Upbeat

In: Business and Management

Submitted By matt05743
Words 383
Pages 2
Case 09-6
UpBeat Inc.
Tommy Toe, the controller of UpBeat Inc., a successful company located in Greenville,
S.C., was whistling. Sales in the last quarter substantially exceeded budgeted amounts, and the order backlog indicated that the next quarter would be even better. All of a sudden, Tommy frowned. When he reviewed the monthly reporting package and cash flow projections, he noticed that the debt-to-equity ratio had deteriorated. This poses a problem under UpBeat’s debt covenants. In addition, at present liquidity is tight, and the company is having difficulty keeping current on taxes and on payments to suppliers and employees. Tommy immediately called UpBeat’s local bank. The bank manager recommended that
UpBeat sell off some of its accounts receivable to increase its liquidity and improve its debt covenant ratios. Because there are no markets for receivables of this sort, UpBeat agreed to sell the bank $50 million of accounts receivable at 90 percent of face value. The following provisions are included in the sale agreement:


Transfer Provision 1 — The bank has to obtain permission from UpBeat if it decides to sell/pledge the accounts receivable, which UpBeat could not unreasonably withhold.



Transfer Provision 2 — UpBeat has the option to repurchase the accounts receivable at a fixed price if it obtains sufficient liquidity from new investors or other sources.

Tommy knows that legal isolation is often an issue in sale accounting and that often U.S.
GAAP requires a true sale opinion from an attorney. As a result, Tommy obtained a legal opinion from his attorney that included a “would” opinion stating that the transferred assets would be beyond the reach of the powers of a bankruptcy trustee. Tommy and his auditor evaluated the legal letter and found it adequate to support legal isolation of the accounts receivable…...

Similar Documents

Upbeat

...Case 09-6 UpBeat Inc. Tommy Toe, the controller of UpBeat Inc., a successful company located in Greenville, S.C., was whistling. Sales in the last quarter substantially exceeded budgeted amounts, and the order backlog indicated that the next quarter would be even better. All of a sudden, Tommy frowned. When he reviewed the monthly reporting package and cash flow projections, he noticed that the debt-to-equity ratio had deteriorated. This poses a problem under UpBeat’s debt covenants. In addition, at present liquidity is tight, and the company is having difficulty keeping current on taxes and on payments to suppliers and employees. Tommy immediately called UpBeat’s local bank. The bank manager recommended that UpBeat sell off some of its accounts receivable to increase its liquidity and improve its debt covenant ratios. Because there are no markets for receivables of this sort, UpBeat agreed to sell the bank $50 million of accounts receivable at 90 percent of face value. The following provisions are included in the sale agreement: • Transfer Provision 1 — The bank has to obtain permission from UpBeat if it decides to sell/pledge the accounts receivable, which UpBeat could not unreasonably withhold. Transfer Provision 2 — UpBeat has the option to repurchase the accounts receivable at a fixed price if it obtains sufficient liquidity from new investors or other sources. • Tommy knows that legal isolation is often an issue in sale accounting and that often U.S. GAAP requires...

Words: 382 - Pages: 2

Upbeat

...Case 09-6 UpBeat Inc. Tommy Toe, the controller of UpBeat Inc., a successful company located in Greenville, S.C., was whistling. Sales in the last quarter substantially exceeded budgeted amounts, and the order backlog indicated that the next quarter would be even better. All of a sudden, Tommy frowned. When he reviewed the monthly reporting package and cash flow projections, he noticed that the debt-to-equity ratio had deteriorated. This poses a problem under UpBeat’s debt covenants. In addition, at present liquidity is tight, and the company is having difficulty keeping current on taxes and on payments to suppliers and employees. Tommy immediately called UpBeat’s local bank. The bank manager recommended that UpBeat sell off some of its accounts receivable to increase its liquidity and improve its debt covenant ratios. Because there are no markets for receivables of this sort, UpBeat agreed to sell the bank $50 million of accounts receivable at 90 percent of face value. The following provisions are included in the sale agreement: • Transfer Provision 1 — The bank has to obtain permission from UpBeat if it decides to sell/pledge the accounts receivable, which UpBeat could not unreasonably withhold. Transfer Provision 2 — UpBeat has the option to repurchase the accounts receivable at a fixed price if it obtains sufficient liquidity from new investors or other sources. • Tommy knows that legal isolation is often an issue in sale accounting and that often U.S. GAAP requires...

