Financial Report of Loewen Group Inc. Essay -- Finances Accounting Bus

Financial Report of Loewen Group Inc.The Loewen Group Inc. was founded in 1969. The company has two study furnish in North America, one in Burnaby, British Colombia and a second inCincinnati, Ohio. Loewen Group Inc. (L.G.I.) is the largest funeral ope pastureenterprise in Canada and is the second largest company in the North AmericanFuneral gos intentness. L.G.I. owns 918 funeral homes and 269 cemeteries andalso engages in the pre-need selling of funeral services including cemetery andcremation services. The company strives on respecting its Eagle Principle,which is displayed on the first page of its 1995 yearly Report To soar to heights of possibilities one needs two equallyhealthy, strong wings - one being that of people or service concerns, the other(a)that of responsible planning and fiscal management. It is the balance of thesewings that enables the eagle to soar beyond all heights1 In 1995, the company defended itself against two major lawsuits, as wellas con tinued to negotiate acquisition agreements. The Loewen Group Inc.stresses that once an acquisition has been completed, local management isencouraged to remain and offers long marge contracts to its key employees, r belydismissing the other employees. L.G.I. provides many services to its acquiredcompanies including offering training to new employees on its managementinformation systems and covering costs for any renovations which are needed onthe acquired locations. Each funeral home and cemetery is operated as adistinct profit centre, with monthly and annual financial performance monitoredby regional and corporate management in accordance with budgeted projections. This report includes a study of The Canadian Funeral Services Industrypractices, a review of the take-over attempt by Service CorporationInternational, an analysis of the Loewen Group Inc. 1995 Annual Report for theperiod ending December 31, 1995, and examination of the revenue recognitionpractices used by L.G.I..The Funeral Services IndustryAccording to a paper issued in August 1995, by Statistics Canadas Services,Science and technology Division Final Purchase, Growing Demand The CanadianFuneral Services Industry, the funeral services industry, in comparison to otherindustries, has historically been considered a low risk industry. The Fu... ...adian Funeral ServicesIndustry. APPENDIX D Total Revenue of the Funeral Services Industry by SectorSource p.4 of Final Purchase, Growing Demand The Canadian Funeral ServicesIndustry.APPENDIX E The Scott Formula(Expressed in thousands of U.S. Dollars)1995 1994 SymbolsTotal assets 2262980 1326275 ATotal liabilities 1648298 915136 LTotal equity 614682 411139 ETotal revenue 599939 417328 REVNet income (76684) 38494 NIInterest expense 50913 34203 INTIncome tax rate (38.1) % 33.9 % TRAfter-tax interest expense 50913 * 1.381 = 70311 34203 * .661 = 22608 ATI =INT (1 - TR)hard roe (return on equity) (76684) / 614682 =(0.125) 38494 / 411139 = 0.094 NI / ESR (sale s return before interest) (76684) + 70311 / 599939 = (0.011) 38494 +22608 / 417328 = 0.146 NI + ATI / REVAT (asset turnover) 599939 / 2262980 = 0.265 417328 / 1326275 = 0.315REV / AROA (return on assets) (76684) + 70311 / 2262980 = (0.003) 38494 + 22608 /1326275 = 0.046 NI + ATI / AIN (average interest rate after tax) 70311 / 1648298 = 0.043 22608 / 915136 =0.025 ATI / LD / E (debt-equity ratio) 1648298 / 614682 = 2.682 915136 / 411139 = 2.226 L/ E