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In October 2011, MF Global Holdings LTD, a New York City brokerage company, filed for bankruptcy. Almost a billion dollars was missing from customer accounts that were supposed to be segregated from MF Global's trading accounts. Thousands of U.S. farmers collectively lost millions in their trading accounts at MF Global. This note explains the risks many businesses face including unknowable future material prices, interest rates, and currency exchange rates and how derivative securities are often used to hedge or protect against these risks.

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.

Spreadsheet Supplement for Product #913533

The case relates to accounting quality analysis conducted by the leading research firm Center for Financial Research and Analysis (CFRA) on companies in the solar industry with a focus on First Solar Inc. In 2009, CFRA was concerned that First Solar, like much of the solar industry, was facing deterioration in business prospects and exposed to risks arising from revenue recognition, high inventory levels, lack of customer and geographic diversification, aggressive warranty policies, excessive production capacity growth, and supply chain risks. The case places students in the shoes of CFRA analysts who need to assess First Solar's accounting quality and business prospects after the company releases its second quarter financial numbers in 2009. The case provides students with background information on the solar power industry, First Solar, data from CFRA research, and First Solar's quarterly reports and the earnings conference call to analyze and draw conclusions about First Solar's accounting practices and strength as a company. Students have to decide whether CFRA should flag First Solar as a concern and add it to CFRA's "Biggest Concerns" list.

Supplement for case 112036

Supplement for case 111084. In late 2012, IASB chair Hans Hoogervorst, just over a year into his term, must address several serious geopolitical challenges that can derail IFRS growth. The SEC has issued a report outlining why the U.S. should not adopt IFRS. Other major economies such as Japan and India begin to dither on IFRS as well. The E--the IASB's main backers--is embroiled in a debt crisis that divides it; Britain--the strongest voice for IFRS in the EU--lirts with an EU exit. And China remains silent. Adding to these issues are longstanding concerns about the IASB's legal status and its finances. How can Hoogervorst return momentum to IFRS?

A short history of Apartheid in South Africa.

Supplement for case 113015.

Financial Accounting Foundation chairman Jack Brennan is under pressure from private-company interests to set up a new body-the Private Company Council-to determine separate GAAP for private companies. PCC advocates-including the US Chamber of Commerce-argue that traditional US GAAP has too many disclosure and fair-value requirements that impose very high compliance costs on private companies. But there are influential players-including the Big Four auditors-who oppose creating the PCC. They argue that the compliance costs of traditional GAAP are the price of high-quality accounting standards. Balancing these powerful interests, Brennan must make a decision on the PCC; at stake is US GAAP's ability to facilitate capital allocation decisions in the economy.

In October 2011, noted hedge fund manager David Einhorn of Greenlight Capital delivered a presentation at an investors' conference analyzing the business and accounting quality weaknesses of Green Mountain Coffee Roasters. Until then Green Mountain had exhibited rapid business and stock price growth. He questioned Green Mountain, the maker of Keurig single-serve coffee machines and their famous K-Cups about their growth prospects, their handling of acquisitions, their plan for the expiration of an important patent, accounting practices and other issues. Following Einhorn's presentation Green Mountain's stock experienced a significant decline despite claims by many analysts that Einhorn had not presented any new information. The case presents Einhorn's argument and the counter claims by the analysts. Students are charged with assessing the merits of Einhorn's arguments and the counter claims. The case exposes students to a detailed strategic, financial and accounting analysis of a business and provides an example of how a thorough business and accounting analysis using primarily public information can change market's perception of valuation of a company.

Supplement for case 113004

This case is a supplement to Maxim Off Highway Axle Business: An Acquisition Opportunity (A).

The case describes two pilot projects on applying activity-based costing to measuring the cost of treating patients. It presents process maps and financial data relating to the processes used during (1) an office visit to a plastic surgeon for three different diagnoses, and (2) application and removal of three different casts in the orthopedic cast room. Students calculate and compare the costs and margins of the three procedures at the two different sites using the hospital's existing cost system and a proposed new system based on time-driven activity-based costing.

On January 1, 2012, the LEGO Group announced a major new initiative to enhance its market penetration in Asia. Later in the year, a cross-functional group of senior managers gathered at company headquarters to discuss the status of the Asian initiative and the risks associated with it. The aim of the meeting was to outline four scenarios for the future that could help managers assess what key success factors and actions were required for coping with the challenges presented by each scenario and to prioritize them. Students will have an opportunity to enact the scenario exercise themselves, devising their own scenarios, and deciding whether the LEGO Group should build a factory in an Asian location in the next five to seven years. In order to facilitate a discussion about the challenges of designing a "winning organization," the case also presents difficult choices that executives had to make about the LEGO Group's strategy, choice of primary customers, core capabilities, and organizational structure. In order to facilitate a discussion about the challenges of designing a "winning organization", the case also presents difficult choices that executives had to make about the LEGO Group's strategy, choice of primary customers, core capabilities, and organizational structure.

The case illustrates the use of the residual income (also known as the abnormal earnings) valuation approach. Students are asked to provide a valuation of Coca-Cola Company using the residual income valuation methodology and understand how it maps into the discounted cash flow method. Students learn how forecasts of sales, performance, dividends, and other valuation inputs feeds into a valuation model. Students also learn the modified Dupont decomposition technique and how to reclassify financial statements to perform the modified Dupont analysis.

Every year MBA programs across the country advertise for prospective students. They promote the academic excellent of their programs, the uniqueness of their offerings, the quality of their faculty and a variety of other factors. In a competitive market, the goal is to attract the brightest and the best. Many schools claim that graduates of their programs will see large salaries on graduation. This is clearly a very important part of many students' decision criteria. In fact, the Financial Times rating of MBA programs uses graduates' salaries as a large component of their rating system. A student has access to the salary data from a prominent MBA school in North America. She sits down to analyze the data and see what factors are associated with higher salaries.

Paul Lui, Executive President at Private Client Services Division (PCSD), had the difficult task of designing a new incentive compensation system for financial consultants at the wealth management division of a mid-tier financial services firm that had limited resources compared to its larger rivals. Luil had many objectives in mind in designing the new incentive compensation system: to motivate financial consultants to stay, perform, and excel; to attract new consultants to fill in the vacated positions; and to generate new business in the face of labor shortages and significant competition from larger firms. How did the current compensation plan at PCSD compare to those of rival firms? How could Lui change the compensation plan for PCSD, given the resource constraints his company faced as a mid-tier financial services firm? Beyond changing compensation plans, what could Lui do to recruit new experienced consultants; stop top producers from leaving; and more generally, improve the morale at PCSD?