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The AMA Handbook of Due Diligence by Andrew J. Sherman, William M. Crilly

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ENTITY Form 10-31
247
REF.
PREPARED BY REVIEWED BY
REVISION DATE SECTION PAGE
TERMS OF SALE - PRODUCT WARRANTY AND RETURN POLICIES
WARRANTY POLICIES
What are the standard warranty policies on defective merchandise?
Please provide copies of standard warranty policies for each product line.
PRODUCT LINE COVERAGE PERIOD CONDITIONS
GUARANTEE POLICIES ON NON DEFECTIVE MERCHANDISE
Does the entity provide “total satisfaction” guarantees? [ ] Yes [ ] No
If so, what type of guarantee? [ ] Money back. [ ] Return for credit.
[ ] Other: ____________________________________ Other: ____________________________________
VALUE OF RETURNED MERCHANDISE
What has been the experience with returned merchandise?
VALUE OF RETURNS 20 20 20 20 20
Thousands Of Dollars $ $ $ $ $
Percent Of Gross Revenues % % % % %
RESTOCKING FEES ON EXCESS INVENTORY OR REFUSED MERCHANDISE
Does the entity accept the return of excess inventory from distributors and/or dealers? [ ] Yes [ ] No
If so, are restocking fees assessed? [ ] Yes [ ] No
If so, how are they determined?
Does the entity assess restocking fees on rejected shipments? [ ] Yes [ ] No
If so, how are they determined?
ENTITY Form 10-32
REF.
PREPARED BY REVIEWED BY
REVISION DATE SECTION PAGE
248
TERMS OF SALE - COMPETITIVE ENVIRONMENT
COMPETITIVE ENVIRONMENT
How do the entity’s terms of sale and related policies rank against its major competitors?
* Rank “1” to “4”, with “4” being best. Use the same ranking if policies are comparable.
POLICY ENTITY COMPETITOR A COMPETITOR B COMPETITOR C
Payment terms
Credit policies
Warranty program
Return policies
Restocking fees
Competitor A: ________________________ B: _________________________ C: _________________________
EXPLANATION OF SIGNIFICANT POLICY DIFFERENCES
Please provide details on policy differences where entity is at a significant disadvantage vis-a-vis one or more
competitors.
POTENTIAL REVISIONS
What changes, if any, are recommended to improve the entity’s competitive position on the above policies?
ENTITY Form 10-33
249
REF.
PREPARED BY REVIEWED BY
REVISION DATE SECTION PAGE
PRODUCT LEASING PROGRAMS
PRODUCT LEASING ACTIVITIES
Does the entity lease any of its products? [ ] Yes [ ] No
If so, what types of leases are offered? [ ] Capital leases [ ] Operating leases [ ] Both
What effective interest rate is built into leases currently being written? _______ %
METHOD OF FINANCING
How are the lease contracts currently being financed? (Check all that apply.)
[ ] Internally. [ ] Externally with recourse. [ ] Externally without recourse.
If outside financing is utilized, what organizations are involved?
FINANCIAL RESULTS FROM LEASING OPERATIONS
FINANCIAL RESULTS 20 20 20 20 20
Dollars In Thousands
Lease Revenues (1) $ $ $ $ $
Percent Of Net Revenues % % % % %
Leasing Expenses (2)
Contribution To Operating Profit
Percent Of Operating Income
Note: (1) Where are lease revenues reported in the income statement? ______________________
(2) Where are leasing expenses reported in the income statement? ______________________
ENTITY Form 10-34
REF.
PREPARED BY REVIEWED BY
REVISION DATE SECTION PAGE
250
OTHER MARKETING PROGRAMS
CONSIGNMENT SALES
CONSIGNEE REVENUE VALUE
ON
CONSIGNMENT
TERMS
Dollars In Thousands
$
Total $
Percent Of Net Revenues %
BARTER/COUNTERTRADE ACTIVITIES
TRADING PARTNER PRODUCTS ANNUAL DOLLAR VALUE OF
BARTER/COUNTERTRADE
TRANSACTIONS
Dollars In Thousands
$
Total $
Percent Of Net Revenues %
ENTITY Form 10-35
251
REF.
PREPARED BY REVIEWED BY
REVISION DATE SECTION PAGE
MARKETING FINANCIAL PERFORMANCE
TREND IN MARKETING EXPENSES
EXPENSE CATEGORY 20 20 20 20 YTD
(Thousands Of Dollars)
Payroll Expense
Corporate Personnel $ $ $ $
Field Personnel
Total Payroll Expenses $ $ $ $
Payroll Related Expenses
Total Payroll & Related Expenses $ $ $ $
Nonpayroll Expenses
Advertising $ $ $ $
Sales Promotion
Trave l
Entertainment
Sales Commissions
Other Nonpayroll Expenses
Total Marketing Expense $ $ $ $
(Percent Of Net Revenues)
Total Payroll & Related Expenses % % % %
Nonpayroll Expenses
Advertising
Sales Promotion
Trave l
Entertainment
Sales Commissions
Other Nonpayroll Expenses
Total Marketing Expense % % % %

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