EZ Write$-$Down

$($Not So Easy$)$

The prospective financial statements for EZ Company were released early last week to the public. Losses were higher than expected and management released the following statement in response to inquiries:

$$Due to the extreme financial distress of one of our customers, EZ Company expects to collect only $50\%$ of the amount the customer owes. Therefore, the company wrote down the receivable and recognized a loss.$$

Banking with Calculators

Calculator, Inc., is known best for its sales of$...$ you guessed, calculators. It recently switched to wholesale, and the majority of customers are banks. In preparation for a financial recession, Calculator prepared its prospective financial statements to estimate the potential losses if one or more customers went bankrupt.

Slow and Steady

$($but Profitable$)$

Old Faithful Co$.$ is a maker of the Gadget, a component of earthmoving equipment used worldwide. It has paid dividends and reported profits every year for decades. It has hired a firm of accountants that will use software to generate financial statements that will be released without a report.

Numbers Flying

Recent volatility in jet fuel prices has many airline companies worried. Fly$-$By$-$Night is one small company that has really felt the effects of the financial instability. Consequently, it decided to enter into a business combination with a more stable company. American Air purchased Fly$-$By$-$Night, and the combination was completed earlier this year. American has recently released its financial statements, along with a statement that adjusts to historical financial information so that owners know how outcomes would have been different if this combination had occurred in the prior year.

Not a Corny Joke

Longhorn Ranches is preparing for a season of drought in West Texas. For business professionals of Corporate America, it can be hard to understand how a lack of rain can affect the bottom line.

However, Longhorn Ranches recently released a statement containing lower projections this quarter. Its management was assisted in the presentation of these financial statements by accountants who determined whether they were independent, reported on the statements, disclaimed any assurance, disclosed any lack of independence, and included their names in the report.

To Merge or Not To Merge

It has been reported that Grove Company is seeking to expand operations in the Southeast. Maple Mfg$.$ is a company that serves this area and Grove Company is considering whether it would be beneficial to merge with Maple.

Grove Company retained a CPA firm to determine how long each of Maple$$s customers has been purchasing from Maple and the financial stability of each of those customers. Grove Company will use the CPA$$s report to help make the decision whether Maple is a suitable target.