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The case reviews responses by governments, securities commissions and others to the U.S. Sarbanes-Oxley Act. It discusses the certification of financial statements and internal controls, the role of boards and board committees, including the audit committee, and issues of auditor independence. The Canadian Public Accountability Board is also discussed.

In October 2008, the manager of client services at Duckworth Asset Management Inc. (Duckworth), an investment firm headquartered in St. John's, Newfoundland, was preparing for a briefing with Duckworth's vice-president of investments. The vice-president had been fielding several phone calls in the past few weeks, all from clients concerned about the significant drop in global financial markets. Since its June 2008 peak, Canada's S&P/TSX had dropped 33 per cent - one of the fastest market corrections in history. One client in particular - the Canadian Swimming Scholarship Foundation (CSSF) - had asked for a meeting with the vice-president regarding alternative investments. The CSSF had heard from another foundation that market neutral strategies could help them manage the volatility they were experiencing with their current holdings. The vice-president had asked the client-services manager to prepare a recommendation on how to best explain events in the current market, the concept of investment risk and if a market neutral strategy could help reduce total portfolio vulnerability.

What role does trade finance play in facilitating global supply chain management? Richard S. Elman, founder and CEO of Noble Group Ltd., a global commodities trading company based in Hong Kong, must raise capital to support the firm's working capital and investment needs. In evaluating by which means Elman should raise capital, students must consider issues relating to the payment terms and financing arrangements used in world trade, as well as the risk management and operating decisions of a trade intermediary.

The president of a small Canadian tour operator of packaged vacations faces foreign exchange risk resulting from a future transaction in which the firm is committing to pay in U.S. dollars where the company's revenues are in Canadian dollars. The thin profit margins require the company to consider different hedging alternatives. The case provides significant information that will allow students to discuss international parity conditions and various hedging strategies within a relatively simple context.

Asked to take a basic financial literacy exam, a representative sample of U.S. managers scored an average of only 38%, which doesn't bode well for either the individuals or their organizations.

In this edited conversation with HBR senior editor David Champion, Merton, a professor at Harvard Business School, casts light on the role of derivatives in the current financial crisis. Merton was awarded the Nobel Prize in 1997 for his part in developing a new method to value derivatives, and after publication of that development, the markets in derivatives exploded: Today, the estimated notional value of derivative contracts exceeds $500 trillion. Merton posits that derivatives themselves cannot be the cause of a financial crisis. They are simply tools that can be used either functionally (to reduce risk) or dysfunctionally (in ways that increase risk without offsetting benefits). He also offers prescriptions for making the financial markets safer.

What role does trade finance play in facilitating global supply chain management? Richard S. Elman, founder and CEO of Noble Group Ltd., a global commodities trading company based in Hong Kong, must raise capital to support the firm's working capital and investment needs. In evaluating by which means Elman should raise capital, students must consider issues relating to the payment terms and financing arrangements used in world trade, as well as the risk management and operating decisions of a trade intermediary.

Citigroup faced considerable distress in early 2009. In late 2008, the bank had accepted $45 billion in preferred equity from the United States government via the Troubled Assets Relief Program (TARP). Yet, the stock had continued to slide in early 2009. In late February, the company announced that it would convert as much as $50 billion of preferred stock into common stock, at $3.25 per share. The case asks students to evaluate the pricing of preferred stock relative to common stock at this time. As the case takes place during a period of considerable uncertainty in global capital markets, and conventional sources of arbitrage capital have been depleted, the apparent mispricing may not be as attractive as it initially seems. In the B and C case, students must decide whether their view of the appropriate pricing changes, when the apparent mispricing worsens. A final additional teaching point relates to the formation of a synthetic short position using the options markets.

Citigroup faced considerable distress in early 2009. In late 2008, the bank had accepted $45 billion in preferred equity from the United States government via the Troubled Assets Relief Program (TARP). Yet, the stock had continued to slide in early 2009. In late February, the company announced that it would convert as much as $50 billion of preferred stock into common stock, at $3.25 per share. The case asks students to evaluate the pricing of preferred stock relative to common stock at this time. As the case takes place during a period of considerable uncertainty in global capital markets, and conventional sources of arbitrage capital have been depleted, the apparent mispricing may not be as attractive as it initially seems. In the B and C case, students must decide whether their view of the appropriate pricing changes, when the apparent mispricing worsens. A final additional teaching point relates to the formation of a synthetic short position using the options markets.

