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KTM is a small motorcycle manufacturing company located in Austria. As a result of difficult economic conditions in 1999, KTM went private with the help of the venture capital firm BC European Capital (BC). Following a couple of years of strong growth, BC is looking to liquidate its position and move on. KTM is faced with the decision of determining the best means to repurchase BC's equity position in the firm and leave the firm with enough financial flexibility to continue to pursue its rapid expansion plans.

Presents the strategic dilemmas faced by a foreign venture capital (VC) firm with over one decade of making cross-border investments in Asia--with particular emphasis in China. Set in the 2006-07 time frame as the investment environment in China is triggered by an accelerated inflow of capital, raises the question of how WI Harper should best leverage its regional expertise before raising its next fund. Other dilemmas faced by the firm include: re-evaluating its approach to cross-border investments, retaining its investment principles, and dealing with the growing pains of evolving from an informally managed regional fund to a blue-chip, institution-backed global fund. Most importantly, uses WI Harper's Chinese presence to illustrate the effects of a heated investment environment on an incumbent VC firm, allowing for a balanced discussion about its strategic alternatives given an increasingly global investment environment.

Trans Global Corporation is a multinational company facing a complex set of inter-related problems including: international financial reporting standards, impact of a country's EU status, functional currency decisions, currency translation methods, exchange rates and impact of using derivatives to hedge currency changes.

Clearwater Seafoods (Clearwater) is a seafood company located on the east coast of Canada. It is an income trust with operations around the world. As a result of the increasing value of the Canadian dollar relative to other currencies around the world, Clearwater has recently ceased paying its distributions. The case considers the decision faced by the chief financial officer to determine the strategy the firm should take to enable it to reinstate its distributions. This involves the choice between different financial and operational means to hedge the foreign exchange risk which brought the firm into its current situation.

This case examines the structure of corporate goverance in three economies: Germany, Japan and the United States. It presents the structure and background on the composition of Corporate Boards of Directors. The case sets up a discussion of how corporate governance impacts on managerial decisions.

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The announcement of Porsche's (Germany) intention to take a 20% equity interest in Volkswagen (Germany) in September 2005 was greeted with outright opposition on the part of many shareholders in both Volkswagen and Porsche. Major investment banks immediately downgraded Porsche from a buy to a sell, arguing that the returns on the massive investment, some €3 billion, would likely never accrue to shareholders. Although Porsche and VW were currently co-producing the Porsche Cayenne and Volkswagen Touareg, this ownership interest would take the two companies far down a path of cooperation way beyond the manufacture of a sport utility vehicle. Although Porsche had explained its investment decision to be one which would assure the stability of its future cooperation with VW, many critics saw it as a choice of preserving the stakes of the Porsche and Piëch families at the expense of nonfamily shareholders.

Spreadsheet Supplement for case 807092.

Spreadsheet Supplement for case 807092

Two partners of Warburg Pincus, a global private equity firm, are trying to decide whether to take a portfolio company public, and on what exchange. The company, Norway-based ElectroMagnetic GeoServices (emgs), has developed a market-leading technology that determines whether an undersea rock formation contains oil -- prior to the oil company drilling a hole. With its high-growth characteristics, emgs is very different from the typical oilfield services company, and would be more suitable for floating on the NYSE or LSE, where liquidity and valuations would also be greater than on the Oslo Bors, the other possibility. Yet floating in the U.S. would involve greater compliance expense and might also require the management team to move to New York or Houston, something the team is reluctant to do. The partners need to decide what to do before the IPO window for energy-related companies closes.

Examines a proposed investment in the capability to manufacture printed circuit boards (PCBs) in-house rather than buying them from third-party contract manufacturers. Stryker Corporation's Instruments business is considering the proposal in response to difficulties with existing suppliers. Requires students to formulate and execute basic quantitative capital budgeting analyses, specifically, to compute net present value (NPV) internal rate of return (IRR) and payback period.

Describes how Bankinter, a mid-sized Spanish bank, altered the information set available to its customer-facing employees. In the spring of 2003, Bankinter introduced an Excel-based program called the mortgage simulator that helped branch managers calculate the price of a mortgage and estimate the customer lifetime value (CLV). Facilitates a discussion of the impact of such a change in the information set for employees when the incentives and decision rights remain unchanged. Also examines the tradeoffs front-line employees face as they divide their efforts between reaching new customers and increasing the amount of cross-selling to existing customers.

The CFO of JetBlue is trying to decide which of two financing proposals to pursue. A straight equity issue will dilute his principal shareholders' ownership, but seems like the safer alternative in an industry that is notorious for its high failure rate. On the other hand, a convertible debt alternative seems less dilutive, and cheaper, but brings with it an increased risk of default and financial problems. Which option should John Owen pursue?

The sophisticated technologies used to understand costs don't illuminate revenue sources well. For that you need a whole new breed of accountant.

AMB Property Corporation set out to be a leader in corporate governance and financial reporting. The company, a publicly traded real estate investment trust (REIT) that acquires, develops, and owns industrial properties, believed that its governance and reporting practices were among the best in the industry. The implementation of good disclosure practices in the REIT industry was not a simple undertaking. Historically, the real estate industry was dominated by private partnerships and institutional investors who used tax and partnership accounting rather than generally accepted accounting principles (GAAP). As a result, there was a need for new financial terms that were meant to bridge the differences between GAAP and private partnership accounting, notably funds from operations. However, because such industry-specific metrics were not consistently calculated, it was difficult for users of REIT financial statements to compare operating results across companies. Public REITs that used non-GAAP metrics were required to reconcile these metrics to GAAP standards, a process which added significantly to the length of REIT financial reports. In addition, companies were required to apply GAAP accounting standards that were mostly designed for industries other than real estate and had the unintended consequence of making it difficult to evaluate the operating performance of REITs and compare those results across periods. Explores the issue of financial reporting in the REIT industry, including important FASB standards that potentially distort REIT financial results, the use of Funds From Operations as a metric of financial performance, and different approaches for valuing REITs.

According to a World Bank report written in 2001, "in a modern, globally integrated Mexican economy, it is hard to argue for the continued existence of an institution such as INFONAVIT." The report went on to argue that the first-best option was "closing INFONAVIT." In the same year Victor Borras and a new team of managers took control of INFONAVIT under the new PAN government of Vicente Fox. In 2005 the fund issued 376,444 mortgage loans, one and a half times the number issued by INFONAVIT in 2000. During this same period of expansion INFONAVIT had: reduced its defaulted loan rate from 21.7 percent in 2000 to 6.6 percent in 2005; increased its productivity from 51 loans granted per employee to 98 per employee through outsourcing and the modernization and streamlining of operations; launched a new vivienda economica (affordable housing) program to target the majority of its members who earned less than four times the minimum wage (TMW); helped jump-start a nascent housing development industry; increased the real return to the pensioners' funds from 2 percent to 3.5 percent per year; and issued approximately $4.5 billion in mortgage-backed bonds. The case can be used to teach about government innovation, privatization, strategic management, and the public provision of financial services. It would also be appropriate for a course in international development or international housing. It raises questions about the appropriate role of government in the provision of financial services, as well as the role outsourcing and privatization can play in promoting the efficiency and effectiveness of public services, especially when the government is a major purchaser in a market of relatively small suppliers. HKS Case Number 1878.0`

This case illustrates ratio analysis using financial data for a global power company. It is best suited for an introductory discussion of ratio analysis for both the cross-section and time-series. Ten years of standard ratios pertaining to profitability, efficiency, liquidity, solvency, capital structure, and market multiples are provided. The case highlights the correspondence between firm performance and equity values.