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Screen Microtech Inc., a capacitive touch screen manufacturer, had seen significant growth over the past year: it had moved its manufacturing plant, expanded operations, built a larger client base and seen an unprecedented increase in sales. Its chief executive officer was preparing an initial public offering that could lead to a significant bonus and stock shares for himself and for the company’s chief financial officer. This could be enough to induce them to secure improved financial results through any means necessary. Certainly, it could bias their approach to accounting policy choices. Was the company’s accounting ethical? Did it feature earnings management or earnings manipulation? What was the difference between the two, if any? What was the effect of such accounting practices on the financial markets?

Johansen's has just completed its first year under a new scorecard system for evaluation of manager performance. The manager of Store 51 has traditionally been one of the company's top-performing managers from a financial standpoint, but his overall performance rating has declined due to performance in nonfinancial dimensions. The managers at the performance summit must discuss his performance in the context of a new performance evaluation system, measurement issues around the nonfinancial metrics, and retention concerns. An alternative version of this case, (UVA-C-2349) takes a less conventional role-play pedagogical approach to the same material.

Two undergraduate business students wanted to assess the feasibility of starting a business that would sell an all-natural and completely biodegradable alternative toothbrush — the Miswak. A total of $50,000 had already been secured for the initial investment; however, the young partners wondered whether this investment would be sufficient to sustain the cash flows of the business for its first three years of operations and, if not, how much additional funding would be needed. To discover whether their proposed venture would be feasible, the pair set out to perform a variety of qualitative and quantitative analyses.

Student spreadsheet for 9B16B006.

Screen Microtech Inc., a capacitive touch screen manufacturer, had seen significant growth over the past year: it had moved its manufacturing plant, expanded operations, built a larger client base and seen an unprecedented increase in sales. Its chief executive officer was preparing an initial public offering that could lead to a significant bonus and stock shares for himself and for the company's chief financial officer. This could be enough to induce them to secure improved financial results through any means necessary. Certainly, it could bias their approach to accounting policy choices. Was the company's accounting ethical? Did it feature earnings management or earnings manipulation? What was the difference between the two, if any? What was the effect of such accounting practices on the financial markets?

The associate director of hospitality services at a large university had to address overcapacity at an on-campus eatery. The eatery was experiencing long lineups and severe bottlenecks, especially at its full-service coffee outlet. Seating capacity was also short of demand, and no additional space was available. The associate director also faced pressure from university administration to consider closing a nearby eatery as a result of its poor profitability, but doing so would put additional strain on the already overcapacity eatery. After examining profitability and completing a corporate assessment, the associate director expected to have a better idea of how to tackle the current capacity and profitability issues.

Etsy was an online craft bazaar founded in 2005 in a loft in Brooklyn, New York. The company was known for its emphasis on social responsibility, transparency, authenticity, and its somewhat nontraditional approach to business. In January 2015, Etsy converted its Irish subsidiary to an unlimited liability company, a move it described as implementation of an "updated global corporate structure." In a subsequent U.S. Securities and Exchange Commission (SEC) filing, it stated that this changed structure might "result in a reduction in our overall effective tax rate." In August 2015, the company came under fire for this move. Bloomberg ran an article headlined "Etsy Taps Secret Irish Tax Haven and Brags About Transparency at Home." Americans for Tax Fairness charged that Etsy had "changed its behavior and [was] now using unethical business practices." John Montgomery of Startworks declared, "Etsy sold its soul for a lower corporate tax rate." The Wall Street Journal summarized the reaction with the headline "Etsy Faces Pressure to Abandon Irish Tax Strategy." This case explores Etsy's initial decision, the critical public response to it, and Etsy' choice to ignore the fallout and stay the course.

Dr. Jonathan Strauss, Accounting Professor was contacted by a group of attorneys and asked to be an expert witness in the Jefferson County Bankruptcy Filing case. The situation had been in the news for over two years. Corruption of every kind had led to several Commissioners, contractors and others being fined and/or sent to jail for their part in the corruption. JPMC was sanctioned by the SEC and fined for their involvement in the case. Strauss discovered there was more than one interpretation of how GASB 34 and GASB 58 could be applied to issues that were integral to the Jefferson County bankruptcy trial. Strauss was being asked to testify as an expert witness on those very issues. While Strauss found the issues being evaluated interesting and the work financially rewarding, he had to decide whether he could support the particular position on those issues that the attorney's representing Jefferson County wanted him to take. He knew if he did decide to testify, his testimony would be subjected to detailed scrutiny by highly skilled professionals representing the counter parties in the litigation. He also knew that if he made a mistake in developing the support for his position, it was very likely that his errors would be highly publicized in the national financial press because of the significance of the case. Users of this case will be asked to put themselves in Strauss's shoes and determine whether a particular position can be sufficiently supported to justify the risk of testifying in bankruptcy court in such a high profile litigation.

