Citibank Financial Meltdown and Analysis


The financial meltdown of Citibank in 2008, according to some authors could easily have been predicted based on the market and the strategy of the financial institution. (Gleenlaw et al. 2008)  Citibank was present in the mortgage and housing finance market and held a great market share worldwide. The country currently operates in more than one hundred countries. It has a history of more than 200 years.


Dent’s definition of culture in his study of Euro Rail

Accounting is a common practice for most organizations. Systems of hierarchical accountability, planning and budgeting activities, budgetary controls and remuneration arrangements, and performance appraisal procedures rely on accounting practices in more or lesser extent. Accounting is therefore, likely to be implicated in the cultural systems of organizations (Dent 442). Culture has many definitions depending on the circumstance with which they are applied. Culture is ordered clusters of significance, shared web of meaning through which individuals learn to appreciate the meaning of experience as guiding by action (Dent 444). Culture is produced as well as reproduced through interaction and action.


Question and Response

Case Background

What constitutes organizational development? For business organizations that has withstood the different twists and turns of the tides of time, it is evidently essential that change is considered as an element that constitutes organization development. True, as the society advances, the was businesses are directed also takes differential conditions of adjustments. In relation to this, the case study on EuroRail handled by Jeremy Dent shows a distinctive indication on how modern businesses intend to develop accordingly. In this particular research, Dent intends to show how the aspects and principles of modern accounting actually help in defining the pathway taken by businesses as they change their culture and their operational approaches in the hope of creating adjustments that would make it easier for their company to embrace the new age culture of modern businesses. To be able to examine how Dent places an indicative consideration on specific elements of research and how he utilize the information he gets to actually provide a clear vision on what should be considered in relation to modern business management, several questions of research shall be given particular attention to in this discussion.


When to drop an unprofitable customer?

For this article, I looked in the library through a number of prospective magazines. I finally decided on choosing an article related to the intersection between managerial accounting and customer management.  The article’s title is: When to drop an unprofitable customer? This article was published as a part of the May 2012 edition of the Harvard Business Review.


A scandal from Enron

In October of 2001, the country was besieged with a scandal from Enron, an energy company, headquartered in Houston, Texas. The accounting company of Arthur Andersen was also involved due to their poor auditing practices. Company executives were part of an elaborate scheme called pump and dump. The scheme involves deceptively inflating a stock price through misleading or fabricated statements so that cheap stocks are sold at a higher price. Once these shares are “dumped” onto unsuspecting buyers, prices fall resulting in investors losing money. Enron’s downfall was attributed to its complicated financial statements that confused both shareholders and analysts alike. Executives also misrepresented earnings and altered accounting ledgers in order to indicate favorable company performance.


Qualitative Analysis for Blackberry and Nokia

1.    Qualitative Analysis (SWOT)

1.1         Blackberry


Blackberry’s strengths are its reputation for delivering high quality, reliable products and durable mobile devices. Additionally Blackberry’s e-mail service is another major strength, which combined with its unparalleled physical QWERT keyboard gained the company lots of loyal customers. The email server used by Blackberry is highly secured, every email that leaves a Blackberry device is decrypted and it can only be decrypted in Blackberry’s own network data center in Waterloo, Ontario. Blackberry devises are used by government agencies and companies who value a high secure method for their confidential communications. Even the current President of the United States Barack Obama is a high profile Blackberry user who even refused to give up on his device once he got elected into the White House, this dedicated endorsement by Mr. Obama is valued up to $50 Million (US) by marketing experts (Krangel, 2009). Another asset of Blackberry is their new BB10 mobile device, which is highly praised by critics (Florence Ion, 2013) with this new phone, Blackberry should be able to regain market share losses, the launch of the device so far looks very promising (Friend, 2013).


