Case

Case Solution for Valuation of AirThread Connections

Complete Case details are given below :

Case Name : Valuation of AirThread Connections

Authors : Erik Stafford, Joel L. Heilprin

Source : HBS Brief Cases

Case ID : 4263

Discipline : Finance

Case Length : 15 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

This case can be used as a capstone valuation exercise for first-year MBA students in an introductory finance course. A senior associate in the business development group at American Cable Communications, one of the largest cable companies in the U.S., must prepare a preliminary valuation for acquiring AirThread Connections, a regional cellular provider. The acquisition would give American Cable access to wireless technology and the wireless spectrum and enable the company to offer competitive service bundles including wireless, currently a hole in the company’s service offering. Students learn the basic valuation concepts including DCF (discounted cash flow) using APV (adjusted present value) and WACC (weighted average cost of capital) and they must choose the appropriate approach for situations in which the capital structure is changing or assumed to be constant. Students must consider the effect of constant debt versus the D/V (debt-to-value ratio) in estimating betas and the costs of capital. In addition, students analyze the effects of non-operating assets on valuation. As an additional assignment, instructors can require students to consider the personal tax disadvantage of debt as well as the synergies American Cable expects to achieve following the acquisition.

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Case Solution for Martin Blair

Complete Case details are given below :

Case Name : Martin Blair

Authors : Howard H. Stevenson, Michael J. Roberts

Source : HBS Brief Cases

Case ID : 914521

Discipline : Entrepreneurship

Case Length : 15 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Martin Blair is a first-time entrepreneur who draws on his experience in the food service industry to develop two different restaurant concepts almost simultaneously. In relating his experiences, he reveals several important concerns of the thoughtful entrepreneur, ranging from securing financing to building out physical spaces. Both restaurants are successful, and Blair now wants to grow the business. In particular, he must decide whether to grow one or both of the concepts, and whether to use franchising as a growth strategy for either, or potentially both. He must consider the pros and cons of franchising, which apply differently to each of his restaurant brands.

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Case Solution for The Talbots, Inc., and Subsidiaries: Accounting for Goodwill

Complete Case details are given below :

Case Name : The Talbots, Inc., and Subsidiaries: Accounting for Goodwill

Authors : William J. Bruns Jr.

Source : HBS Brief Cases

Case ID : 3254

Discipline : Accounting

Case Length : 13 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

In 2006, Talbots, Inc., a specialty women’s retailer, purchased a competitor, J. Jill. The transaction created a large goodwill account along with accounts for trademarks and other intangible assets. Using prevailing accounting standards (Statement of Financial Accounting Standards No. 142), Talbots determined that the goodwill was not impaired in its Fiscal Year 2007 and it was carried forward at its purchase cost. However, one year later Talbots found the goodwill impaired, along with the trademarks and some store assets acquired from J. Jill in 2006, and these impairments were deducted from revenues in Fiscal Year 2008. Case includes financial statements.

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Case Solution for Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?

Complete Case details are given below :

Case Name : Merrimack Tractors and Mowers, Inc.: LIFO or FIFO?

Authors : William J. Bruns Jr., Sharon Bruns, Susan S. Harmeling

Source : HBS Brief Cases

Case ID : 3217

Discipline : Accounting

Case Length : 06 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

At Merrimack Tractors and Mowers in 2008, product manufacturing costs are increasing faster than competitors’ costs, and as a result earnings are likely to fall below those reported in 2007. The company president and the company controller have discussed this problem, and the controller has mentioned that if the company changed from LIFO to FIFO it might be possible to maintain earnings growth in 2008. He prepares a memo to the president explaining how inventory flow assumptions work and provides pro-forma income statements that show that, for one product (reel mower units), adopting FIFO would allow Merrimack to report higher income in 2008 than it did in 2007, but higher income taxes would have to be paid.

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Case Solution for Lyons Document Storage Corporation: Bond Accounting

Complete Case details are given below :

Case Name : Lyons Document Storage Corporation: Bond Accounting

Authors : William J. Bruns Jr.

Source : HBS Brief Cases

Case ID : 3215

Discipline : Accounting

Case Length : 07 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

In 2009 a recent MBA must analyze the possible refunding of bonds issued in 2000 when interest rates were much higher. She must consider the possible consequences of repurchasing company bonds outstanding using cash that might be obtained by issuing new bonds at a lower interest rate. Students need to carry out a quantitative assignment.

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Case Solution for Depreciation at Delta Air Lines: The “Fresh Start”

Complete Case details are given below :

Case Name : Depreciation at Delta Air Lines: The “Fresh Start”

Authors : William J. Bruns Jr.

