company’s ability to caver up for its long-term liabilities decreases. This later translates to a high risky situation for the creditors in their investment or giving a loan to the company in relation to the value worth of the company. During that period when a company is faced with distress, the book values of the assets of the company will be valued at higher than the market prices, at such situations; the company is at risk of not meeting the creditor’s expectations in the service delivery as well as service production. At this the creditors to the company may not be paid of their dues and this exposes the company at a very risky position.

The significance of financial evaluation as well as financial decision-making is to add the chances of the shareholders value while keeping them at a financial secure zone. Being able to foretell the financial expectations is important in the attraction of shareholders to the firm as well as keeping the investors from being at a loss. There have been many studies that have been carried out but none has distinctively defined the theory explaining financial distress. These studies have been noted to be statistical in nature as compared to intuitive models or otherwise the basic reasons behind financial distress (Sanhusen, 2008).

Financial analysis is beneficial to carry out financial assessment to firms as it enables the companies to come up with a reliable trend of pattern in its management for a period of time in which the assessment was carried out. With a reliable financial assessment, a company is able to determine the variations from the normal tendencies in the performances as well as identifying the specific favourable or undesirable variations in the period in a given series. However, it is worth noting that for the financial ratios be carried out among same-size companies, there is no need to conduct ratio analyse. This is because the companies are within the same region as the multinational companies given the major difference in the companies is within the business strategies as well as the interest involved in the different companies (Bollen & Whaley 2004). To be able to identify the management of the changes in the differences of the ratio over a given specified period is determined by a relation of the different businesses. Factors that are used to calculate these group ratios is the profitability of the businesses, the liquidity, efficiency as well as the investments. There are other studies that have tried to investigate these determining factors and it was noticed that a failure in the predictive models which is useful in the determination of the business financial stability. The investigation of the financial assessment has also been in questions in practical situations circles (Bollen & Whaley 2004).

The financial analyses are also important in the determination of sales patterns. The financial statements reveal the total amount of sales a company manages annually. Over the years, a firm is able to establish a steady market analysis that provides the company with a market sales pattern (Brinson, & Beebower 1986). Financial record can also provide the company with a reliable basis of future planning in its budget. These financial statements are also able to reveal the much a firm can involves in given the available wiggle room the firm has in the spending in its launching of services and products (Kurtz, MacKenzie, & Snow, 2009, p. 148).

References

Bollen, N. B., & Whaley, C. (2004). Does Net Buying Pressure Affect the Shape of Implied Volatility Functions?’ The Journal of Finance, 59(2), 711-53.

Brinson, G., Hood, L., & Beebower, G. (1986). Determinants of Portfolio Performance’, Financial Analysts Journal, 42(4), 39-44.

Campbell, J. Y., Grossman, S. J., & Wang, J. (1993). ‘Trading Volume and Serial Correlation in Stock Returns’, The Quarterly Journal of Economics, 108(4), 905-39.

Kurtz, D. L., MacKenzie, H. F., & Snow, K, (2009). Contemporary Marketing. Mason, OH: Cengage Learning

Sanhusen, R, (2008). Marketing. New York: Barron’s Inc

Tokhi, M. (2009). A Case Study on Virgin Atlantic airline: Practical Marketing Solutions”. Journal of Business Studies Quarterly 1(1), 16-25.