Case Scenario 2: Raptec

question 124

Essay

Case Scenario 2: Raptec.
Raptec operates in three principal business segments: Direct Attached Storage ("DAS"), Storage Networking Solutions ("SNS"), and Software. These hardware and software products are found in high-performance networks, servers, workstations, and desktops from the world's leading OEMs, and are sold through distribution channels to Internet service providers, enterprises, and medium and small businesses and consumers. Since the time it went public, Raptec has experienced rapid growth and consistently profitable operations. In early 2002, Raptec announced its plan to spin-off the software segment, subsequently incorporated as Axio, Inc., in the form of a fully independent and separate company. Software was Raptec's most profitable and fastest growing segment. By mid-
2002 Raptec had completed the initial public offering of approximately 15 percent of Axio's stock, and then distributed the remaining Axio stock to Raptec's stockholders in a tax-free distribution. Axio's family of products includes category leaders in CD/DVD burning, digital photography, and digital video. Axio's new management team is composed of Lex Luthor, CEO, and previously the President of New Business Development for Universal Studios Recreation Group; Karal Kool, COO, and previously General Manager of Raptec's OEM Solutions Group; and R. Elliot Maxter, CFO, and previously corporate controller for Raptec. The interim four-member board of directors is currently comprised of Raptec senior officers, but the terms of the public offering require them to step down in 2 months. Thus, Axio will need to construct a new board, which in turn will be responsible for overseeing Axio's management and their compensation.
-(Refer to Case Scenario 2). What characteristics will you look for in appointing new board members?

Calculate and analyze the days’ sales uncollected ratio to assess the efficiency of a company's receivables management.

Understand the purpose of a voucher system in accounts payable and the steps involved in invoice approval.

Comprehend the significance of the Sarbanes-Oxley Act in enhancing the reliability of internal controls over financial reporting.

Explain the purpose and process of establishing a petty cash fund, including the rationale for adjustments.

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Definitions:

Critical Event

A significant occurrence that has a profound effect on operations, which may necessitate considerable adjustments to business activities.

Percentage Of Completion

An accounting method used to recognize revenues and expenses of long-term projects proportionally to the work completed to date.

Costs Incurred

Expenses recognized in accounting, representing the cost of doing business and acquiring or producing goods.

Contract Price

The agreed-upon price for goods or services specified in a contractual agreement.