The CEO of a US electronics company assesses the financial projections and financing plan of the CFO. Given the cyclical nature of the industry and the volatility of corporate performance, the CEO is unsure of the usefulness of predictions based on a linear extrapolation of rapid sales growth and stable earnings and assets-to-sales ratios. Teaching …
Goodyear is about to make its first major capital commitments in the largest investment project in its history, the All American Pipeline. The pipeline will transport heavy crude from California to Texas. You are at the heart of a great Goodyear program to diversify its core tire business. Goodyear estimates the construction cost to be …
This technical note expands on the previous note “Forwards and Futures” (UV1045), which introduced the fundamentals of futures and futures contracts. It begins with examples where the hedging was one-to-one and the expiration of the futures contract exactly coincided with the time of the transaction. Often the hedging focus is not as clear as in …
Introduces a framework for evaluating mergers and acquisitions. Considers that the criterion for a good business is that it creates value for shareholders; that is, it has a NPV of positive agreement. Analyze the NPV of the deal from the perspective of both the buyer and the seller. Explain how a positive NPV on a …
Sensormatic is a leading provider of retail security systems. The company relies on customer financing as an integral part of its strategy. The company’s growth strategy and accounting are under attack from short sellers and the financial press.
In this case, there is a dispute between owners and players about the profitability of professional baseball teams in the context of the negotiation of a new collective agreement. The case describes the financial statements of the Kansas City Zephyrs baseball club and discusses several issues whose accounting treatment is controversial between owners and players. …
On March 17, 2006, the Japanese Internet company Softbank Corp announced that it had signed a definitive agreement with the British mobile phone giant Vodafone Group Plc to buy its Japanese unit Vodafone K.K. for ¬ • 1.75 trillion. To fund the largest acquisition of all time by a Japanese company, Softbank intended to raise …
In late 2016, Axonify, a Canadian technology company that ran an enterprise online learning platform, was struggling to meet aggressive revenue growth targets while controlling the cost of attracting new customers. Axonify’s CFO had not imposed a top-down approach to developing budgets, nor had he attempted to closely monitor and control actual results compared to …
On March 15, 1848, the governor of the Bank of France, Antoine d’Argout, faced the possible collapse of his institution. A cascade of agricultural and industrial shocks, rising food prices, unemployment and outflows of foreign exchange hit the heart of the French economy. At the same time, France and Europe in the broadest sense had …