Blackberry’s main weaknesses are the lack of available apps when compared to Apple and Android devices, those two main competitors offer more than 1 Million apps to customers while BB10 will only have between 100.000 and 200.000 apps available in the Blackberry App’s store. A Further weakness of Blackberry is to rely heavily on Government and Corporate purchases, both of which have shrunk over the last years since more and more of these major customers changed to a “bring your own device” policy. But this trend might be reversed since several studies have shown that the “bring your own device” strategy turns out to be more costly for government agencies and private enterprises (Iain Marlow, 2012).


The entire smartphone market has experienced an explosive growth during the last four years global smartphone shipments in 2011 were up a stunning 61%, Apple and Samsung sold 37 million and 36 million units in the 4th Quarter of 2011, so the two companies alone were covering 46.3% of the global smartphone market (Ramos, 2012). This worldwide growing market gives Blackberry the opportunity to market its new device BB10 effectively and regain some of their lost market share. It is especially important to reach customers in emerging markets such as China and India which both proofed to be the biggest markets for mobile devices with the biggest growing potential giving the constantly improving economic situation and large number of population. With the new features like front camera and more available apps and new and updated software, Blackberry might be able to win lost customers back. Safe and secure communication will continue to be the most important features associated with Blackberry devices, in which the company continues to stay unparalleled.


Blackberry faces a stiff competition from other mobile device brands such as Apple, Samsung and Nokia, which, over the last three years were constantly successful in steadily increasing their percentage of the market share. Another threat for Blackberry is its very own secure email system, since it is impossible for Government Agencies to intercept or to encrypt emails and other communications send from Blackberry handheld devices, many Governments consider Blackberry to be a threat to their own national security. The United Arab Emirates and Saudi Arabia have considered restricting the use of Blackberry services including email, instant messaging and web browsing. After the Terror attacks in Mumbai in 2008, the Indian government threatened to restrict Blackberry services since some of the attackers used the companies secure services to coordinate the attacks (McElroy, 2008). Since India is the second largest market (only behind China) of mobile phone users with 904 Million wireless subscribers (Bouverot, 2012) it would be an immense loss for Blackberry to get cut off from a market with such a high growing potential.

2.    Conclusion

Relating to the discussion presented in this section, it could be considered that Blackberry has incurred its peak condition of market performance as it introduced a new revolution on modern mobile technology. However, at the peak of its innovation, Blackberry faced a certain aspect of competition that involved not only its local competitors but that of the international players in the market as well. Relatively, Apple, Samsung and Nokia offered more options of applications being installed in their system. This hurt the market performance and acceptability of Blackberry making it less acceptable in the international market. The applications it offers are more dedicated to a specific target market, hence, it is a big challenge for the company to become more innovative especially in creating new waves of features that would fit the majority of the market.

