NEW ACCOUNTING CASES. iveycases.com

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1 NEW ACCOUNTING CASES iveycases.com

2 New Accounting Cases 9B17B008 Alrich Farms: Cash Flow Analysis Elizabeth M.A. Grasby; Richard Bloomfield; In January 2016, the owners of a family farm near London, Ontario, Canada, wanted to evaluate the financial status of their business. After 30 years in farming during a period that had seen dramatic changes in the agricultural industry, the couple was beginning to think about succession planning for the farm that had been passed down to them from previous generations. The couple wanted to evaluate how well they had managed the farm s cash throughout fiscal 2015 and would use this analysis to help them determine the long term stability of the farm's operation in preparation for this succession plan. Publication Date: April 20, 2017 Pages: 5 Teaching Note(s): 8B17B008; Issues: cash flow, succession planning, operations management, management accounting Industry: Agriculture, Forestry, Fishing and Hunting; Setting: Canada, Small organization, 2016 Learning Objective: This case is to be used as an introduction to the statement of cash flows and its analysis and is intended for undergraduate managerial courses. After working through the case and assignment questions, students will be able to do the following: Describe the demographic and technological changes that have taken place in Canadian agriculture. Undertake an in depth qualitative analysis of industry trends in agriculture and current corporate capabilities of a farm business to understand the context for making decisions. Build a statement of cash flows and draw implications from this analysis. Outline how the owners of a farm could improve cash flows. 9B17B007 Myers' Fitness: A Launching Dilemma for Boot Camp Elizabeth M.A. Grasby; Jessica Bond; In 2016, a recently retired artilleryman from the Canadian Armed Forces was planning his next steps as a civilian. He had always been passionate about healthy lifestyles, and his sense of entrepreneurship led him to consider the viability of launching a series of fitness boot camps, based on different skill levels and age groups. He saw this boot camp idea as a way of providing health services to a group of clients who were already interested in exercise but who might become more involved if their fitness activities were held outdoors. He could either launch the boot camps on his own or partner with a small local gym. He needed to earn $2,000 after all expenses per month from May to August each year for the business to be feasible. The gym offered him cost saving options, but was he ready to share his revenue with a partner? Publication Date: March 30, 2017 Entrepreneurship; Product Type/Pricing: Case (Field), Standard Supplement Pages: 6 Teaching Note(s): 8B17B007; Issues: health services, cost/benefit analysis, management accounting Industry: Arts, Entertainment, Sports and Recreation; Setting: Canada, Small organization, 2016 Learning Objective: After completion of this case, students will be able to perform the following tasks: Perform a business size up Determine qualitatively the pros and cons of operating the fitness boot camp solo or in partnership with the small local gym Establish relevant revenues and costs and determine which are recurring versus one time costs Explain the differential cash flow model and use a cost/benefit analysis to evaluate options Perform a differential analysis to determine return on investment and payback periods with both scenarios Complete qualitative and quantitative analyses Make specific recommendations for launching a new business based on these analyses

3 9B17B006 SAPMER: Strategic Growth and Its Financial Implications Yuan Ding; Hua Zhang; Chun (Jane) Xie; Ellen Jiang; SAPMER SA was a Southern Ocean fishing company started by three Réunion Island entrepreneurs with one ship in The company grew from an entrepreneurial venture to a corporate acquisition, then back to a beloved family business not expected to make much money. But in 2006, SAPMER SA tested the waters with a new tuna venture. The venture was successful, but the company saw a better long term opportunity in occupying a niche position. SAPMER SA launched a strategic rebirth with a five year plan to develop a new segment: super frozen tuna fishing and processing in the Indian Ocean, addressing premium Asian markets in sashimi, tataki, and tuna loins and steak. SAPMER SA s strategy resulted in strong performance, but in early 2013, when examining the financial records and the terms for purchasing newly acquired ships, the owner could see challenges ahead. To manage the challenges, the owner needs to know the reason for the improvement in return on equity, what potential problems could be identified from a DuPont analysis of the financials, and what bottlenecks to anticipate in the coming years. Publication Date: March 24, 2017 Discipline: Entrepreneurship; International; Accounting; Pages: 12 Teaching Note(s): 8B17B006; Issues: financial analysis, fishing, tuna, value enhancement, value chain, niche market Industry: Agriculture, Forestry, Fishing and Hunting; Setting: France, Small organization, Difficulty: MBA/Postgraduate Learning Objective: This case has been designed for courses on financial statement analysis. It can be used in graduate programs, EMBA classes, and with executive audiences. Given the nature of the fundamentals involved, the case can also be adapted for use in more advanced courses such as mergers and acquisitions. After working through the case and assignment questions, students will be able to do the following: Analyze financial statements and identify the features that correspond to the company s strategic growth. Conduct a DuPont analysis to identify the potential risks related to the company s business. Discuss the business problems that may arise from the identified features and risks, comment on the efficiency of the fixed assets and the company s business bottlenecks, and suggest possible solutions. 9B17B005 Shad Valley International: Sustaining the Program While Maintaining Accessibility Elizabeth M.A. Grasby; Ryan Rego; In 2016, the director of finance and operations for a non profit organization faced an important decision. Her organization offered an in residence opportunity for high school students who excelled academically, but the organization s cash flow for the upcoming year was in jeopardy. The director was considering increasing registration fees and planned to prepare cash budgets for the upcoming fiscal year for the program and for the organization. She knew that her decision had to be in line with the organization s values and goals, but she also felt that raising fees might alleviate some of the program s financial strain. The program was already supported by alumni and many company and government sponsors. The director had to make a presentation to the board of directors and ensure her decision would maintain the quality of the program and its candidates and also help the organization s cash flow. Publication Date: March 14, 2017 Product Type/Pricing: Case (Field), Standard Supplement Pages: 8 Teaching Note(s): 8B17B005; Issues: non profit, cash budgeting, financing, cash flow Industry: Educational Services; Setting: Canada, Small organization, 2016 Learning Objective: This case is suitable for use in undergraduate level programs in courses on introductory managerial accounting or finance, with a focus on the topic of cash budgeting. After completion of the case, students will be able to perform the following: Prepare and analyze a projected cash budget and understand its importance for management decisions. Assess some of the challenges non profit organizations face (compared to for profit businesses). Make and defend a business decision based on qualitative and quantitative analysis. demonstrate the importance and need of all decisions to fit with an organization s goals. Apply basic Microsoft Excel functions (e.g., SUM, SUMPRODUCT, ROUNDUP). This objective is optional, depending on the students background and experience. Page 2 of 10

