The commission in its report has estimated an overstatement of revenues by $40 million for the year ended June 30, 2001. The financial statements of the company indicate otherwise as this overstatement would not have a significant impact. The forensic analysis performed on the relevant income statements and balance sheets of the company along with the notes accompanying these statements implies that the management has overstated revenues but the actual amount is substantially less than the amount cited by the Securities and Exchange Commission.
The revenues of the company are generated from two sources which are product sales and service sales. The service sales are irrelevant for the current scenario as the agreements of payment on resale are only made on goods sold and not on services provided. The revenue from product sales in 2000 was almost $22.2 million which rose to $28.19 million in 2001 and eventually reaching a level of $37.21 million. The trend in revenues from product sales indicates a stab le growth. The overstated revenues as stated by SEC do not even makeup the total revenues of one year.
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