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Part (C) examines the net investment hedge a year after its implementation. It provides an opportunity for students to discuss how net investment hedges are reported, monitored, and evaluated, ex-post. It also considers a proposal to expand the hedge to additional currencies.

Hunan TV & Broadcast Intermediary Co. Ltd. ("TIK"), was listed on the Shenzhen Stock Exchange (stock code 917), and it was recognized as one of the leaders in the TV industry in mainland China. Its major lines of business included TV broadcasting, TV and movie production, TV and movie distribution, and an advertising agency. A major client of TIK was Hunan Satellite TV, a related company of TIK. Hunan Satellite TV was the second most popular TV broadcasting station in mainland China. The chairman of TIK, 龙秋云[Long Quiyun], was replaced by 陈刚[Chen Gang] on 30 October 2017. Long was arrested later, on 11 January 2018, on charges for illegally accepting bribes. TIK also appointed three new executive directors in January and February 2018 out of a total of four. The shake-up was followed by a surprise financial result announcement. From FY2010 to FY2016, the company had reported profits ranging from CNY387m to CNY649m. When the company forecasted profits of CNY26m to CNY39m for FY2017 in a mandated forecast on 31 January 2018, investors knew profits for the year would be significantly lower as than the years before. On 26 April 2018, when the company announced a net loss for FY2017 of CNY464m on 26 April 2018, this came as an unwelcome surprise. Both FY2017 and FY2018 were subject to major write-downs in the value of several assets. The write-down provision in FY2017 was CNY411.1m, while for FY2018, it was CNY552.6m.

The case revolves around the actions that Barbara Novick, co-founder and Vice-Chair of Blackrock, and Michelle Edkins, Global Head of Investment Stewardship, would need to take in response to the controversial CEO letters from Laurence (Larry) Fink, Chairman and CEO of BlackRock. Fink's letters focused on the importance of corporate purpose and investing considering environmental, social, and governance (ESG) issues. The case also discusses Blackrock's plans for a new model of shareholder engagement to help drive the changes proposed in the letters. The case presents the opportunity to discuss the governance role played by major institutional investors as well as how the responsibilities and actions of one large investor, BlackRock, should evolve in this role going forward. It is not clear whether BlackRock should play such a role and, if so, whether they have the ability to enforce corporate compliance and to carry out this role given they are primarily an index investor. The case is likely to generate spirited debate about the merits of BlackRock's pronouncements and the importance of corporate investments in ESG themes and allow for discussions on measurement and disclosure strategies that can judge progress on these dimensions.

SK Group was one of the largest companies South Korea. A family-run conglomerate consisting of around 120 subsidiaries and employing more than 100,000, SK was tightly knit into the fabric of Korean society. SK viewed their future success as contingent upon the strength of the societal ecosystem in which they operated. As such, the company had a long history of philanthropic giving. However, SK questioned if their donations were producing the desired impact, as many of the societal issues they, and the rest of Korean society, sought to address were not improving. In order to create a new system of generating social value, SK established the Social Progress Credit (SPC) initiative. The SPC initiative designed a measurement methodology that was used to measure the social value created by social enterprises - firms whose mission was to generate social value in conjunction with generating sustainable financial returns. Additionally, the SPC initiative provided monetary incentives to social enterprises in proportion to the social value generated by participating social enterprises. Looking to the future, SK envisioned a marketplace in which SPC's were traded among investors and credits were priced by the market. Initial results of the SPC initiative were positive, showing positive growth in social value created and financial stability of social enterprises. How then could SK convince other public and private organizations to adopt the SPC model and promote social value? Moreover, how could SK convince mainstream capital markets to make investments into society enterprises on the basis of the social value creation? More importantly, was this attempt to enrich and grow the ecosystem of social value creation making a difference?

