Evidencing the increased emphasis on exit strategy was research conducted during the mid-1960s through the mid-1970s that analyzed the exit process and created a framework that business decision makers could use to determine when and how to exit. For example, Conrad Berenson posited an exit model in 1963 that identified five categories of criteria used to evaluate a product abandonment decision: 1. Financial security, which entails determining if the minimum return on investment is being met for the firm; 2.
Financial opportunity, or calculating the return on alternative uses of the firm’s resources; 3. Marketing strategy, which determines the value of the product above pure financial profit, such as brand-name worth and the value of established distribution channels; 4. Social responsibility, or criteria that encompass the firm’s responsibilities to customers, employees, suppliers, and so forth; and 5. Organized intervention, which takes into account actions by government, society, or labor groups as a result of the decision to exit.
And you need to anticipate the impact of key business decisions on your accounting and financial reporting. * Is your organization raising debt or equity? Acquiring a business? Carving-out a non-core operation? Complex accounting and financial reporting issues can arise as a result of changes dictated by your entity’s capital agenda. * Are you undertaking a significant business transformation? Assessing how a shared services center can improve efficiencies in your reporting process?Streamlining your accounting policies can help you reduce risk and manage cost. * Does the business operate in multiple jurisdictions? An assessment of your statutory reporting processes can allow you to manage risk, increase consistency in financial reporting, and realize efficiencies. * Are you planning to upgrade or replace your existing ERP system? Early assessment of changing accounting requirements should be incorporated into planned migrations to avoid expensive rework later.
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Financial Implication of Decision
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