Financial Report for Bristol-Myers Squibb Pharmaceutical Company - Case Study Example

Bristol_Myers Squibb_Entity Introduction The Bristol_-Myers Squibb entity offers healthcare products to the patients. The paper focuses on the healthcare products that help in the curative process of patients afflicted with cancer, arthritis, and psychiatric and other ailments. The paper centers on the financial investment climate of the company. The financial report affirms Bristol-Myers_Squibb is a good investment alternative. Bristol_Myers Squibb_entity General_Business_Information The company, Bristol-Myers_Squibb is a New_York headquartered pharmaceutical company (Bristol-Myers_Squibb1). The company’s major business operations are focused on the production of medicines. The medicines help in the alleviation or recuperation of patients. The patients include those suffering from cancer, arthritis, psychiatric disorders, HIV or AIDS, diabetes and other ailments. The company belongs to the pharmaceutical sector of the healthcare industry, selling medicines. The company makes profits by selling lots of medicines. The medicines sold must be high enough to recover the production costs of the medicines. Similarly, the revenues generated must be high enough to recover the production, administration, and marketing expenses needed to research, develop, produce, and sell the various medicine alternatives (Beaver 13). Accounting_Concepts & Technical_Issues (Revenue & related inventory accounts The company rigorously complies with standard accounting concepts as well as technical issues (Bristol-Myers_Squibb1). The revenues are recorded using the appropriate estimation and assumption concepts of accounting. The inventories are sent to the three major distributors. The distributors are allowed to return all stocks that are nearing their expiration dates. An estimated 90 percent of the company’s global revenues generated come from medicine stocks sent to the company’s three major global distributors (Beaver 13). Further, the inventory-based revenue amounts are implemented by implementing the prescribed international_accounting standards (Bristol-Myers_Squibb1). For example, FASB_and IASB_accounting concepts affirm Bristol_Myers Squibb_entity’s revenue is correctly recorded in the accounting books since the arrangement contracts were signed by current and future business customers (Stice 11). The sales (revenue) amount is recorded in the accounting books if there is a very high assurance that the customers will be able to pay their purchase liabilities within the foreseeable future. Likewise, the company includes the revenue amounts in the accounting books if the ownership of the company’s medicine products had been transferred to the current and future business customers. For example, the company records as revenues in the accounting records all stocks that had already left the company’s sea port and kept inside the travelling planes, land, vehicles, or boats and are on the way (in transit) towards the company’s current and future business clients (Beaver 13). When the revenues are recorded, there is an immediately reduction of the company’s inventory amount (Bristol-Myers_Squibb1). The inventory amount of the sold medicine products (possibly travelling towards the customers’ addresses) are recorded by taking into consideration the costs of the raw materials, the production workers’ salaries, and other production, admin, and marketing expenses. For medicine products stored in the company’s top distributors, the return of inventories classified as nearing their expiration dates will included as on hand or current inventories of the company (Beaver 13). Further, the Bristol_Myers Squibb_entity’s inventory-based revenue amounts are constantly adjusted (Bristol-Myers_Squibb1). The adjustments include reducing the revenue amounts in compliance with prescribed accounting policies of each market segment or geographic location. Reduction in the revenue estimates because of certain recent factors will automatically trigger a reduction in the company’s current revenue amounts shown in the income_statement report and related balance_sheet report (Beaver 13). My Assessment of the company’s accounting information usefulness The company’s prepared financial accounting data is very useful. Different stakeholders use the financial reports for their unique financial decision moves. For example, the investors use the financial reports to determine whether to invest funds into the company. The company’s income_statement showing the company generated huge net profit figures for the past five years will convince the current and future business investors to invest in the company. On the other hand, an income statement showing the company generated net loss outputs during the past four years will dissuade the investors from putting their hard_earned investment cash into the Bristol_-Myers Squibb entity. For example, the company’s 2014 income_statement shows 2014 generated a global net income, $ 2,029 million (Bristol-Myers_Squibb1). Consequently, the net income output prods the current and future business investors to eagerly invest their money in the Bristol_-Myers Squibb entity (Beaver 13). Further, the customers need the financial information to determine whether the company will continue to fill the current and future business customers’ medicine medicines. An income statement showing the company generated a net loss figure for the past five years creates glaring impression on the current and future business customers that company is on the bankruptcy path. Bankrupt companies often close shop, forcing the current and future business customers to seek medicine alternatives from the medicine competitors (Beaver 13). Moreover, other parties will favorably use the financial reports for their own biased interested. The government uses the financial reports to determine if the company complies with all government statutes, laws, and policies. The employees of Bristol_-Myers Squibb entity will use the financial data as basis for seeking increases in their current salaries and other work-related benefits. The residents of each company branch will use the financial reports as basis for seeking a job for the nearby Bristol_-Myers facility. A net profit financial statement persuades the residents to apply for a vacant job in the nearest Bristol_Myers Squibb_facility (Beaver 13). The current 2014 financial reports’ $ 2,029 million net profit picture shows the company is a good investment alternative (Bristol-Myers_Squibb1). Investing_Public’s Interest & Protection The financial report for 2014 shows the Bristol_Myers Squibb_entity is able to protect the financial interests of the current and future business investors. Investors invest their funds in a company because they expect to receive cash dividends or stock dividends from the company. A 2014 financial report (Income_statement) showing the company generated high revenues and net profit figure ($ 2,029 million for 2014 year) persuades the current to funnel additional funds to the Bristol_Myers Squibb_entity, their investment strongly protected by the net income picture. If the company’s 2014 income statement generated a net loss figure, a majority of the company’s current and future business investors are persuaded to invest their funds in another nearby company(Beaver 13). Conclusion Summarizing, the Bristol_-Myers Squibb entity delivers high quality healthcare products to the patients. The company’s health care products help cure the patients’ ailments. The financial reports indicate the company performed financial well during 2014. Evidently, the financial report confirms Bristol-Myers_Squibb is a good investment alternative because users of the company’s financial reports investors, especially the investors, will surely generate benefits from transacting with the company. Works Cited Beaver, William. Financial Statement Analysis. Hanover: Now Press, 2011. Print. Bristol-Myers_Squibb, Financial Report. New York: Bristol-Myers_Squibb, 2015. Print. Stice, Earl. Intermediate Accounting. New York: Cengage Learning Press. 2013. Print. Read More