An analyst at an investment firm is considering an investment in Carmanah Technologies Corporation (Carmanah). Carmanah is a fast-growing player in the high-powered alternative energy products. Since 2007, when the new chief executive officer (CEO) took over, a turnaround effort has been in place at Carmanah. At $0.91 per share, Carmanah's shares were trading at just 23 per cent of their value in mid-2007. The analyst is scheduled to make a recommendation on Carmanah to his managing director in two days. He needs to get to work valuing the company on the basis of the information he has gathered.

Spreadsheet supplement for case UV2566.

The vice president of sales learns that the most profitable 1% of the division's customers generate 100% of profits, and that two of the division's largest customers lose 50% of profits. The division has just finished a project to install a time-driven activity-based cost system that traces costs directly to the processes used to produce, sell and deliver a wide variety of stainless steel sinks to a diverse customer base. Given the division's high variety of products and customers (which includes wholesalers, retailers, contractors, and distributors), the VP of sales wanted a much more accurate cost system so that he could conduct difficult but fact-based negotiations with customers. The case describes the design and implementation of the new cost and profit measurement system. It documents acceptance and decisions made by managers after seeing the enormous dispersion of profits among their products and customers.

Virgin Group (Virgin) has been eyeing the Canadian banking industry for several years as a new potential investment opportunity. Not unlike the Canadian mobile phone industry (which they entered in 2005), the banking industry is seen as a prime target. Customers have become trapped by high fees, poor customer service, and limited product choice and Virgin can shake things up. The decision being contemplated is whether Virgin Money should enter the Canadian banking industry.

BCE Inc. (BCE), one of Canada's leading integrated communications companies, faced numerous challenges. In the key wireless communications market, BCE was trailing its competitors on growth and revenue. BCE's share price was underperforming and shareholders, including the powerful Ontario Teachers' Pension Plan, were becoming concerned. In addition there were regulatory changes on the horizon that could have a serious impact on BCE's wireless division. BCE's chief executive officer (CEO) was faced with the task of improving BCE's competitiveness and shareholder value in a dynamic industry. What options did the CEO and his leadership team have, which ones were better for BCE and how could the better ones be executed in order to satisfy BCE's shareholders? The case provides a good opportunity to assess financial performance and assist in understanding the interaction of strategy and finance.

BCE Inc. (BCE), one of Canada's leading telecommunications companies, had struggled under its weak stock price performance and low valuation relative to its comparable peers, and faced increasing pressure from its largest shareholder, the powerful Ontario Teachers' Pension Plan (Teachers'). On March 29, 2007, it was reported that private equity firm Kohlberg Kravis & Roberts (KKR) had held informal meetings with BCE executives in the hopes of launching a friendly takeover bid for the company. This essentially put BCE in play with the leadership team confirming, on April 17, 2007, that it would be reviewing its strategic alternatives, which included discussions with various Canadian-led consortiums to explore the possibility of a privatization. As the deadline to the bid date drew closer, four contending bidding consortiums emerged, including three consortiums of financial buyers and one strategic buyer. The case provides a good opportunity to discuss private equity investments as well as valuation in a mergers and acquisition context. This case is a follow-up to Ivey case BCE Inc.: Facing the Future, product # 9B09N015.

This case is appropriate for teaching in entrepreneurship, strategy, marketing, and finance courses. Motor City is the business brainchild of an absentee owner. It is a new business model for selling used cars and requires a senior management familiar with the car industry. Some issues are: How should the management be compensated to align interests with the owner? Stock ownership, phantom stock ownership, profit sharing? The B case [UV2045] raises such issues as matching the pace of growth with available cash flow.

The chief financial officer of VF Outdoor Americas - a division of the world's largest apparel company, VF Corporation, must decide on the financial viability of purchasing the skateboard VANS lifestyle brand. In his decision, the chief financial officer needs to develop an offer of what VF should pay for VANS and prove to the parent company that the acquisition will be accretive to earnings per share.

An investment advisor at a major brokerage is considering whether she should recommend Wal-Mart stock to her clients who do not currently have this stock in their portfolios. Students will be presented with basic valuation concepts including the dividend discount model, price-earnings model and applications of the capital asset pricing model.

A manager at a public accounting firm was contracted to perform a second financial performance review and issue recommendations for improving the performance of California Choppers. She must analyze several financial indicators including liquidity, asset management, long-term debt payment ability, and profitability. Poor performance results and interpersonal difficulties between the owner and chief executive officer are making her job very difficult.

The Canada Pension Plan Investment Board (CPPIB) is asked to provide an opinion about the risk and return characteristics of an all-equity portfolio. The CPPIB is analyzing the potential of investing in other asset classes because of the potential for increased returns over the long-run. The Canada Pension Plan's assets currently completely comprise federal and provincial bonds and short-term securities.