Olam

Case Solution for Olam: Accounting for Biological Assets

Case Solution & Analysis for Olam: Accounting for Biological Assets by Yew Kee Ho, Teo Chee Khiang, Sitoh Kheng Hoe.

Complete Case details are given below :

Case Name :      Olam: Accounting for Biological Assets
Authors :           Yew Kee Ho, Teo Chee Khiang, Sitoh Kheng Hoe
Source :              Ivey Publishing
Case ID :           9B15A042 / W15369
Discipline :        Accounting
Case Length :    14 pages
Plagiarism : NO (100% Original work)
Description for case is given below :
In 2012, an equity research firm based in California accused Singapore-based Olam International Limited (Olam) of engaging in potentially misleading and dangerous accounting practices. The firm – Muddy Waters Research – further stated that Olam was on the verge of bankruptcy. The primary complaint made against Olam by Muddy Waters was that Olam allegedly made aggressive use of “non-cash accounting gains,” particularly when reporting on Olam’s biological assets. Olam’s share price tumbled after the accusations were made public. Olam defended itself by asserting that it had applied Singapore Financial Reporting Standard (FRS) 41 – Agriculture appropriately and that the fair value gains of the biological assets were justifiably derived. FRS 41, equivalent to International Financial Accounting Standards 41 – Agriculture, required Singapore-listed companies to use fair value in the measurement of biological assets. This case examines the complex challenges that valuators face when presented with different valuation models, the application of financial reporting standards and the fine balance between reliability and relevance in the accounting of assets in the real world.
 
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Case Solution for Temasek’s Offer to Buy Olam International

Complete Case details are given below :

Case Name :      Temasek’s Offer to Buy Olam International
Authors :           Ruth S.K. Tan, Zsuzsa R. Huszar, Weina Zhang
Source :             Ivey Publishing
Case ID :            W14757
Discipline :        Finance
Case Length :    15 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
Olam International, a publicly listed firm, was a leading agri-business with an integrated supply chain. To sustain growth, the company took on large amounts of debt to fund acquisitions and other capital expenditures. A hedge fund issued a Sell recommendation, highlighting the problems facing the company, including several years of negative free cash flows. The heated exchange between Olam and the hedge fund led to a government investment fund, Temasek Holdings, first backing Olam, and then eventually offering to buy out the minority shareholders. This scenario presents an excellent opportunity to apply the discounted cash flow analysis and relative valuation techniques to evaluate Temasek’s offer.
 
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