Words: 382 - Pages: 2

Davos Forum

...lend an upbeat tone to this week’s five-day gathering in Davos, Switzerland of 2,500 executives, policy makers, investors and academics. Delegates include German Chancellor Angela Merkel and European Central Bank President Mario Draghi, both of whom won praise in the poll. Goldman Sachs Group Inc. (GS) Chief Executive Officer Lloyd Blankfein and billionaire investor George Soros will also be there. “There’s a great sense of relief we dodged a lot of bullets in 2012 -- we didn’t go off the fiscal cliff in the U.S., Europe didn’t have a meltdown and China didn’t have a hard landing,” said Nariman Behravesh, chief economist at IHS Inc. (IHS) in Lexington, Massachusetts, who will be in Davos. “There are definitely pockets of good news with recoveries in North America and parts of Asia gathering momentum.” U.S. economic activity picked up across much of the country last month, boosted by automobile and home sales, the Federal Reserve said on Jan. 16 in its Beige Book survey of business conditions. U.S. Effect The improvement in the U.S. is having a “positive effect throughout the world,” according to Sriram Srinivasan, chief executive officer of Wall Street Investment Management in Chantilly, Virginia, and a poll respondent. The global economy is in its best shape since May 2011, according to the survey, with 35 percent of those contacted saying it is getting better. That’s about twice the number who say the outlook is worsening. European investors were the most upbeat;......

Words: 394 - Pages: 2

Mrs. Deng

...Memorandum TO: FROM: RE: DATE: The purpose of this memo is to determine whether the transfer provisions preclude sale accounting, and if so, would sale accounting be appropriate after the initial transfer if the provision in question was eliminated. UpBeat, Inc. is a successful company located in Greenville South Carolina. Sales have substantially exceeded budgeted amounts and look to get even better. Upon reviewing of the monthly reporting package and cash flow projections it can be noted that the debt to equity ratio has deteriorated, liquidity is tight, and the company is having difficulty keeping current on taxes and on payments to suppliers and employees. In order to meet UpBeat’s debt covenants the local bank has agreed to purchase $50 million of accounts receivables following provisions included in the sale agreement: UpBeat would like assistance in determining whether the transfer provisions preclude sale accounting. Both transfer provisions have the possibility to preclude sales accounting. Transfer provision 1 may allow for UpBeat to retain the benefit by requiring permission to sell the financial assets. It may be inferred by some that because UpBeat cannot unreasonably withhold the sale the benefit transfers to the bank, however, more information is required to properly known exactly what unreasonably withhold means. Transfer provision 2 has the possibility to allow a sale if the fixed price received for the repurchased receivable is a fair value......

Words: 1769 - Pages: 8

Current Ethical Issues Paper

...program is solid. For Upbeat Financial Service it is important to ensure the six characteristics that build a good solid ethical decision. Trustworthiness, respect, responsibility, fairness, caring and good citizenship are known as the “six pillars of character.” (Josephson, 2002) In this paper we are going to outline the services of Upbeat Financial Services and the moral and ethical issues they face. Upbeat Financial Services is a company that offers financial services and a “One-Stop Mortgage provider.” They offer mortgages at the lowest rates available, credit reports, appraisal, and home inspections upon approved credit. (Placeholder1) Their mission statement is as follows; “Upbeat Financial Services will be the preeminent provider of low cost mortgage services using state-of-the-art technology in the five state areas of Idaho, Montana, Wyoming, North Dakota, and South Dakota.  We thank you in supporting our mission!” Upbeat Financial Services offer their clients the most efficient and effective processing of mortgage applications from beginning to end. Not only do they work with families and individuals that are purchasing properties, but they also service professionals looking for a secondary or a primary residence, and retirees looking to purchase secondary or a primary residence. This wide range of clients could present some ethical dilemmas. Let us now take a look at some of the moral and ethical dilemmas that Upbeat Financial Services may...