The president of a commercial development company needed to secure investor financing to develop a retail plaza. He must analyze the development's costs and benefits in order to convince investors to finance the project. The president wanted to create value while reducing risk for both the company and the investor group when deciding whether to move forward with this opportunity. He had a week to perform his qualitative analysis.

In 2014, the president of a commercial development company needed to secure investor financing to develop a retail plaza. He must analyze the development’s costs and benefits in order to convince investors to finance the project. The president wanted to create value while reducing risk for both the company and the investor group when deciding whether to move forward with this opportunity. He had a week to perform his qualitative analysis.

An increasing number of global corporations have experienced negative publicity over complicated tax structures established to minimize their tax burdens. In the case of U.S. companies, there has been a growing outcry over "inversions," a means of restructuring the business so that the U.S. parent was replaced by a foreign parent entity in a nation with lower corporate tax rates. Apple CEO Tim Cook was called to testify regarding Apple's tax strategies by the U.S. Senate Permanent Subcommittee on Investigations in April 2013, and executives from Apple, Google, and Microsoft faced an Australian senate inquiry into their alleged tax avoidance in April 2015. Criticism of corporate tax planning-also called tax avoidance-was dubbed "tax shaming," and even prompted consumer boycotts. Some analysts have suggested that companies begin considering tax policy as an aspect of corporate social responsibility, rather than simply a fiscal decision. Even though many companies are affected by this "tax shaming," a 2014 Ernst & Young survey of 830 tax and finance executives in 25 jurisdictions revealed that most had "little appetite" for directly engaging the media, with 65 percent agreeing (or strongly agreeing) that "engaging with the press on tax issues is a no-win proposition for business" and only 13 percent disagreeing. Results of the study notwithstanding, some companies did indeed respond to public pressure regarding their tax planning; this case describes some of these responses.

Update on Alibaba Group's share price performance and related events in the year following its September 2014 IPO.

The local government in Delhi has ordered a ban on Nestlé's flagship product in India - Maggi Noodles, citing excessive lead content per government lab tests. Nestlé disputes the government tests, noting that internal and third-party tests show the product to be safe. There is considerable confusion in the media and amongst Nestlé's customers, and Maggi sales begin to plummet. Other local governments and India's federal food-safety regulator also consider bans. Nestlé must decide how to respond - options include suing the regulators and withdrawing the product, which could impact up to 25% of Nestlé's India sales.

Supplement to case 116015. A Swedish newspaper reveals that IKEA has erased all images of women from its catalog for Saudi Arabia. The article sparks criticism of IKEA from the Swedish government and its customers in the West. Critics content that IKEA is not living up to its own commitments to gender equality. Some threaten a boycott. IKEA must respond. Reissuing the catalog with women included risks running afoul of Saudi censors who can impose harsh penalties. The company has had a presence in Saudi Arabia for nearly 30 years.

Supplement to case 116015. A Swedish newspaper reveals that IKEA has erased all images of women from its catalog for Saudi Arabia. The article sparks criticism of IKEA from the Swedish government and its customers in the West. Critics content that IKEA is not living up to its own commitments to gender equality. Some threaten a boycott. IKEA must respond. Reissuing the catalog with women included risks running afoul of Saudi censors who can impose harsh penalties. The company has had a presence in Saudi Arabia for nearly 30 years.

Erie Thames Powerlines, an electricity distributor in Southwestern Ontario, needed to determine the suitability of the company acquiring a hybrid truck as opposed to a conventional diesel utility truck. As of early July 2016, the truck suppliers (for both hybrid and diesel trucks) and the internal accounting department had provided substantial information with which to conduct a thorough analysis. The company also wanted to include some qualitative aspects, such as the reduction of noise pollution and the positive contributions of hybrid trucks both to the company’s image and to its promotion of energy efficiency. The firm needed to build an appropriate business analysis that included both qualitative and quantitative elements to support a recommendation to the utility company’s board of directors in August 2016.

Raven's Sun Enterprise Ltd. is a small oilfield and construction site delivery business operated by firefighter Mike LaPlante on his days off. Mike is the firm's only driver, so scheduling his time profitably is the critical success factor. Students will have to consider an unusual measure of volume, Mike's available work days, to assess potential profitability and risk during a recession. They will have to apply constrained resource analysis and cost-volume-profit analysis (CVP) to three different sales mixes, which in this service business involve combinations of in-city and long-haul deliveries. Finally, their recommendations will relate the CVP analysis to work/family balance and safety issues.

The general manager of a resort was considering completely renovating the resort’s suites for the upcoming season. He would need to submit a proposal to the resort owners for funding approval. Although he knew the renovation would increase customer satisfaction, he would need to justify the significant upfront investment from a financial perspective.

The general manager of a resort was considering completely renovating the resort's suites for the upcoming season. He would need to submit a proposal to the resort owners for funding approval. Although he knew the renovation would increase customer satisfaction, he would need to justify the significant up-front investment from a financial perspective.