Financial crime PowerPoint Presentation Example | Topics and Well Written Essays - 750 words

Financial crime - PowerPoint Presentation Example There were financial crimes involved in the issue, which included the addition of $500 million to the company’s loan loss reserve. The company was in fact, not as successful as it claimed to be and many of its executives were also suspected to have been involved in financial frauds. The primary reasons that contributed to the downfall of the company were the bets placed on credit default swaps, the unrealistic accounting strategies of the company and the underlying financial crimes that prevented investors from predicting the downfall of the company. Credit default swap is more like an insurance that would receive payments from the buyer makes payments and in the event of facing loss from debts or loans, the company would give a pay off. The company got itself into riskier financial products as it allowed collateralized assets groups and subprime mortgage pools to invest in credit default swaps, since it would not be possible to assess the real value of these groups. When there were sever losses in the housing market, most of the pools that the company had insured began to face losses. At the point where the company had to pay off almost all of its investors, the company was almost bankrupt. This also made evident that the company had shown its loss loan reserve values to be higher than it was. When the financial crisis faced by AIG was under scrutiny, it was brought to light that the company had been warned twice before of its improper records and books. The liabilities that the company was subject to as a result of the financial products were not accounted for as necessary. The company had been warned of its book records and the assets valuation was reported as lacking in accuracy, failing to provide a clear understanding of the impact of its products on AIG’s finances. The accounting strategy that contributed considerably to the company’s downfall was the â€Å"fair-value† accounting

Strategy Essay Example | Topics and Well Written Essays - 4000 words

Strategy - Essay Example It has 760 stores in UK and 30 countries around the world. (Annual Report) M&S profits peaked in 1998 when it crossed the  £ 1 billion mark that year. It was the highest achieved by a UK retail chain. From then until 2002 it was downhill. In 2004 a new CEO Rose took over the reins and M&S slowly but surely got back to making higher profits every year since, although they are still far from the billion pounds they made in 1998. (see Appendix 1) Several major factors affected profits, the barometer of public support and financial performance. Rivals had switched to source their products from abroad at cheaper prices while M&S continued with the costly UK suppliers. As a result margins came under pressure, sales became stagnant and profits plummeted. From a high of a billion pounds in 1998, the profits fell to a low of 145 million in 2001. M&S were forced to curtail their dependence on UK suppliers and resort to other means for sustenance. (see Appendix 1) The second factor was the company policy not to accept credit cards. This had become a universal phenomenon and denial was luring younger and more mobile customers away to other rival outlets that offered this facility. The third factor was that M&S had abandoned its high street image and had gone for low end products like rivals were doing and it suffered an image loss. It was earlier known for quality of its products and it was no longer a leader in that segment. This forced a serious rethinking in the boardroom and let to a total revamp in both control and strategy of the company. A new post of Chairman as well as a new one for a CEO, as against a combined post, were created and have since seen the company’s fortune turn around. M&S, chastened by the serious erosion in customer loyalty and profits decided to revert to its roots. In the first stage they went back to exploit their core competencies. M&S started off with introduction of a new range of classical clothing for women and it was reported