1. Edit the following paragraphs for grammar only.

Reviewing the financial condition of ABC industries, the following observations were made. First, ABC is experiencing some irregularities with their internal controls. The head accountant signs off on cash dispersals over $100, and they rarely route their approvals to a second party for sign off. By concentrating financial decision-making with one employee, this practice places the company at risk for potential fraud. In the future, we recommend at least that ABC ensures that one additional financial employee be required to sign off on all such disbursements.

Second, ABC has experienced less capital expenses in recent years, and this has reduced its ability to depreciate equipment. The cost of raw materials now makes up 43% of ABC's manufacturing expenses, which has risen dramatically in recent years because of increasing transportation costs. To maintain its competitiveness in the industry, increases in material costs should be reviewed and other suppliers should be explored. 

Third, ABC's revenue has increased an average of 12% annually over the past five years. This increase, along with significantly greater real estate assets, have substantially changed ABC's net worth. Although ABC's financial condition equals that of XYZ, its subsidiary, its lack of financial diversification make comparisons difficult. By selling its nonessential assets, we suggest ABC raise cash to diversity its operations.  

2. Edit the following paragraphs for punctuation only.

After five years as a publically traded company XYZ has established itself as a leader in it's field. As of January 1 2018 XYZ had over $7.5 million in cash reserves and projected an additional $2.5 million in cash reserves in FY18. Because of weak domestic demand XYZ has experienced some financial challenges over the past six quarters, however it appears that these challenges will subside in the near future as demand increases both domestically and worldwide. Based on current projections XYZs sales are expected to increase 5% in FY18 and its return on investment is expected to increase 3%.     

XYZs leadership team has successfully positioned the company financially. The president of XYZ has three key advisers: the vice-president of operations, domestic and international, the vice-president of finance, planning, and logistics, and the vice-president of human resources. A vice-president of marketing will join XYZ in FY18 pending approval at next years annual meeting. All of XYZs other key leadership positions have been held by personnel with experience exceeding industry averages which is impressive in the current economy. Overall we recommend that XYZ continue its exemplary retention efforts.  

3. Edit the following paragraphs for coherence by adding transitional words or phrases.

After reading ABC's annual report, we decided to invest 15% of our portfolio in ABC stock. The stock fell by nearly 10% the first year, significantly lowering our overall return on investment. We decided to buy more ABC stock because we still believed it had significant upside, due to its unique brand. The next year its price increased by 27%, and our portfolio's value reached its highest level in a decade. We will continue to look for companies like ABC that have significant growth potential.

During our visit to XYZ Corporation, we observed some anomalies in accounting procedures. Quarterly reports were submitted a month late for the first and second quarters of FY17. Key XYZ accounting personnel were working on a major update of the accounting database during the first half of FY17. The lateness of the quarterly reports is understandable, given the conditions. We observed that some of the equipment expenses for the new warehouse did not appear in the annual company audit. Correcting expenses can be done retroactively as long as reporting protocols are followed carefully. We recommend internal oversight to avoid errors in the annual company audits.              

4. Replace the "to be" verbs (underlined) in the following sentences with more active, descriptive verbs.

a. All accountants must attend next month's division meeting, which will be about proposed changes in corporate tax law. 

b. The reason ABC increased its revenue was that it changed its management team.

c. Adding two new plants and attracting new investors were good for sales growth.   

d. She was of the opinion that reducing the company's debt was a way to fiscal solvency.

e. Most firms that participated in the survey were under financial duress during the past five years.

5. Replace the nominalizations (underlined) in the following sentences with active verbs.

a. Our firm made the recommendation that ABC should make a reduction in its expenses for production costs.

b. They made the decision to continue to expand their international operations, especially in China and Japan.  

c. After a year of slow growth, they came to the conclusion that the business had to take into consideration several new competitors.

d. After making a suggestion that XYZ expand it green energy policy, the Board members came to the realization that XYZ had already implemented them.   

e. The auditors had a suspicion that fraud may have resulted if the new procedures had not been put into effect.  

6. Eliminate unnecessary words from the following sentences.

a. Those deductions can no longer be taken due to the fact that they were phased out.

b. In order to minimize your tax obligation, you should claim the full amount of the capital gains on this year's return.

c. If you refer to your amortization table, you will find the amount of interest that may be eligible for a tax deduction during the next calendar year.  

d. I kindly request that you review your return, sign your return, and keep the copy of your return for your own records.   

e. Due to the changes that occurred with her status in the company from part-time to full-time, taxes were required to be withheld for a period of only six months.

7. Edit the following text for visual clarity and structure only. The text will appear on a one-page financial fact sheet for ABC Industries that's intended to persuade investors and key customers to do business with ABC. The fact sheet will appear as both a paper copy and online as a PDF.

Financial Update for ABC Industries

Quick Facts for FY14. Revenue = $234,000,000. Total employees = 1,331. Plant locations in Indiana and Ohio. CEO = John Harris, founder. Years in business = 27.

The financial health of ABC Industries continued to improve slightly in FY17, reflecting overall economic conditions. Although capital improvements rose significantly, domestic sales remained weak. International sales, however, increased at a rapid rate, outpacing sales of most competitors. 

Capital Improvements

In FY17 ABC Industries spent $7,500,000 on capital improvements for its two plants in Indiana and Ohio, a 15 percent increase over FY16. All of these expenditures were depreciated on a long-term basis. Specifically, ABC Industries spent $2,500,000 on new machinery and equipment. It spent $3,300,000 on upgrading machinery, mostly in Ohio and Illinois. And it spent $1,700,000 on building improvements in Indiana. All of these expenses were funded on a cash basis from existing accounts.

Domestic Sales

Because of the economic downturn, domestic sales for ABC Industries remained sluggish in FY17. Although the new product line of home improvement tools experienced a 28 percent gain in sales, sales of all other product lines remained flat or experience only marginal gains. A new line of snow removal equipment enters the market in FY18, offering an opportunity for significant sales growth.

International Sales

Sales outside of North American increased 18 percent in FY17, the highest gain in the history of ABC Industries since it began international operations. Specifically, sales in South and Central America increased by 22 percent, in Europe and the Middle East by 11 percent, and in Asia (China, Indonesia, Japan) by 17 percent. Projections for sales in FY18 show continued international growth in all of these areas.

Competitive Challenges

Currently, ABC Industries' main competitors are located in the U.S., with growing competition from companies located in Brazil, Russia, and China. To address competitive challenges, ABC Industries has developed aggressive strategies in two areas: marketing and R & D. In FY18 ABC Industries plans to increase its marketing budget by $670,000 and to increase its R & D budget by $425,000.

For additional information about ABC Industries, see www.ABC.com