Historically, the decision over whether or not to consolidate was guided by bright-line rules, which outlined the minimum percentage of ownership required in a subsidiary for it to be considered controlled by a reporting entity and thus included in the consolidated financial statements (CFSs). Today, U.S. GAAP and IFRS use a principles-based approach, which is guided by the concept of control to determine whether a subsidiary is to be consolidated in the CFSs. In this context, a debate exists between managers and auditors about which subsidiaries should be consolidated. To deepen our understanding of how managers and auditors grapple with consolidation decisions, we interviewed several CFOs and audit partners to determine if they are anchored to legalistic mechanisms or if, instead, they are strategically developing ways to support the consolidation decision. Based on our interviews, we find that opportunistic transactions-criticized at the time of the rules-based approach-still exist due to the search for legalistic mechanisms that protect underlying choices influenced by economic incentives. Such results are crucial for analysts and investors to properly interpret consolidated financial performance.

Carla Thomas, the owner of Boulevard Sandwiches, is preparing to meet with Alan Philips, the new manager of Boulevard Sandwiches, Inc., Unit No. 2, in mid-December 2017. The primary purpose of this meeting is to finalize the 2018 operating plan for the location, as well as to conduct sensitivity analysis related to the assumptions included in the budget. Thomas has decided that, due to the growth of her business, she can no longer continue to manage the operation as she did when there were only a couple of locations, so she is in the process of implementing a more formal and extensive planning and budgeting process. This case may be used as a stand-alone case on budgeting, or it may be paired with "Boulevard Sandwiches, Inc. (B)" (UV7971) in a module on budgeting and strategic profitability analysis or flexible budgeting.

Alan Philips has just completed his first year as manager of Boulevard Sandwiches, Inc., Unit No. 2. Actual profit for the year was well below budgeted profit. Philips is preparing for a meeting with Carla Thomas, the owner of Boulevard Sandwiches, Inc., to discuss the 2018 operating results and Philips's performance for the year. In December 2017, Philips had met with Thomas and had accepted the 2018 budget as aggressive but achievable. Now, he must convince Thomas that he did a good job during his first year as manager and that he deserves a bonus. This case can be used alone or after "Boulevard Sandwiches, Inc. (A)" (UV7969), which focuses on preparing the 2018 budget for Boulevard Sandwiches Unit No. 2.

External pressures from an increasingly saturated industry were forcing the president of Crème Couture Bridal Inc. to contemplate the future of her business. Crème Couture operated as a retail outlet for memorable lifestyle events, selling wedding dresses, bridalwear, formalwear, and various accessories to women of all ages. The president wanted to develop an expansion strategy that would best position Crème Couture for long-term success. Specifically, she wanted to assess the profitability of each revenue segment to determine which segments should be further enhanced or eliminated. She wanted her expansion strategy to align with her long-term goals of attracting more clientele, providing exceptional customer service and increasing net profit.

In 2016, the general manager of Stone Rock Golf & Country Club (SRGCC) in Ainslie, Ontario, was considering an opportunity to grow the club’s weddings and special events business. SRGCC, a popular 18-hole golf course in a small town, was owned and operated by four local families, who ran the business according to their family values and their sense of loyalty and pride in their community. Since the golf industry had recently experienced a significant decline, the manager believed that increased investment in the weddings and special events business would help to strengthen and diversify SRGCC’s revenues. He was considering three different options, from modest to quite substantial: (1) focus on the immediate capital need of renovating the outdated maintenance facility; (2) make a large investment that included adding a new space for weddings and special events, expanded parking, and a new maintenance facility; or (3) do nothing and maintain the status quo. To complete the entire renovation, the club would require an investment of close to $1 million as well as approval from the four families. How could he build a case to increase SRGCC’s revenues and convince both his banker and the board of directors to accept his choice?

This case explores Ontario's Fair Hydro Plan, a 2017 policy of the Government of Ontario that aimed to reduce consumer electricity rates by borrowing to provide subsidies. This borrowing was to be repaid through increased rates levied on future consumers in the province. This policy was accounted for using the principles of rate-regulated accounting. The impetus for these changes was the rapidly rising electricity rates.

