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The epilogue to Supply Chain Partners: Virginia Mason and Owens & Minor (A), the B case details the outcome of the issues discussed in Case A; namely that Virginia Mason and Owens & Minor did implement the TSCC contract. Virginia Mason also kept the suture contract with O&M because the TSCC model was able to prove that O&M was the low-cost provider. Case B also gives results metrics, such as reduction in line items, orders, and days sales outstanding.

Spreadsheet Supplement for case 109077

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.

In March 2008, Olam faced a rating downgrade by Merrill Lynch, which caused a dramatic plunge in its share price. The management of Olam needed to respond to Merrill Lynch's rating downgrade, manage the impact of shift in growth strategy on short-term performance and balance leverage with long-term sustainable growth.

A shareholder and employee of a small laser and water jet cutting corporation in Toronto, Canada must make decisions regarding expansion, purchase of new equipment, hiring of more personnel and a move to a larger location. Students are expected to 1) complete an industry analysis of the manufacturing industry, including the current economic outlook; 2) perform a thorough company size-up; 3) identify the qualitative pros and cons of each decision; 4) perform two differential analyses, one with sensitivity and one without, after identifying items relevant to the expansion decision and categorizing them as either recurring or one-time flows; 5) assess the financing, timing and any other relevant factors to each option; and 6) use their analysis to make their decisions.

This case was written as the financial accounting portion of the final exam for a first-year MBA course at Harvard Business School. The goal was to test students' ability to apply major concepts taught during the course to an industry which they had not covered, but which shared similarities in terms of economics with issues addressed in the curriculum. The company, Tokyo Auto Fire & Marine (hereafter Tokyo AFM), is a fictitious insurance company based in Japan. The new CEO is revisiting the accounting choices of his predecessors in light of changes in the economic environment of the firm. The case can also be taught as a review session.

Commercial Director Prado wonders how to leverage the loyalty card information to prepare the Fall 2008 budget. The case discusses the value of subjective and objective information for profit planning purposes. Spanish children's apparel retailer Neck & Neck uses loyalty card information for tactical purposes, such as promotional campaigns. Its management team is thinking about how to incorporate that information to the budgeting (profit planning) process. From an analytical standpoint the case looks at the surprising results of a mailing campaign that reveals the consequences of inadequate updating of the customer database. Also, the budgeting data in the case may be used to teach regression model selection and R-squared.

A shareholder and employee of a small laser and water jet cutting corporation in Toronto, Canada must make decisions regarding expansion, purchase of new equipment, hiring of more personnel and a move to a larger location. Students are expected to 1) complete an industry analysis of the manufacturing industry, including the current economic outlook; 2) perform a thorough company size-up; 3) identify the qualitative pros and cons of each decision; 4) perform two differential analyses, one with sensitivity and one without, after identifying items relevant to the expansion decision and categorizing them as either recurring or one-time flows; 5) assess the financing, timing and any other relevant factors to each option; and 6) use their analysis to make their decisions.

The sole shareholder of a Newmarket, Ontario, bamboo wholesaler wants to complete all necessary accounting transactions in order to determine the fiscal 2007 results. Students are required to record all opening balances, the necessary transactions, and adjusting and closing entries. The case is a comprehensive one wherein the required transactions involve cash, accounts receivable (including write-offs, recoveries and bad debts), retail inventory (purchases, returns, discounts, FOB terms, valuation and the lower-of-cost-or-market rule), and fixed assets (purchase, amortization, repairs, trade-ins and sales).

The owner of a vending operation located in Windsor, Ontario, must record all financial activities for the fiscal year to determine the company's financial success. The business sold a healthy energy product through more than 300 vending machines located in gyms, malls and educational campuses across Canada. Students are required to record transactions associated with cash, accounts receivable (including write offs, recoveries and bad debts), retail inventory (purchases, returns, discounts, FOB terms, valuation and the lower-of-cost-or-market rule) and fixed assets (purchase, amortization, repairs, trade-ins and sales).

After one year of operations, the new manager of a tennis pro shop and bar lounge must prepare, with the help of the company's accountant, financial statements from notes kept throughout the year. The case is intended to be an introductory exercise in accounting for simple transactions relating to assets, liabilities, revenues and expenses. Adjusting entries such as amortization and cost of goods sold are required. Students are asked to complete the accounting cycle by preparing closing entries and an income statement and balance sheet.

Arcelor believes its shares are undervalued and has to decide whether to buy back stock via a repurchase tender offer or via an open market repurchase. Before doing so, it has to value the company to get an estimate of the fair value of the company. It has also to decide whether it can afford the buyback: is the increase in leverage a move to a better capital structure?

The case describes the hostile bid of Mittal for Arcelor in the first half of 2006. It documents stock price behaviour around the crucial events surrounding the acquisition. It also provides estimates of synergy benefits as well as a spreadsheet that allows students to calculate directly the implications of synergies for shareholder value.

The owner of an indoor beach volleyball and rock climbing recreational facility in London, Ontario, is considering expanding by adding a rooftop patio and outdoor beach volleyball court. Students are asked to perform a business size-up and to analyze the expansion qualitatively. Students are required to list all the cash flows associated with the expansion and classify them as relevant (cash, future and different), recurring or one-time costs. Once this is completed, students are to perform a differential analysis, with sensitivity analysis, where necessary, to determine the return on investment and to establish the payback period. Finally, students are to make a decision about going ahead with the expansion.

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.

Under the leadership of Tim Flynn, Chairman and CEO of KPMG, the firm made a number of changes in compensation, governance, and culture in order to address the underlying reasons for actions that occurred prior to him becoming CEO that led to the accounting giant paying $456 million to the federal government over allegedly selling illegal tax shelters. These changes included a common compensation bonus pool for the entire firm and rewarding people for professionalism as much as for business development; strengthening governance by adding a lead director to the board, removing the chairman and deputy chairman from board member selection, and creating separate committees for professional practice, ethics, and compliance and operations; and enhanced its ethics and compliance program through human resource processes (e.g., recruiting, orientation, training, and exit interviews), implementing periodic and required ethics courses, active firm leadership in these courses, and establishing multiple channels of communication for employees to raise concerns with an explicit "no retaliation" policy. In January 2007, 86% of the employees were proud to work for the firm, compared to 60% in 2005. Employee turnover was at an all-time low. And the Tax Practice, the source of the problems, was the fastest growing such practice in the Big Four accounting firms at 18%.

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.

This note covers the basics of real estate from a portfolio manager's perspective. It examines how money is made in real estate, how real estate is valued, the differences among various types of real estate, and how to do basic financial modelling such as net present value (NPV) and internal rate of return (IRR).

The chief financial officer (CFO) of North Billington Golf and Country Club was reviewing the financial statements prepared by the auditors. At the upcoming annual general meeting, Parkinson was expected to address the membership on the future financial health of the golf club. In addition to having the financial statements ready, he wanted to compare the financial results with those of other golf courses.