American Superconductor

Topics: Debt, Business, Finance Pages: 3 (731 words) Published: October 11, 2011
Principles of Accounting I
Unit 5 Individual Project
1-2 Pages
Selecting a for-profit organization of interest, you will research an unusual or conflicting accounting principle that has impacted your chosen organization. The research will require you to present, review and analyze the organizations published accounting statements of the last two years. Specifically, your research paper will: Identify the core functions of each department, their strengths and weaknesses, and make recommendations for improvement, as appropriate Identify and describe the underlying problem or conflict

Compare the alternative courses of action
Explain the effects at issue
Recommend options that would be consistent with the organization’s accounting practices, accounting processes, and accounting-related departments. Include the last two years of published accounting statements.

American Superconductor is a company which develops technologies and solutions for electric power. The organization decided to utilize an equity financing accounting principle in their businesses decisions which was fairly controversial as many believe that is not a wise way for a business to operate. Skeptics of debt financing believe that the risks are too high. For example, the company would still be obligated to pay back loans regardless of whether the business survives. In addition, they may face high interest rates and they may be required to provide cash or collateral before utilizing equity. Also, the decision may destroy the company's credit rating as they will constantly be displayed as in debt. In addition, when utilizing money from investors, startup companies are unlikely to benefit from equity financing because investors are not likely to invest in this type of un-established business. Therefore, this not an ideal option for new businesses. These are some of the disadvantages in which American Superconductor may face in this decision. However, American Superconductor's risky...

References: “About Us” .(2011). American Superconductor. Retrieved from
Esposito, A. (2003). "American Superconductor Switch; Westboro Company Plans to Raise Money Through a Stock Offering". Telegram & Gazette. E.1. Worcester, Massachusetts.
"Equity Financing" (2010). Small Business Notes. Retrieved from
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