Words: 907 - Pages: 4

Demonstrative Comm

...direct reports in a nonverbal manner can mean the difference between success and failure. I will be reviewing some of my experiences in business communication over the last twenty years as it relates to meetings, presentations, and client interactions. When I meet with staff I am always positioning myself in a leadership role. The message will be different and my delivery style must match the message. I also must plan what type of response I am looking for from the meeting? Do I want the receivers to be upbeat, energized, and engaged? Or, is my message more disciplinary and I am looking for understanding and acknowledgement? When meeting with clients is this a sales call? Or is this a service follow up that seeks to resolve an issue? In all these different situations, I must tailor my non-verbal cues in a way that projects I understand the purpose of the meeting. For example, in a sales meeting that is upbeat and seeking to celebrate success my rate of speech is fast-paced, upbeat, and I am smiling. I engage each member with eye contact, my body language is very animated, and the end result is that the receivers can tell that I am pleased with their results. Everyone leaves the meeting feeling good and we get on with the day’s business at hand with energy. Other circumstances sometimes require a different type of delivery style. For example, recently I had to deliver the message that data trends showed our profit results had been less than favorable compared to the prior......

Words: 876 - Pages: 4

Bryan Stevenson

...professor of law at the University Of Michigan School Of Law. He has also published several widely disseminated manuals on capital litigation and written extensively on criminal justice, capital punishment and civil rights issues. I searched and searched and I couldn’t find any information about his wife and kid that a conversation with Bryan Stevenson, the celebrated death penalty defense lawyer and professor, might have an upbeat, even triumphant tone. One would be incorrect. Capital punishment, that contentious old emblem of the American criminal-justice system, is under fire. In recent months, California and Maryland followed eight other states in suspending operation of their death chambers. In 2006, the number of executions nationwide dropped to 53, the fewest in a decade, as governors, legislators and even some prosecutors questioned whether the ultimate punishment can be administered fairly and humanely. And so, one might assume that a conversation with Bryan Stevenson, the celebrated death penalty defense lawyer and professor, might have an upbeat, even triumphant tone. One would be......

Words: 620 - Pages: 3

Barrister

...characters reveal their thoughts during a soliloquy. Examples of Indirect Characterization from The Cat in the Hat Type of Indirect Characterization Examples Many of the words spoken by the cat at the beginning of the story have an upbeat connotative meaning. For instance, the cat says to the children, “But we can have / Lots of fun that is funny!” (7). So all we could do was to Sit! Sit! Sit! Sit! And we did not like it. Not one little bit (3). Throughout the first three quarters of the story, three different illustrations portray the fish scowling at the cat (11, 25, and 37) immediately after each of the cat’s activities. When the cat returns to clean up his mess at the end of the story the fish is shown with a smile on his face (57). On page 18, the cat engages in “UP-UP-UP with a fish” an activity that involves the cat standing on a ball while balancing seven objects. Later in the story, the cat releases two “things” that fly kites inside the house. Throughout the first three-quarters of the story, the cat is shown with a smile on his face. Towards the end of the story, however, when the cat is told to leave, he is shown leaving the house with slumped shoulders and a sad face. Explanation This reveals that the cat’s character is an upbeat character that likes to have fun. Speech Thoughts These are the thoughts of the narrator as he stares out the window on a rainy day. These thoughts reveal that this character is not happy about his current......

Words: 697 - Pages: 3

Kpwr 106 Radio Channel Analysis

...hit songs. The time was in the morning so they were mostly playing upbeat songs. I heard couple slower songs but most of them were fast and upbeat. 9 songs were played in a row with nothing in between and I thought that was very unusual. The DJ of this station barely did any talk. In between commercial and songs, with record intro in the background, he talked about Monster tour concert with Eminem and Rhianna for 15 seconds every time. This was not a show format so the whole hour was music and commercials. His name was Big Boi and he rarely gave the song title and artist information. The main focus of him was to advertise the upcoming Monster tour concert in Rosebowl in Pasadena. This was promoted 3 times during the hour 0f listening. The most important thing I learned is that this station focuses on is its audience in the age group of 18-35. Typically in radio there is a targeted demographic so this station generally focused on young age group who like hip-hop and R&B. The commercial had a lot of school degree programs and cheap auto insurance so it was definitely targeting the younger crowd. The station stayed related to the format and interest of their station. If the time frame was at night I might have listened to more personality rich talk show format, however it was during the day so it was more focus on the upbeat playlist of music. The image of the station is young, hip, cool, swaggy, upbeat, modern and it definitely attracted young, popular group. I......

