"Manufactured Homes" Case Essay
Prof. Dr. Brendan O’Dwyer Semester 2, Blok 1
Financial Statement Analysis Anahita Farokhi 6041949
Case 3: “Manufactured Homes” (MANH)
Manufactured Homes is engaged principally in the retail sale of new and used manufactured single-family homes and targets individuals in the low income category. Manufactured Homes focuses on the lower end of the market, according to the company this has two advantages: 1. Since its customers were seeking to fulfil an essential housing need, its customers were less affected by changes in general economic conditions. 2. Repossession rates were significantly lower than those of the industry, since its customers were likely to work very hard …show more content…
If any of the above conditions is not satisfied, the seller of the receivable must report the proceeds from the transfer as a loan against the receivable.
Well I think that Manufactured homes proved until 1986 that it is been conservative in stating its provisions for losses on credit sales. We can see in Note 7 to the financial statements that the actual charges until now did not exceed the provisions made. However, the actual charges tended more towards the provision during the consecutive years. According to me the accounting treatment of sales not reasonable enough because it is dependent on estimates which the company actually is not capable of making accurately. Manufactured Homes should stay conservative in stating its provisions for losses on credit sales to save the company from any default.