3.    Appendix 1


  1. Inventories – Raw materials are stated at the lower of cost and replacement cost. Work in process and finished goods inventories are stated at the lower of cost and net realizable value. Cost includes the cost of materials plus direct labor applied to the product and the applicable share of manufacturing overhead. Cost is determined on a first-in-first-out
  2. Net Income – Net income was $3.4 billion in fiscal 2011 compared to net income of $2.5 billion in the prior fiscal year. The $954 million increase in net income in fiscal 2011 primarily reflects an increase in gross margin in the amount of $2.2 billion, as well as an increase in consolidated gross margin percentage. Included in net income in fiscal 2010 was the impact of unusual charges of $96 million, a $175 million income tax benefit, which related to the foreign exchange impact of the enactment of functional currency tax legislation in Canada, and a $164 million litigation charge, which related to the settlement of the Visto Litigation.
  3. Financial Condition – Liquidity and Capital Resources, Cash, cash equivalents, and investments decreased by $172 million to $2.7 billion as at February 26, 2011 from $2.9 billion as at February 27, 2010. The decrease in cash, cash equivalents, and investments is primarily due to net cash flows used in financing activities and investing activities, which were partially offset by net cash flows provided by operating activities.
  4. Recently issued announcements – In November 2008, the Securities Exchange Commission (“SEC”) announced a proposed roadmap for comment regarding the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”). IFRS is a comprehensive series of accounting standards published by the International Accounting Standards Board (“IASB”).
  5. Litigation expense – In fiscal 2010, the Company settled the Visto Litigation. The key terms of the settlement involved the Company receiving a perpetual and fully- paid license on all Visto patents, a transfer of certain Visto intellectual property, a one-time payment by the Company of $268 million and the parties executing full and final releases in respect of the Visto Litigation. Of the total payment by the Company, $164 million was expensed as a litigation charge in the second quarter of fiscal 2010. The remainder of the payment was recorded as intangible assets.
  6. Gross Margin – Consolidated gross margin increased by $2.2 billion, or 34.0%, to $8.8 billion, or 44.3% of revenue, in fiscal 2011, compared to $6.6 billion, or 44.0% of revenue, in fiscal 2010. The increase in consolidated gross margin was primarily due to an increase in the number of device shipments and an increase in service revenues as a result of additional subscriber accounts.
  7. Revenue – for fiscal 2011 was $19.9 billion, an increase of $4.9 billion, or 33.1%, from $15.0 billion in fiscal 2010. The number of BlackBerry devices sold increased by approximately 15.6 million, or 43%, to approximately 52.3 million in fiscal 2011, compared to approximately 36.7 million in fiscal 2010. Device revenue increased by $3.8 billion, or 31.7%, to $16.0 billion, reflecting primarily the higher number of devices sold. Service revenue increased by $1.0 billion, or 48.1% to $3.2 billion, reflecting the increase in net new BlackBerry subscriber accounts since the end of fiscal 2010. Software revenue increased by $35 million to $294 million in fiscal 2011 and other revenue increased by $40 million to $460 million in fiscal 2011.
  8. Research and Development – Research and development expenditures increased by $386 million to $1.4 billion, or 6.8% of revenue, in fiscal 2011, compared to$965 million, or 6.5% of revenue, in fiscal 2010. The majority of the increase during fiscal 2011 compared to fiscal 2010 was attributable to salaries and benefits due to an increase in the headcount associated with research and development activities, as well as increased materials usage.
  9. Selling, marketing and administration expenses – increased by $493 million to $2.4 billion for fiscal 2011 compared to $1.9 billion for fiscal 2010. As a percentage of revenue, selling, marketing and administration expenses decreased to 12.1% in fiscal 2011 versus12.8% in fiscal 2010.

4.    Qualitative Analysis (SWOT)

  1. Nokia

Strength: a company that particularly originated in Finland. Nokia is noted for providing high-end quality products that are able to make a specific impact on the market that they aim to serve. Understandably, this particular reputation of the company has led it to its current state of being internationally recognizable (Rao, 2005, 33). Its current status in the market is protected by its alliances with the big players in the mobile and internet industry. Relatively, this makes it easier for Nokia to establish a name even in the outside limitations of its more competitive grounds. Innovation, as a part of the company’s culture remains a strong indicator of the organization’s capacity to enter new markets.

Weakness: the innovations handled by smaller competitors located in areas such as China and India provides a specific condition of challenge to Nokia. With more features that fit the desires of the people and lower price offerings, it is sure that the brands from competing businesses in par with Nokia’s product offerings specifically challenge the foundation of the business especially in the face of the changing market trends (Walker, 2008, 119).

Opportunities: the android market has specifically improved dramatically and it is a great opportunity for Nokia to swerve from the downfall of its profit towards regaining its stand in being the pioneer in innovation (Humphrey, 2005, 67). It may however need to shift its labor and manufacturing faculties to afford innovations with lower costs of expenses.

Threats: If Nokia is not able to make particular changes in its approach to the market, it could be possible that the company would not be able to make specific manifestations of improvement and the capacity to win the market over (Rao, 2005, 35)..

6.    Appendix 2

  1. Nokia

Inventories: Because of the drop of market performance of the products released by Nokia, it could be realized how the inventory of the business increases by at least 2% based from the inventories of 2010. This basically indicates that the rate of products released by the business in the market does not reach a high peak compared to that of the number of items distributed during the past years.

