Financial reporting in the recent years through the SEC mandates has become one of the most important aspects to corporate management. Stamford International's problem is inherent in the discrepancy in reporting system and accounting irregularities from the various aspects of the business. Not only has this but Stamford, due to rapid growth not been able to accommodate for the expansionary activities like acquisitions of units and international transactions. The result has been the experience of loss in earnings-per-share. In the following analysis, the researcher thus will outline some of the problems that Stamford should address and resolve accordingly to be able to post a positive quarterly report and remain compliant with the SEC regulations and become ready for signing of the Sarbanes-Oxley certification.
Earnings-per-share ratio is an estimate to measure the overall profit generated for each share for a particular period. Reportage of earnings-per-share is used to disclose to the shareholders, who in turn estimate the kind of dividends they expect at the year end. Issues relating to earnings-per-share should be analyzed as it reflects on the marketability of the shares to investors and shareholders. From David Morris (CEO) and Bill Lawrence's (CFO) discussion one understands that Stamford needs to re-evaluate its financial status to be able to meet the standards set by the SEC. In this context the first step should be to estimate the earnings-per-share. Although there is no doubt that earnings-per-share cannot be manipulated it can be estimated by using proper accounting practices and according to the generally accepted accounting principles (GAAP). In my opinion the company's first quarter earnings-per-share results should be reflected in the following manner (see table below). Table: Revised Earnings-per-share based on meeting discussion Stamford International Inc.3
DiscrepancyEPS (C/share) Last quarterEPS (C/share) 1st...