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Intel Corporation is one of the largest companies worldwide that manufacture semiconductor chips. Founded in 1968 by Robert Noyce and Gorgon Moore, the company has its headquarters in Santa Clara, California (O’Regan, 2021). The firm is also x86 microprocessor developers, found in most personal computers. The corporation supplies microprocessors to companies such as HP, Lenovo, Dell, and Acer. The company produces and sells integrated circuits, motherboard chipsets, graphic chips, and other computing and communication gadgets.
Revenue for the company has been growing over the years. Intel recorded a gross profit of $79.02 billion in the fiscal al year 2021 (Yahoo!, 2022). The revenue of Intel has been increasing due to its growth of data-centric segments and the strong economy. Intel corporation has also grown in the Client Computing Group. The business experienced growth in demand for high-performance devices especially. Income for the company was also increased in 2017 due to the tax reforms that occurred in that year. Its income has increased by 84% since 2015 as the tax for corporates has decreased. After the decrement, the company used 86% of its finances to add to its equipment, plant, property and buy trading stocks (Yahoo!, 2022). As a result, the company’s gross profits are greater than the industrial average. The company continues to grow and is forecasted to have a 3% increase by the fiscal year 2024.
Taiwan Semiconductor Manufacturing Co. is the biggest competitor of Intel Corporation. TSMC uses a 3- nanometer tech to manufacture its chips, an advanced technology. By the year 2020, the revenue for TSMC increased by 25.2 percent to a value of 47.268 billion Dollars (Wang & Lin, 2021). This statistic indicates that the company generates twice as much revenue as Intel Company. The company is also interested in increasing its capacity in the coming years (Wang & Lin, 2021). TSCM is building a chip plant in Arizona worth $ 12 billion, which is supposed to be opened in 2024, threatening the market for Intel Company.
Advanced Micro Devices, Inc. is another major competitor for Intel Corporation. Computer integrated circuits are the primary focus of AMD, a technological company located in the United States. According to the company’s forecast, a 45 percent rise in sales is predicted for AMD in 2020, to a value of $9.76 billion from $6.73 billion (Sousa et al., 2021). In 2020, the profits rose to 63 percent, with a quarter-over-quarter growth of 94.8 percent (Teles, 2020). Intel’s market share surpassed 71.58% by June 2021, making AMD obsolete. AMD powers 28 percent of all gaming consoles (Sousa et al., 2021). It has a market share of 20.5 percent, making it the second-largest processor manufacturer in the world. AMD is Intel’s main competitor and a potential alternative.
Intel Corporation is a company that has business interests in foreign countries. Being a multinational company, the company has one hundred and seventy-three offices across thirty-six countries, such as Sweden, Canada, Belgium, Austria, Netherlands, etc. (Gereffi et al., 2019). The company has 121100 full-time employees across different countries (Yahoo!, 2022). The company has its roles in developing and supporting industrial innovations and diversity worldwide. The company has a significant economic influence on the countries it operates.
Accounting policies refer to ideologies and practices used by entities to identify, evaluate and re-count economic transactions. They provide a representation of a company’s financial status and performance. Any misrepresentation of the financial position of a business due to poor accounting policies create a negative reputation for an organization because users are likely to receive incorrect and inappropriate accounting information (Lugovsky & Kuter, 2019). Companies choose accounting policies to serve their business interests as per the management’s opinion using the best suitable methods to present financial position in an absolute and reasonable manner. Business interests influence accounting policies when an organization has to ensure the company’s difficulties do not affect the representation of its financial position. The policies should conform with generally accepted accounting principles (GAAP) and be accessed for the quality of earnings. If a company wants its great financial status to appear great, it can easily use accounting policies to manipulate earnings legally. For example, while using the average cost methodology, the inventory weighted average cost determines the cost of goods sold (COGS) after sales are made.
