Between August 1 and September 10, 1986, revenue from the Companys reported insurance restoration projects supposedly aggregated
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Typically, the Company’s joint venture partners arranged for the financing (e.g., short-term bank loans) necessary to undertake the restoration projects. This financing supposedly covered the costs of materials and supplies, employee transportation and lodging costs, payroll, and other expenses estimated to be incurred before the first progress payment was received from the insurance adjuster (generally, after approximately 25 percent of the work had supposedly been performed). The Company was primarily liable for the debt and the joint venture was secondarily liable
The profitability of a restoration contract depended on the Company’s ability to control its expenses, the principal one of which was the cost of replacing the flooring materials. The Company claimed it had available a pool of approximately 200 experienced people capable of performing the restoration work, 90 of whom were Company employees and 110 of whom were independent contractors. Most of these people were supposedly located in Southern California and were deployed, as needed, to the various project sites
Using the facts above and the financial information on the subsequent pages, complete the following exercises:
Prepare a vertical analysis for each of the following three periods:
Fiscal Year Ended April 30, 1985
Fiscal Year Ended April 30, 1986
Quarter Ended July 31, 1986
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ISBN: 978-0324829556
10th Edition
Authors: Willian M Pride, Robert J. Hughes, Jack R Kapoor
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