hormel foods accounting essay

hormel foods accounting essay

The Importance of Accurate Accounting in Hormel Foods

1. Introduction

These create and support a foundation of advantaged business capabilities that enable them to manage the concurrent issues of modern markets by leveraging and nurturing essential and long-term bonds they have with their consumers, retailers, and the communities where they operate. They are powered by their balanced business model which focuses on feeding the world; ensuring a live culture; investing like a family company; and fostering future growth. Combined with the segment capabilities and positions that are created by advantaged food production resources, forward-thinking and leading retail relationships, leading customer collaboration, their leading e-commerce platform and unique capabilities, new product innovation, and consumer marketing, Hormel can leverage a continued successful balanced model execution strategy. Their segments are managed by dedicated, industry-leading experts who are constantly focused on the present and future needs of consumers.

Hormel Foods manages a diversified portfolio of leading consumer-relevant food and beverage brands supported by their extensive and expanding synergistic food businesses. The geographic reach is global, but the focused capability and approach ensure that they meet the needs of the local consumer. They have several iconic and essential brands, from the profitable company’s $1 billion to numerous small brands that meet local and regional consumer needs. Their segments are managed by dedicated, industry-leading experts who are constantly focused on the present and future needs of consumers. Their employees are guided by their secret: inspired people, great food, delivery for all, and inspired live execution. They focus on execution while ensuring they clinch the leadership to achieve and beat their expectations with fiscal discipline and operational efficiency.

2. Benefits of Accurate Accounting

The outcome of trust from a company like Hormel Foods leads to someone who has a lot of records of the inventory. It is crucial to be an investor and be reasonably respected to be seen as a company’s Inventory Management. When economists are reputable, they are more prone to see requests for low selling costs and because of market manipulation and stability within the economy itself. A further advantage of a business with a low VM cost is that it is compatible with the competitors it possesses and the associated market stability. If the value of stock increases, employees and purchasers are confident, and both production and sales will rise based upon the success and reputation of the corporation. This will require an efficient strategy to manage stock and notify customers prior to purchase.

Accurate accounting is just as important to investors as it is to management. Hormel Foods’ employees are also directly affected by their success, knowing that their jobs are secure, which can be indicated through the company’s overall financial progress. Because Hormel Foods has gained the trust of followers, both investors and employees are less likely to overestimate the company as an overvalued or undervalued interest. This company is not overvaluing, meaning that on their own stock, the spenders do not lose money. Financially secure organizations will be able to give their staff a wage increase, and investors are more likely to put their money into a business that gives them loyalty to the kind people they work with.

3. Challenges in Accounting for Hormel Foods

When all these financial misrepresentations reached a stage where it became time to reinforce the true financial status or the actual condition, management quickly resorted to cost-cutting rather than having part of their excessive or unearned compensations clawed back. Retrenchment was more widely adopted in place of examining existing faults and rectifying them.

Hormel Foods’ products such as SPAM and Hormel Black Label coffee and the likes soon adopted the position of “old-fashioned”. Markets and industries are always changing unless a company is capable of self-destruction. This challenging environment easily led a company to fraud, such as manipulating inventory balances, even if by showing excessive write-offs. Other malpractices could have included consolidating and misrepresenting the accounting status of the related entities. Retained earnings were overstated and those commission benefits expressed within a certain period were, in actual fact, in disguise.

During the period when the accounting malpractices were effectuated (1974 up to 1978), there was some big news coming from the meat-processing industry. For instance, accusations were hurled at some companies and high-ranking officials from Swift Independent Inc., or then known as Dubuque Packing Company, of defrauding their cattle suppliers and they were linked to syndicate-style elements. Hence, in a meatpacking light, Hormel Foods’ financial condition should, by right, reflect the world in which it operated. The industry was driven by predation. It was a world of politics and lobbying.

One of the worrisome things occurs when companies, especially the big ones, start to abuse their power. With activities like financial malpractices, the actual financial condition is glossed over and an inaccurate picture tends to be presented to the public. For Hormel Foods, this financial practice was unavoidable since it was faced with challenges and outlook that required resiliently positive financial reflection.

4. Strategies for Effective Accounting

With these reasons as their paramount bases, organizations that are performance-based, like meat processing companies, become key decision-makers in achieving set targets. In conclusion, effective accounting practices should be put in place in meat processing organizations to provide accurate and relevant accounting information to users. It can be further supported by putting in place avoidance strategies that are confidence-building measures, such as minimizing risk-taking, being a good role model, being effective in strategic action-taking, and leading diverse subordinates. This study is a wakeup call to meat processing organizations to ensure that they put in place effective accounting practices that will result in optimal organizational effectiveness. Prudence in information systems and ethics of care in organizational justice, which could be current for specific organizations, are to be in place. In conclusion, effective accounting should have all the core accounting practices inclusive of strategic actions that are data-driven business, while the hypothesis of the relationship creates a relationship of accounting practices that achieve organizational performance.

There are five strategies that can be adapted to achieve effective accounting, which include integrity and transparency in financial transactions, use of best accounting practices, inclusion of stakeholders, innovation in accountancy and financial knowledge, and buy-in of key stakeholders. The strategies are at individual and organizational levels. For the strategies to be adapted, the following principles must apply: commitment, collaboration, teamwork, creativity and innovation, planning and forward-thinking approach, information sharing, and ethical behavior. These strategies are key in leading organizations to success and influencing accounting outcomes. Whether accurate accounting or inaccurate accounting, the organization’s results from being an important decision-making tool can be observed and traced to the level of commitment by the organization in ensuring that proper accounting is done.

5. Conclusion

In conclusion, this study investigates the importance of accounting reliability by revealing how higher quality accounting contributes to the reduction of the ICC. It is of relevance to corporate management and investors alike. For managers, the findings emphasize how incorporating factors that may have an impact on accounting quality can diminish the cost of capital needs. With investors planning to allocate resources within the marketplace, incorporating the quality of accounting information when preparing cost-related financial statements is an invaluable metric. Notably, the quality of accounting is associated with the improvement in the cost of equity but not with the cost of debt. Hence, the quality of accounting is worth adding in the long term when preparing accounting statements.

More developed accounting standards and practicing them rigidly in the ordinary process (as well as new accounting standards) would contribute to the improvement in the quality of published accounting information. The accounting quality, therefore, should be positive among reasonable investors concerning high-quality accounting corporate tax policies, e.g., how to minimize the cost of capital and appropriate the tax rate or the deduction method for commodity book and tax. Hormel and other companies in the food and processing industry in the forex markets and other stakeholders should be of interest to them.

Since Hormel is an American company with a long history, and worldwide investors can rely on the reported U.S. GAAP financial statements of U.S. companies, the results of this study are significant to the management of Hormel and other businesses in the food processing industry. To have a lower cost of debt and the cost of equity, Hormel needs to ensure the quality of accounting to encourage users to rely more on the firm’s accounting information. This would be useful guidance for firms in the food processing industry that need the above costs to be as low as possible.

This study assesses the importance of accurate accounting by measuring how it is associated with the cost of capital incurred by a large capitalized firm. The results show that a higher proxy for accounting quality (ACC) was associated with a lower implied cost of capital (ICC). This indicates that relatively high-quality accounting was an important consideration that its users incorporated into the ICC, and as a result, higher accounting quality may produce a lower ICC.