The Academy, a local CrossFit gym in Kitchener, Ontario, was determining how best to expand its business in order to continue its growth trajectory in a highly competitive industry. The gym's co-owner and head coach needed to decide whether to invest in upgrading The Academy's existing facility or open a second location. He wanted to complete a qualitative industry size-up, competitive analysis, consumer analysis, and corporate capabilities size-up, in addition to a quantitative size-up, including statement of cash flows and ratios analyses. He required the chosen growth strategy to meet a hurdle rate of 20 per cent.

The Academy, a local CrossFit gym in Kitchener, Ontario, was determining how best to expand its business in order to continue its growth trajectory in a highly competitive industry. The gym’s co-owner and head coach needed to decide whether to invest in upgrading The Academy’s existing facility or open a second location. He wanted to complete a qualitative industry size-up, competitive analysis, consumer analysis, and corporate capabilities size-up, in addition to a quantitative size-up, including statement of cash flows and ratios analyses. He required the chosen growth strategy to meet a hurdle rate of 20 per cent.

In 2018, the owner of Northwest Fitness, a fitness business in London, Ontario, Canada, was analyzing the business's past year of operations and planning for the future. The company focused on “functional fitness” training to help clients improve aspects of their everyday life. The owner had launched the fitness studio with the help of a bank loan and a line of credit; after three years of success, he wondered if the company was finally in a financial position that would allow him to expand operations. He needed to analyze the past financial performance and project a statement of earnings and a statement of position assuming an expansion was pursued.

In 2018, the owner of Northwest Fitness, a fitness business in London, Ontario, Canada, was analyzing the business's past year of operations and planning for the future. The company focused on "functional fitness" training to help clients improve aspects of their everyday life. The owner had launched the fitness studio with the help of a bank loan and a line of credit; after three years of success, he wondered if the company was finally in a financial position that would allow him to expand operations. He needed to analyze the past financial performance and project a statement of earnings and a statement of position assuming an expansion was pursued.

The case explores how Hung Fook Tong Group Holdings Limited (1446.HK) a Hong Kong company engaged in the production and sales of a variety of herbal and non-herbal products under its "Hung Fook Tong (鴻福堂)" brand, accounts for its various membership programmes and promotional packages. Founded in 1986 by Mr. Wong Jing Fat, the Company has grown from a single herbal tea shop into a chain of 115 retail stores. The case is set in the first quarter of 2019 before the release of 2018 annual results. Students take on the role of Colin Lo, the Financial Controller of the Company. Mr. Lo is preparing for the upcoming board meeting. He expects a detailed discussion on the impact of changes in accounting policies, in particular, HKFRS 15 "Revenue from Contracts with Customers".

Spreadsheet supplement for case 902B01.

The financially savvy (fictional) protagonist in this case is an independent artist, intrigued with the possibility of becoming a seller on the Etsy, Inc., marketplace. As such, she is seeking to learn about the company-that is, its culture, recent history, and incentive compensation philosophy and practices for top executives. The case provides pertinent, publicly sourced information for exploring and discussing such issues. This case is suitable for an undergraduate, graduate, or non-degree executive education course where the focal topic is, in general, performance management, and more specifically, the use and design of executive incentive compensation plans. A valuable secondary objective is to introduce students to some of the company information disclosed in a publicly available corporate proxy statement. That document, filed with the SEC as Form DEF 14A, is filed in preparation for a public company's annual shareholder meeting.

In August 2018, the founder of Speak-On, was finalizing plans for his company's first year of operations. Speak-On was a learning tool used in classrooms to help students improve their communication and public speaking skills. Having worked on developing a prototype all summer with financing from the Government of Ontario, the founder needed to understand the cash needs for his company. He planned to project a cash budget for fiscal year 2018 and do a sensitivity analysis on his projections to determine the amount of additional financing needed. Did Speak-On require external financing, and would the line of credit support the cash needed?