Words: 688 - Pages: 3

Sdfaa

...and that moods that start at the top are the most “catching” of all because everyone watches the boss and tends to take their emotional cues from him or her. In fact, research shows that work teams across diverse industries end up sharing moods – both good and bad – within two hours. Interestingly, genuine cheerfulness and warmth spread most quickly, irritability more slowly, and depression most slowly. While few can argue that working for an upbeat, inspirational, optimistic boss is more fun, positive experience, there is less agreement about whether the boss’s mood impacts the organization’s bottom line. The key arguments: The boss’s mood matters: • The Harvard Business Review reports that “A cranky and ruthless boss creates a toxic organization filled with negative underachievers who ignores opportunities; an inspirational, inclusive leader spawns acolytes for whom any challenge is surmountable. The final link in the chain is performance: profit or loss. • Earlier research conducted at Cornell found that an upbeat environment fosters mental efficiency, making people better at taking in and understanding information, at using decision rules in complex judgments and at being flexible in their thinking. Sometimes it takes a kick in the pants… • Some people argue that a more “rough and tumble” leader scares people out of complacency and into a high performance zone that they might not otherwise reach. Oft-cited examples: □ Bill Gates, one of......

Words: 630 - Pages: 3

Accounting

...Class: Here are some excerpts from the model solution to UpBeat that discuss four possible alternative solutions to the issues raised in this case. Discussion 1 For each of the transfer provisions included in the agreement, determine whether the provision would preclude sales accounting. Alternative 1 — Fail sale accounting criteria because of Transfer Provision 1. ASC 860-10-40-5(b) requires that the bank have the right to pledge or exchange the accounts receivable it received and that no condition both “constrains [the bank] from taking advantage of its right to pledge or exchange [the receivables and] provides more than a trivial benefit” to UpBeat Inc. Transfer Provision 1 (outlined in the case document) indicates that the bank is constrained because it has to obtain permission from UpBeat if it decides to sell or pledge the receivables. This constraint would preclude achievement of the sale criteria under ASC 860-10-40-5(b). Alternative 2 — Fail sale accounting criteria because of Transfer Provision 2. ASC 860-10-40-5(b) requires that the bank have the right to pledge or exchange the accounts receivable it receives and that no condition both constrains the bank “from taking advantage of its right to pledge or exchange [the receivables and] provides more than a trivial benefit” to UpBeat. Because similar accounts receivable are not readily available in the marketplace, the transferee is constrained. The transferee cannot sell the accounts receivable......

Words: 823 - Pages: 4

American Jazz Music

...Within a few years, the civil war broke out. Jazz was not only played for listening pleasure, jazz was played as a way to express feelings and tell stories. This was called the blues. The blues was a form of jazz in which there would be a slow beat and a rhythmic story being told in sync with the beat. The sudden wave of another form of jazz called ragtime brought about mixed feelings. This was upbeat music and caught the attention of many of the younger listeners. This brought on the age of Flappers. Flappers were young women who felt free and wore shorter skirts and had shorter hair. They lived life in the “fast lane” and didn’t care what others thought of them. They danced about and were much more flashy than a typical women of those times. Parents saw this as a problem and did not want their children to be involved in this sort of thing so they were relieved when a couple introduced elegant dancing. Elegant dancing was introduced by a young couple in New Orleans who disapproved of the newer faster more casual ways of dancing. Instead they danced elegantly to the upbeat rhythms of Ragtime music. This swept over the richer areas and the couple became famous quickly. Jazz music has evolved over many years and is still in the process of revolutionizing for the modern society. It is still enjoyed and is very much a part of today’s culture. It is known as “America’s Music” and will probably not be forgotten anytime soon....