Financial Condition: There is a dramatic year on year drop on the sales and revenue report of the business. This largely impacts the manner by which the business is able to serve the needs and the demands of the market. With a drop of at least 2% to 5% rate of sales, it is essential that adjustments on the operation costs be considered.

Recently issued announcements: To reduce production cost, Nokia has announced that it would have a new manufacturing plant to be located in Hanoi, Vietnam. Targeted to open in 2013, this new branch for manufacturing is expected to lower down both labor and operating costs that the company releases every year.

Litigation expense: Due to the issue between Apple and Nokia, litigation expenses were incurred. The said amount paid for legal services and support specifically hurt the performance of the company yet it was also considered as an investment so as to settle the differences and the disagreements the company has with its tight competitor, Apple. The amount of the said expense was considered to be at EUR 11,000. The process was tedious and the situations that the company has to endure during the time specifically affected the way they managed financial assets accordingly.

Gross Margin: Smart devices sold in the market has a relatively dropping rate of almost 7% gross margin from the 30.8% of 2010 towards the 23.7% performance in 2011. This situation is primarily driven by the fact that the cost erosion of competitive pricing in the market has created a huge gap between Nokia and its competitors.

Revenue: the revenue based on the fiscal report of yearly sales specifically point out that the company has plummet to at least a 13% drop on the rate of sales that it is making both in the local and the international market. The entrant of new producers of mobile phones and smart phones which further develops the android market dramatically creates a distinct indication on how the company performed in 2011 in par with its competitors and new upcoming challengers. The sales of at least EUR 13, 696 million in 2010 went to drop at 13% on 2011 at EUR 11, 930. This drop provides a picture that the income of the business dropped as well. This yearly decline on sales also affects the performance of the organization in an annual manner.

Net income: observably, because of the higher rate of expenses in 2011 which could be valued at EUR 7,534 million compared to 2010 expenses valued at EUR 6,995 million, the net income of the business in 2011 drops dramatically.

Nokia’s share price decrease every year: there is a 5% drop of share price every year based on the performance level of the company in the international market. With the incoming new technologies that has surpassed the innovation that the company pioneered, which is the dual-sim development, it could be considered that the company facing a strong and very much impacting challenge to the way they perform in the market.

Decision of Investment:

Considering the competitive stance of the organizations observed herein, Blackberry seems to be at a more specific course of progress, which means that investing in the company would be more relatively productive than in investing with Nokia. With the android market continuously growing and developing, it is assumed that Blackberry gains a specific place in the arena of competition making it a relative source of proper profit from investment.  With a higher price of share increase in the market in recognition of Blackberry’s position in the industry, it could be realized that investing in this organization is relatively a good decision for both companies and individual entities in the market. With a higher chance of gaining profit, Blackberry seems to take a better sense of command in relation to market segmentation compared to Nokia. If Nokia continues to stick to its original condition of creating and manifesting innovation of mobile phones the way it deed in at least 3 years ago, it would be hard to consider it as a relatively good source of investment in the market. Nevertheless, if it gains better control on how to penetrate the android market and become more acquainted to the need of the market for more functional yet cost-practical products, then it might just be possible for Nokia to be considered a good source of confident investment.


Armstrong, M., (2006).  A handbook of Human Resource Management Practice, 10th  Ed. London: Kogan Page.

Humphrey, A., (2005). “SWOT Analysis for Management Consulting”. SRI Alumni Newsletter, SRI International.

Rao, M., (2005). “Sustaining competitive advantage in high-technology environment: A strategic marketing perspective”. ACR Vol.13, No.1, pp.33-47

Walker, D., (2008). “Sustainability: Environmental Management, transparency and  competitive advantage”.  Journal of Retail & Leisure Property, Vol.7, No.2,  pp.119-130


FedEx and UPS

  1. History and Services Firms Provide

United Parcel Service was initially founded in 1907 as a messenger company (UPS, 2012). Since then, the company has grown into one of the world’s largest logistical companies. The company gradually consolidated over time, purchasing domestic logistics companies, taking on the current corporate shape.  Due to the firm’s initial operational foundation, it is a strong competitor in the ground and freight forwarding areas.