Source : HBS Brief Cases

Case ID : 4013

Discipline : Accounting

Case Length : 08 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

In estimating depreciation for accounting purposes, Delta Air Lines has changed its assumptions about aircraft lifespan and residual values four times in the last thirty years or so. In the most recent changes, Delta adopted fair value accounting as part of its “fresh start” emergence from bankruptcy. Each of these policy changes has affected future asset values as well as present and future income. Students should organize their case analysis around three types of questions: (1) the estimated life cycle of commercial passenger airplanes; (2) the uses of financial reports, including the purpose of depreciation in reporting on assets and periodic income; and (3) alternative procedures for reporting asset book values and income that might better serve users of financial reports.

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Case Solution for Jimmy Fu and Moog, Inc.: Understanding Shareholder’s Equity (Brief Case)

Complete Case details are given below :

Case Name : Jimmy Fu and Moog, Inc.: Understanding Shareholder’s Equity (Brief Case)

Authors : Craig J Chapman

Source : HBS Brief Cases

Case ID : 4203

Discipline : Accounting

Case Length : 06 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Jimmy Fu is interviewing for a job at Moog, Inc., a worldwide designer, manufacturer, and integrator of precision motion and fluid controls and systems. He learns that a job offer from Moog typically includes stock options and restricted stock in the compensation package. The vesting and termination language for the stock plan leads Jimmy to investigate the Shareholders’ Equity section of the Moog balance sheet, where he finds more activity than he expected. The case introduces students to the concepts of employee stock options, stock-splits and buybacks, multiple share classes, and the basics of equity investment and diversification. Students must complete a quantitative analysis of the financial transactions related to Shareholders’ Equity.

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Case Solution for Danshui Plant No. 2

Complete Case details are given below :

Case Name : Danshui Plant No. 2

Authors : William J. Bruns Jr., Julie H. Hertenstein, Kelvin Liu

Source : HBS Brief Cases

Case ID : 913525

Discipline : Accounting

Case Length : 05 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Danshui Plant No. 2 in southern China has a one-year contract with Apple Inc. to assemble 2.4 million iPhones. In the first three months of the contract, the plant is unable to assemble as many phones as expected and is operating at a loss. The plant manager must analyze the budget and prepare a summary of monthly operations to help identify the source of performance problems. The plant has had difficulty hiring enough workers despite raising wages over 30%. In addition, the assembly process for an iPhone is complicated, with 140 steps involving over 100 components. The plant manager considers whether a flexible budget would be more useful for uncovering problems than the static budget currently being used. Students must perform break-even and flexible budget analyses and calculate price and usage variances as they consider solutions for the plant’s problems with the iPhone contract. This case, which explores the challenges of outsourcing manufacturing, can be used as an introduction to managerial accounting.

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Case Solution for Luotang Power: Variances Explained

Complete Case details are given below :

Case Name : Luotang Power: Variances Explained

Authors : Robert L. Simons, Craig J Chapman

Source : HBS Brief Cases

Case ID : 913533

Discipline : Accounting

Case Length : 08 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

The general manager of Luotang Power, a coal-fired power plant located in central China, reviews annual results before a meeting with the board of directors. He thought the company performed well during the year and both plant availability and fuel economy had improved over the previous year. However, the positive performance does not show in the financial results and he must investigate before presenting to the board. He considers performing a variance analysis to better understand plant performance compared to the previous year. He also examines the contractual arrangement the plant has with the provincial power company for a minimum purchase of electricity to supplement regional demand. The company had been successful at selling excess electricity to the power plant but over the past 12 months, demand has decreased. Students must complete a quantitative analysis of the plant’s performance and prepare recommendations to improve reporting and evaluation of the plant’s performance. This case can be used in an introductory managerial accounting course to explore variance analysis and incentives in contracts.

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Case Solution for Biovail Corporation: Revenue Recognition and FOB Sales Accounting

Complete Case details are given below :

Case Name : Biovail Corporation: Revenue Recognition and FOB Sales Accounting

Authors : Craig J Chapman

Source : HBS Brief Cases

Case ID : 4011

Discipline : Accounting

Case Length : 09 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Biovail Corporation, a major Canadian pharmaceutical company listed on the New York Stock Exchange, announces that it will miss its quarterly earnings target by $25 to $45 million, blaming $10 to $15 million of the shortfall on a truck accident involving a shipment that left its facility on the last day of the quarter. The case was ultimately prosecuted by the U.S. Securities and Exchange Commission (SEC). The case is centered on the question of revenue recognition and how the company should have accounted for the sales (FOB company or FOB destination). However, it also provides a rich setting permitting exploration of peripheral topics around the ethics of earnings management. For example, the case discusses stock analysts’ reactions to the announcement; questions how much product was actually in the truck; questions how aggressively the company responds against the analysts who downgrade the stock; and highlights the role of the SEC in enforcement.

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