INTRODUCTION

Westinghouse Electric Corporation is an American based company founded in 1884. Westinghouse Electric Corporation is the pioneer in the industry of power generation. The company deals in electronic appliances for home, electronics, lightning and power.(Westinghouse, n.d.).

At the end of 1974, the management of the company was changed, and the company performed very well under the new management.(Wikipedia, n.d.)(Mesothelioma.com, 2018)(historicpittsburgh, 2010)(Westinghouse, 2014)(Engineering and Technology History Wiki, 2015)(HBS Library, 2017)(Funding Universe, 2017)(Encyclopedia Britannica, 2016)(PITSBURGH Businees Times, 2017)(CASE WESTERN RESEREVE UNIVERSITY, 2016)(engineering and technology history, 2015)(HBR, 2017)(Funding Universe, 2018)(CWR, 2017)(PBBT, 2018)(Science communications, 2012)(Mesothelomia, 2016)(Westinghouse, 2013)

West House Harvard Case Solution & Analysis

According to the report of 30th January 1974 published by Westinghouse electric corp., their net income ($161.9m)in 1973 were dropped by 19%in comparison with the net profit ($198.7m) earned in 1972. This drastic drop in net income astonished the investors of Wall Street because it was predicted that the net income of Westinghouse will be shot up in 1973 and that is why investors were expecting a good profit between $2.35 and $2.50 per share but it ended up with $1.82, against their expectations. The CEO of the company claimed that their profit declined due to the Westinghouse’s power system company where shipments of turbines and generators had been lagging throughout the year. He added by again surprising the Wall Street that he expected the profit in 1973 would be dropped by 50% and would end up with $0.61 per share but the profit exceeded his expected limit.

Analysts revised their estimations for Westinghouse’s profit per share in 1974 as between $1.80 and $1.85 and fulfilling the expectations it ended up with $1.82 per share for the year 1974.(Westinghouse Eelctric Corporation: Quality of earnings analysis, 2018)

We mustsummarize here Westinghouse’s financial statements and whether it is fulfilling the generally accepted accounting principles (GAAP) approach or has some implications andmust give justifications for the analysis along with detailed discussion with example.

SUMMARY OF ACCOUNTING AREAS

In the table A of case study there is a hierarchical distribution of salaries and incentives to the executives of the company. From the CEO of the company salary starts from $251,250 and it reaches below to the $5,412,503 which is distributed in the group of 80 officers and a list of received and deferred compensation along with the cumulative of all.

In exhibit 2 of the case study, we have quarterly income statements and stock price information, and selected daily stock price information. In 1972, the sales in the first quarter were $1,180m, in second quarter they increased to $1,260m, then dropped in third quarter with $1,230m, and suddenly increased in fourth quarter with $1,420m. At the end of the year of 1972,company was able to make sales of $5,090m annually. While in 1973, its sales were $5,700 in the first quarter, $1,270 and $1,410 in the second quarter, $1,390 in the third quarter and finally $1,630 in the fourth quarter.

The net income of the company in 1972 was $198.7m having $42.8m, $52.6m, $49.7m, and $53.6min the four respective quarters.............

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