Words: 507 - Pages: 3

Case 9-6 Upbeat Inc

...Case 9-6 UpBeat Inc.\ Transfer provision 1 only states that bank requires UpBeat’s approval to sell or pledge the accounts receivables to third parties, but doesn’t specify the detailed requirements. Therefore, according to ASC 860-10-55-31, we cannot simply determine whether the requirements would constraint bank from taking advantage of sale or pledge the transferred account receivables and preclude sale accounting of UpBeat. Provision 2 mentions UpBeat can exercise a call option to redeem its account receivables when it meets certain revenue amount. According to ASC 860-10-55-42, an option will precludes sale accounting when the transferred asset is purchased back at fair value and the transferor doesn’t hold a residual beneficial interest. However, the agreement between bank and UpBeat shows the repurchase price is fixed; therefore, the provision 2 doesn’t preclude sale accounting. In addition, if the provisions precludes the sale accounting are removed, the sale accounting would be appropriate after the initial transfer. 860-10-55-31: Judgment is necessary to determine whether a requirement to obtain the transferor’s permission to sell or exchange should preclude sale accounting. For example, in certain loan participation agreements involving transfers of participating interests, the transferor is required to approve any subsequent transfers or pledges of the interests in the loans held by the transferee. Whether that requirement would be a constraint that would......

Words: 773 - Pages: 4

Arturo Sadoval

...Gillespie’s original “Manteca”, it still had the upbeat Latin sound that was popular in late 1940’s. You can hear the smooth yet energetic sound of Arturo’s trumpet. The swing feeling I got from the urge to tap my foot and snap my fingers. Listened to Arturo Sandoval’s 2005 album “Journey to Chateau la Fuente” song “Cigar, Brandy, & Jazz”. This song is very southing and soft. The piano and drums keep a constant riff while you can hear Arturo’s trumpet playing with a smooth soft tone. This song actually had me envisioning sitting in a lounge listening to his jazz band with a cigar and a glass of brandy enjoying the evening. Each instrument in the band had the opportunity to improvise in this song as well, which was carried out flawlessly. Listened to Arturo Sandoval’s 1996 album “Swingin’” song “Woody”. This was a swing song that was very energetic and upbeat, yet smooth and casual. You can definitely hear Arturo’s trumpet as he improvises with the band coming in and playing small pieces. Then the entire band begins to come together towards the middle of the song and makes a nice low-swing feeling. Listened to Arturo Sandoval’s 2002 album “My Passion for the Piano” song “Blue in F”. This was a more bluesy sound, with Arturo playing the piano with the drums and bass in the background. Although I did not feel this was necessarily a sad song, it was bluesy in the respects that it was played to be a blues song. It did have an upbeat sound to it as Arturo played......

Words: 1377 - Pages: 6

Accounting: Upbeat

... Transfer Provision 1: The bank has to obtain permission from UpBeat if it decides to sell/pledge the accounts receivable, which UpBeat would not unreasonably withhold. It is fair for Upbeat to make the bank agree to obtain permission from UpBeat if it decides to sell/pledge the accounts receivable as long as UpBeat does not unreasonably withhold. UpBeat has no right to constrain the transferee from selling or pledging their assets and cannot make it impossible for the transferee to sell the asset. (860-10-40-18) b. A requirement to obtain the transferor's permission to sell or pledge that is not to be unreasonably withheld Transfer Provision 2: UpBeat has the option to repurchase the accounts receivable at a fixed price if it obtains sufficient liquidity from new investors or other sources. This provision would preclude sale accounting. UpBeat would maintain too much control over the asset if they had the ability to decide when and if at a fixed price they were going to repurchase the asset. Provision two sounds closer to secured borrowing over sale accounting. UpBeat wants to maintain control and the ability to repurchase at a later date, but does not want the obligation to repurchase at a later date with interest attached that secured borrowing would mean. (860-10-40-24) Requirement 2: If both provisions were cancelled then UpBeat would be able to consider the sale of the accounts receivable to the bank......

Words: 276 - Pages: 2