Manufactured Homes: Accounting Policies, Evaluation and Current and Future Financial Position

Accounting Policies <Tab/>Manufactured Homes (MH) uses the installment sales method for recognizing revenue. Using this installment sales method assumes that the customer probably will not default and there is little risk for the company. As cash is supposed to come in, revenues are matched with expenses. However, if the customer defaults, then there are many future expenses that cannot be matched with corresponding revenue. The company usually sold its installment …

…the financials in such a way that MH is no longer profitable. Like many businesses and industries, a change in the economic conditions could turn the prospects of MH around very quickly. Despite their current issues, MH is building a manufacturing home empire that expands with each passing day. However, with the status of the market and a potential overly aggressive business plan, MH is a risk of becoming non-profitable in the very near future.