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What is the impact of the December 1993 shipments of conventional lenses to Bausch and Lomb 1993 financial statements? Is the impact significant? The impact was:- i)Increased revenue by $22M ii)Reduced inventory by 1. 8 million pair. Based on the COGS of 45%, this could mean a reduction in inventory of close to $10M. iii)There is very little increase in SG&A as not much was spend in terms of sales effort. v)AR increased significantly with some of the promissory notes are payable in June 1994 (6 months after sale) v)Probably increase marketing, promotional and expenses related to discounts in the subsequent year due to “Premier Vision” plan. This impact is significant. From the statements, B&L reported a 13% YoY increase in sales revenue. However, exhibit 6 showed that there was a decline in market demand for conventional lenses, but an increase in both planned replacement and disposal lenses. B&L does not produce either of those products, yet the reports indicated a healthy growth in revenue.

This increase was largely due to sales revenue recognized from the 1993 large volume shipment to the distributors, transferring inventories from B&L to various distributors and recognized as revenues to B&L. This strategy not only increased the revenue for the year significantly but also reduced the excess inventory held by B&L, and increased their AR significantly, thus portraying a positive outlook on the Balance Sheet. 2. Does the new distribution and sales strategy make sense from an operational standpoint?

Why or why not? The main advantages of the new distribution and sales strategy are as follows: -Marketing resources would be immediately freed up to focus on the disposable market -B&L need to hold less inventory for the conventional lens -Possibly lower distribution cost due to shipment consolidation. B&L only need to ship to distributor warehouse instead of final customer location. Since distributor orders can be combined and shipped in bulk, transportation cost could go down. -Larger market coverage.

Combined sales force from all the 30+ distributors would be able to cover larger base than B&L’s limited sales force could do -Less sales effort is needed from the B&L sales force. They only need to manage the 30+ distributors instead of a larger number of tier 1 customers. The disadvantages of the new distribution and sales strategy are as follows: -B&L faces a higher risk of losing the main clients for the conventional lens as the company no longer deals directly with the main clients. The erosion of the sales of conventional lens for B&L might hasten as a result. The profit margins for the conventional lens are likely to decrease as the margins will need to be passed on to the distributors selling to the high-volume. -Based on the market trend, it is likely the demand for the disposable lens will increase at the expense of conventional lens. Therefore, the hope to increase the sales through the distributors and the introduction of ‘frequent flyers’ scheme is unlikely to yield much result. –

The risk of defaults on their payments by the distributors has increased as they are forced to hold a much higher inventory of conventional lens. Higher credit limits given to the distributors also implies a high possibility of decrease in B&L’s operational cash flow (increase in AR) -High risk of huge inventory returns from the distributors if they are not able to sell in reasonable timeframe. This will increase huge sales return in B&L books in the following year. -The sudden increase in the distributor’s inventories will also affect B&L’s revenue figures for 1994 as thee distributors will be trying to clear their inventories in a declining market demand.

In conclusion, it does appear that the disadvantages far outweigh the advantages. Thus it does not make operational sense in the longer term though the initial revenue recognition is high. It might be more advantageous for B&L to stick with the old method of distribution and sales for the conventional lens. 3. Do you think the product shipments associated with B&L’s new distribution strategy satisfied the FASB criteria for recognizing revenues? Why or why not? According FASB, revenue is only recognized when it is both realized (and realizable) and earned.

Revenue is realized (or realizable) when products are exchanged for cash or for assets that are readily convertible to cash. Based on the above definition, the new distribution strategy per se satisfied the FSAB guidelines. The distributors received their products and they signed promissory notes which can be realized in to cash. There is however lack of information with regards to the existence of any buyback agreements between B&L and the distributors and the actual percentage of returns of conventional lens.

If such buy back agreements were in place, B&L should not recognize the revenues at the point of sale to the distributors if buyback price covers all costs of the inventory plus related holding costs because the inventory remains on the seller’s books. Likewise, if B&L cannot reasonably estimate the amount of future returns and/or have extremely high rates of returns, then the company should recognize revenues only when the right to return expires. Without a clear indication of buy back agreements, the strategy was compliant with FASB criteria.

However, this strategy does pose considerable risk to the organization. The distributors appeared to have been “coerced” into taking the inventory with the promise that B&L will help them to sell on to the large customers. If that was true, under FASB criteria, it would have been a violation of revenue recognition as revenue can only be recognized if the seller does not have significant obligations for future performance to directly bring about resale of the product by the buyer or the amount of future returns can be reasonably estimated.

Also, it appears that the distributors are not obliged to pay until they have sold the inventory with a 5months repayment scheme. This contradicts FASB revenue recognition guideline of where obligation to pay should not be contingent on resale of the product. Lastly, by increasing the credit terms beyond the capabilities of the distributors and also extending credit notes which are due 6 months after the sale, it does introduce high risk to the organization should they default on the payments.

Olympe de Gouges’ Declaration of the Rights of Woman and the Female citizen.

Olympe de Gouges’ Declaration of the Rights of Woman and the Female citizen..

Choose one (1) of the three (3) reading selections from the list of topic choices below. The focus is on brief but important primary source material written by important authors. In each case, the subject relates to the problems of certain people who are oppressed or impoverished. In each topic, a different genre or approach is adopted to help readers see and perhaps address the problem. Read the selections as identified with each topic below. Write a four-to-five (4-5) paragraph essay (350 words minimum) which analyzes the work following the list of four things “your paper should cover” given just after the topics. Topic of choice – Reading selection of Olympe de Gouges’ Declaration of the Rights of Woman and the Female citizen (written in 1791). The selection should be read in full at http://chnm.gmu.edu/revolution/d/293/ with background provided on p. 852 of our class text. You should also look at the revolutionary document of 1789 that she is “correcting”, called Declaration of the Rights of Man and of the Citizen (http://avalon.law.yale.edu/18th_century/rightsof.asp ). Olympe de Gouge has the status of women as her main concern. The general context is the French Revolution and the attempts to redefine rights and status once one replaces monarchy. For the reading selection and topic you choose, your paper should cover the following: Briefly introduce the writer and the situation that this reading is about. Identify the genre or nature of the reading. Using specific examples or lines within the reading, suggest the author’s key views and key aims for the reading audience. Evaluate the author’s strategy and what you see as the work’s likely effectiveness (or lack of effectiveness) for the target audience. If there is any known historical result, discuss that. Evaluate how the reading impacted you. Identify any analogous situations today, and also key lessons you get from the reading that could be relevant to one’s professional and personal life.

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