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Business and Finance

Case Review of The Diamonds Foods

The Diamonds Foods, Inc. case designates the significant accounting to blow up at the corporation in late 2011 that elicited by a statement by Off Wall Street, a protuberant short selling investigation firm. Diamond Foods, a highflying growth business in the year 2011, nurtured from a walnut farmers’ cooperative in the year 2005 into a proprietary snack foods constructer on the strength of a chain of acquisitions. The accounting humiliation that involved inappropriate accounting for walnut procurements led to Diamond tumbling its high profile acquirement of Pringles, an SEC and DOJ study, the departure of the CEO and CFO, and the foundation of a top flying development company. The case styles the history and evolution of the company, the investigative and methodical work conducted by OWS and permits students to understand suggestions of the growth plan for financial performance and assessment. Additionally, the case highpoints the role of corporate panels and audit committees in handling strategic and financial reporting menaces.

The article reviews that the complaining growers, for their fragment, tend unhappy for fewer payments than the actual market’s predicament price, as said by the analyst but their criticisms ignored a severe fact: Diamond had approved to buy all of their inventions before the harvests even commenced. They further contracted grower’s subsidy from having a surefire buyer, which at periods can lead to value disparities, particularly in years when countless export buyers are procuring directly from uncontracted agronomists (Srinivasan, & Gray, 2013). I also think it was the best practice for a group of displeased growers going further to sued the company in the year 2008, alleging below-market-rate values. However, the lawsuit tends dismissal in the year 2010. According to Srinivasan, and Gray, (2013) with all that viciousness now behind it, Diamond is leftward to shore up its rudiments. In part, that earnings were paying renewed consideration to its essential walnut business that something Mendes had severely wanted to progress beyond. Diamond started out as a modest cooperative of walnut gardeners in Northern California. When the Inc. went public in the year 2005, growers were given places on the board, and the corporation provided stock to cooperative members, many of whom static own shares. Growers have comprehensibly been disturbed about Diamond’s fate, as beautiful as their own; ever since the IPO and the following moves away from the nut occupational, (Diamond owns the Secret Pop brand of popcorn as well as Kettle chips.) The Pringles pact, and then the accounting indignity, only heightened rigidities, and many cultivators have fled to other buyers, counting foreign investors.

The article also explains how another analyst jagged out that the Diamond (DMND) characteristically paid its cultivators in installments, and the only transformation this time was the reimbursement’s name. DMND seems to give its disbursements different names from year to year but think would be prudent to keep a consistent name to circumvent confusion over the nature of the disbursement thus the article explains payment itself is a strange condition. There was also an issue with Roberts’ disagreement that Diamond’s changes away from walnuts had been forced by weakening relations with farmers and forfeiture of its near-monopoly on their nuts. Diamond was spreading into snacks because that was an enhanced business, the report argued. In exasperating to buy Pringles, it was not scrambling to reimburse for lost walnut sales and curdled relations with growers as explained in the article. It was briskly leaving a low margin business overdue.

It tends to believe that in business all the stakeholders supposed equal and satisfactory treatment, which in turn upsurges organization’s productivity. Diamond food Inc. failed to treat their growers well regarding payments for their dues hence the loyalty between them was at unease situation that can lead to the company failing hence loss realization. Every company in function always tries in operating in a conducive environment that will improve the productivity of the institution hence high-profit margin realization with satisfied product and services to clients (Srinivasan, & Gray, 2013).

The article portrays that SEC claims that while tackled with competing strains, Neil orchestrated a structure to have it both conducts. He developed two particular outlays to please Diamond’s walnut cultivators and bring the entire yearly amounts remunerated to growers nearer to market prices, but inadequately excluded quotas of those disbursements from year-end financial proclamations. Instead of acceptably recording the expenses on Diamond’s books, Neil drilled his finance team to deliberate the payments as developments on harvests that yet unconfined. By concealing the authenticity that the fees linked to prior crop conveyances, Diamond was capable of manipulating walnut prices in its accounting to hit periodical targets for earnings per stake (EPS) and exceed guesstimates by analysts. For example, after regulating the walnut charge to encounter an EPS target for the subsequent quarter of the year 2010, Diamond went on to vender its top of twelve successive quarters of outperformance in its described EPS results during depositor presentations (Srinivasan, & Gray, 2013).

From the article, it explains that Roberts thought that the changing subtleties of the walnut business, counting more competition from purchasers domestically and request abroad, might have encouraged Mendes’s move into the more comprehensive snack business. To reserve the indispensable acquisitions, Diamond had to have a resilient stock price and the capacity to borrow money comparatively cheaply. The motion payment might have been an approach to make the establishment look more lucrative and less hazardous than was in previous period. It had semi of the payment been encompassed in Diamond’s financial year 2011 income account; it would have more than halved paychecks. In effect, Roberts was reproving Diamond of accounting deception (Srinivasan, & Gray, 2013). The article portrays well the scandal rendering accounting statements of the Inc. where the company tends performing on loss basis whereas it supposed to realize a good margin profit.

In conclusion, I feel that the article tries its best in explaining the role-played by the executive under their tenure thus in my view seem they underperformed to the expected. Executive management department should try to put everything in order hence enhancing customer satisfaction (Gujarathi, 2014). The article displays perform where Diamond and Kettle foods share a history of persistent focus on flavor and produce quality and functioning collaboratively with their retail associates. By adding Kettle, counting its talented team of workers, diamond snack business will have a superior scale that will help in driving even greater invention in the snack marketplace. It tends expectation that the attainment will be accretive in the opening year and is a durable, strategic fit to enhance support our long-term progress plans (Verschoor 2014).


Gujarathi, M. R. (2014). Diamond Foods, Inc.: Anatomy and motivations of earnings manipulation. Issues in Accounting Education, 30(1), 47-69.

Srinivasan, S., & Gray, T. (2013). Diamond Foods, Inc.

Verschoor, C. C. (2014). Penalties for fraud are insufficient to deter wrongdoing. Strategic Finance, 96(3), 15-61.



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