Financial Analysis of Wal-Mart Stores Inc.

Founded by Samuel Walton in 1962 and incorporated in 1969, Wal-Mart Stores Inc. (NYSE: WMT) runs chains of department stores and warehouse stores in 15 countries under different names. Ever since going public in 1972, the American retail giant has grown considerably over time to become the third largest public corporation in the world; The Walton Family controls 48% stake in Wal-Mart businesses. Wal-Mart is rated as one of the valuable companies in the world, according to the Fortune Global 500 list. Wal-Mart operates successfully as Walmex in Mexico, Asda in UK, Best Price in India, and Seiyu in Japan. The Wal-Mart operations in Germany and North Korea were less successful, compared with South American and Chinese operations. (Frank, 2006)


Budgeting & Reporting Assignment

Part A

When running a business a financial view on the company’s financial performance is a necessity not only for management but also stakeholders and other investors. A way that the company can provide a view inside their company’s finances is to have good accounting system that correctly calculates and budgets revenues, services, and expenses. There are several financial metrics that are used by accountants and managers to evaluate company’s performance. The Income Statement is a financial metric used in determining the profitability of a company during the period specified.


Company Overview: Wal-Mart Stores Inc.

Founded by Samuel Walton in 1962 and incorporated in 1969, Wal-Mart Stores Inc. (NYSE: WMT) runs chains of department stores and warehouse stores in 15 countries under different names. Ever since going public in 1972, the American retail giant has grown considerably over time to become the third largest public corporation in the world; The Walton Family controls 48% stake in Wal-Mart businesses. Wal-Mart is rated as one of the valuable companies in the world, according to the Fortune Global 500 list. Wal-Mart operates successfully as Walmex in Mexico, Asda in UK, Best Price in India, and Seiyu in Japan. The Wal-Mart operations in Germany and North Korea were less successful, compared with South American and Chinese operations. (Frank, 2006)


Smith & Wesson Financial Statement


The annual report helps the investors and other company stakeholders get a better picture of the company’s economic position and performance than what may be possible through an analysis of financial statements such as balance sheet, income statement, and statement of cash flows. Accounting rules provide considerable flexibility to organizations, thus, accompanying notes and management opinions are helpful in learning about the assumptions used in preparing the financial statements.

Main Sections of the Financial Report

The annual report is divided into several parts for the sake of organization and convenience. As far as Smith & Wesson is concerned, the first section in the 2012 10-K report (Smith & Wesson Holding Corporation, 2012) dealt with the internal and external environment of the company such as its operations, strategies, core competencies, product lines, regulations, and SWOT. The management gave its opinion on existing and future events that may or may not have material impact on the economic position of the company. Another section was commentary on the financial statements of the company which helps the readers better understand the factors that influenced the company’s performance. The management also compared the recent performance with those of the past years to highlight the progress or challenges.

Accounting Other

Accounting Exercise

  1. Scenario 1


In this scenario, Customer A is located in one area with an inventory of different products.  Metropolitan services Customer A by going to their site and collecting and transporting the waste back to Metropolitan Columbus facilities. Revenue should be recognized in this transaction not when the waste is first received, but rather, after the waste is safely destroyed on September 20. The revenues should be recognized on September 20.


  1. Scenario 2


In this scenario, Customer B is a hospital located in the New York area, where they must dispose contaminated hospital tools by law.  Metropolitan was able to collect the waste on March 31.  Although the customer was billed for services on March 31, Metropolitan should not recognize revenue until April 1st when facility personnel collected the hospital waste.  Revenue should be recognized on April 1st.

  1. Scenario 3

In this scenario, there was a minor earthquake that necessitated toxic waste clean-up.  The total length of the assignment is six months: Metropolitan workers will be on-site for a total of six months, providing services 7 days a week, 24 hours a day service to the area. The revenue recognition principle in this case is more difficult since services are provided over a long-period of time, rather than the previous examples in which they were based on a per-episode basis.