For the significance of financial reporting, the Intel Company uses a one-month accounting cycle. There are several steps involved in this form of the accounting cycle. The company first identifies transactions and is properly recorded in the company’s books. Next, the company creates a journal entry for all the transactions and tracks expenses. The company then posts the entry in the general ledger that summarizes the accounting activities (Faccia et al., 2019). The company then does a trial balance to inform the company of the unadjusted balance. The unadjusted trial balance is then forwarded to analysis and testing to ensure equal balancing of debit. Journal entries are then adjusted and recorded as necessary. After adjustment, the financial statement is generated. The final step of the cycle involves the closing of books and a closing statement that provides a report of analysis carried out over the period.
Bad debt expense refers to receivables that a company cannot collect due to a customer’s inability to meet debts caused by financial difficulties. The spending of money on bad debts, known as doubtful commitments, is recorded as a negative transaction in a company’s financial records. For example, Intel Corporation has a bad debt expense of 10 million Dollars (Yahoo!, 2022). Each firm has its method for classifying outstanding accounts as bad debts, and each system is different from the other.
Revenue recognition is a quantitative accounting problem for Intel because of the wide range of business areas and end consumers it serves. Intel, for example, recognizes revenue on direct-to-consumer sales immediately following delivery. Until the distributors sell the goods, Intel holds onto the revenue and expenditures connected with its products for resale. To keep distributor profit margins stable in the face of industry price cuts and rapid technological obsolescence. Licensing agreements, especially with McAfee, are other ways for Intel to make money (Goel, 2019). Contracts like this create income that accrues and is recognized during the contract’s duration. A comparable delay and recognition of Intel’s subscription-based online products revenue occur throughout the subscription period. When services are completed, revenue is reported for Intel professional services. This process complicates revenue reporting since Intel has a wide variety of connections that may be attributed to a single customer. In these cases, revenue is distributed across the specific deliverables and may be recognized immediately or later.
In conclusion, investigating a company’s financial health is essential for making informed investment decisions. Intel Corporation uses first-in, first-out inventory methods, which is efficient for the company as it is short-lived for the semiconductor product to manufacture. In this form of inventory method, the assets that are acquired first are the ones that are disposed of first. It also assumes that the inventory is constituted of items that were last purchased. There is low-income manipulation, and the method assumes the cost flows with general goods’ physical flow. The company utilizes the first-in, first-out inventory, which makes the company have obsolete inventories. The company should implement the last-in, first-out inventory method to maximize its profits during high inflation.
References
Faccia, A., Al Naqbi, M. Y. K., & Lootah, S. A. (2019). Integrated cloud financial accounting cycle: how artificial intelligence, blockchain, and XBRL will change the accounting, fiscal and auditing practices.In Proceedings of the 2019 3rd International Conference on Cloud and Big Data Computing (pp. 31-37). Web.
Gereffi, G., Frederick, S., & Bamber, P. (2019). Diverse paths of upgrading in high-tech manufacturing: Costa Rica in the electronics and medical devices global value chains. Transnational Corporations, 26(1), 1-30. Web.
Goel, S. (2019). Ethical Accounting: The Driver in Recovering Markets. In Eurasian Business Perspectives (pp. 95-106). Springer, Cham. Web.
Lugovsky, D., & Kuter, M. (2019). Accounting policies, accounting estimates and its role in the preparation of fair financial statements in digital economy. In International Conference on Integrated Science (pp. 165-176). Springer, Cham. Web.
O’Regan, G. (2021). Integrated Circuit and Silicon Valley. In A Brief History of Computing (pp. 89-96). Springer, Cham. Web.
Sousa, B., Alves, C., Mendes, M., & Au-Yong-Oliveira, M. (2021). Competing with Intel and Nvidia: The Revival of Advanced Micro Devices (AMD).In 2021 16th Iberian Conference on Information Systems and Technologies (CISTI) (pp. 1-7). IEEE. Web.
Teles, F. S. (2020). Equity research–advanced micro devices (AMD) (Doctoral dissertation).
Wang, C. H., & Lin, H. C. (2021). Competitive substitution and technological diffusion for semiconductor foundry firms.Advanced Engineering Informatics, 48, 101254. Web.
Yahoo! (2022). Intel Corporation (INTC) stock price, news, Quote & History. Yahoo! Finance. Web.
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