Furthermore, revenue recognition is complicated by the fact that the waste is transported over state lines that necessitates Metropolitan to assume “ownership” of the waste.  In this scenario, taking consideration of these factors, revenue should be divided on a per-day basis, and then charged as Metropolitan completes their daily routine. Revenue should be recognized on a daily basis.

  1. Scenario 4

In this scenario, Metropolitan is contracted to perform a variety of services for wasted produced in a university’s chemical laboratories.  There are a number of different processes this job required in order to finish the contract: 1) packaging the waste into (10) gallon steel drums; 2) further consolidation of that waste into six drums; 3) Shipping of those drums to Wyoming and then to Denver Colorado where they were ultimately disposed of.  With this process in mind, Metropolitan should recognize revenue on August 10th when the job is finished.

  1. Scenario 5

In this scenario, Metropolitan services the city of Chicago that holds a waste collection event monthly throughout the year. Metropolitan is tasked to run the collection areas for residents to drop off household hazardous waste. There is also a rather long process of getting the waste to its final destination, but revenue should not be recognized until it reaches Cheyenne. That is, all revenue should be recognized


  1. Footnote Text

The company sells waste management, transportation, processing, and burial services.  Maintenance revenue is recognized ratably over the term specified within each contract which can range from immediate disposal of waste to longer term commitments.  Revenue recognition may also differ based on the type of contract: while some contracts result in an immediate disposal of waste, others take significant processing and burial.


EPA.  Regulations on Hazardous Waste Disposal.  Available at:

FASB.  Revenue Recognition Principles.

Needles, B. (2008).  Principles of Accounting.  Cengage Publishing.


University of Utah.  Principles of Accounting.







Accounting basic of manage class work

Current Assets and Current Liabilities

The better management of current assets leads to better management of current liabilities and help organizations improve their working capital. If the firm has an efficient accounts receivables management system, it may be able to pay payments to suppliers in a timely fashion and may even qualify for discounts for prompt payment (Booth and Cleary) which should improve cash position. Similarly, sufficient cash reserve means the organization may need a lower amount of short term loans, resulting in better short term liquidity.


Discussion 6

NO. 4

A CPA has been asked by a client to evaluate various commercial service bureaus and recommend a particular service bureau for processing the client’s accounting records. Several partners in the CPA’s firm have a material interest in one of the service bureaus under consideration.


Rule 101 – independence (2013) states that a CPA member should be independent in the performance of their professional accounting services as necessitated by standards and principles created by accounting as well as auditing bodies of regulation. As such, the independence of the CPA, in this case, is impaired since several partners in the CPA firm holds a material interest in service under consideration. This raises the questions of objectivity when they perform services to bureaus under consideration. Besides, bias and prejudice may influence their integrity, judgment, and independence. The dilemma, in this case, takes two dimensions. One, CPA firm can dispose of material interest. This act will re-instill independence; hence, their judgment will be objective and unbiased. Secondly, CPA with material interest should make a public declaration and assure that they will adhere to professional standards and principles when providing their services.

NO. 5 

A CPA, a staff member, plans to submit her resume to another firm. In her resume, as an indication of her auditing experience, she is considering listing the names of several non-public companies for which she has performed audits.

The ethical issue is naming audit clients in the resume, and it is described in Rules of Conduct: Rule 301 – Confidential client information. This rule holds that a CPA member in public practice should not disclose any private or confidential information without the client’s consent. However, the ruling made on Rule – 391.7.14 – revealing the names of the clients, states that it is permissible for a member to disclose or publish client’s name without their consent unless such disclose contains a release of private or confidential information (McAllister & Cripe, 2008).


AICPA Code of Professional Conduct. (2013). Rule 101-Independence.Retrieved from http// on 27 November 2014.

AICPA Code of Professional Conduct. (2013).Rule 502-Advertising and other forms of solicitation. Retrieved from http// on 27 November 2014.

McAllister, B., & Cripe, B. (2008). Improper release of proprietary information. The CPA Journal78(3), 52.