4 9B17B004 Tesco: From Troubles to Turnaround Anupam Mehta; Utkarsh Goyal; Sanchit Taneja; In 2016, Tesco PLC, a leading U.K. retail chain, had undergone tremendous financial turmoil. Profitability had been decreasing since 2013 with heavy losses registered during fiscal year (FY) 2014/15. Net profit had decreased by 304 per cent from 2012 to However, after the appointment of a new chief executive officer in 2014, Tesco managed to register a net profit of 138 million in FY 2015/16: an astonishing turnaround. Evidently, Tesco was recovering from its losses, but the share price of the company had fallen by more than 20 per cent from 2015 to What course of action would enable Tesco to maintain and improve its value for shareholders? What areas should the chief executive officer focus on in order to change Tesco s financial performance? Publication Date: March 13, 2017 Discipline: Finance; Accounting; International; Pages: 10 Teaching Note(s): 8B17B004; Issues: financial evaluation, financial analysis, strategic focus, grocery, department stores Industry: Retail Trade; Setting: United Kingdom, Large organization, 2016 Learning Objective: Using this case, students will be able to do the following: Understand the retail trends in the U.K. supermarket industry Identify the challenges faced by Tesco Understand and apply various financial assessment tools and techniques, and conduct a financial ratio analysis Prepare and review the trend analysis and common size statements to determine the best course of action for Tesco going forward 9B17B002 Joneja Bright Steels: The Cash Discount Decision Surya Bhushan Kumar; Vinay Goyal; S.K. Mitra; Joneja Bright Steels Private Limited (JBS) was one of many major players in India s bright steel industry, serving almost every automobile manufacturer in Northern India. After the business launched in 2002, the automobile market expanded, leading JBS to an early strong position. But in fiscal year 2014/15, the company experienced working capital management issues. JBS considered using credit policies as a way of improving profitability shifting from a strict credit policy of net 45 days to a flexible credit policy with a 2 per cent discount for accounts paid within 10 days (2/10 net 45 days). Should JBS implement a cash discount for fiscal year 2016/17? The discount could potentially increase the burden caused by already declining sales, but could also improve the company s cash position. Publication Date: February 21, 2017 Discipline: International; Accounting; Entrepreneurship; Pages: 8 Teaching Note(s): 8B17B002; Issues: working capital, ratio analysis, steel industry, automotive industry Setting: India, Medium organization, Difficulty: MBA/Postgraduate Learning Objective: This case is ideal for use in graduate courses that examine various aspects of managing the working capital of a well established organization involved in manufacturing activities, focusing on what effect a flexible credit policy has on the profitability of an organization. In the process of deciding whether to implement a cash discount for accounts receivable in a competitive situation, students will learn to recognize the various elements of working capital in an organization and how these are related to the revenue realized; the steps involved in calculating ratios related to working capital; how to use a firm s competitors for benchmarking; and how to determine the valuation of a cash discount and how it can help improve the cash position and profitability of a firm. 9B16B022 BYD: The Art of Precise Profit Management Yuan Ding; Hua Zhang; Chun (Jane) Xie; BYD Company Limited (BYD) manufactured rechargeable batteries, mobile phone components, and automobiles. In 2008, the company caught the attention of Warren Buffet s investment group, and their investment in BYD caused BYD s share price to increase per cent over just a year, setting Chinese investors expectations high for BYD s release of A shares, planned for June BYD s 2010 annual report showed that the company s performance had already taken a dip, but its prospectus was optimistic about the market prospects. The first quarter report for 2011, issued the day before the A shares were to be released, was not as optimistic. BYD s A shares fared well on the first day of release, but the company s net profits declined remarkably, and reports forecasted further decline. However, the company s 2011 annual report showed a drop in operating profits of just per cent year over year just slightly less than the 50 per cent decline that would have triggered intervention by the securities regulators. Was the company making a remarkable recovery? Were BYD s A shares still a sound investment, or had the company managed its financial statements to protect itself and its securities underwriters? Publication Date: December 14, 2016 International; Pages: 12 Teaching Note(s): 8B16B022; Issues: profit management, IPO, initial public offering, earnings management Setting: China, Large organization, 2011 Difficulty: MBA/Postgraduate Learning Objective: This case is best used in courses on financial statements analysis in graduate and executive MBA programs and with executive audiences. Given the nature of the fundamentals involved, the case can also be adapted for use in more advanced courses such as mergers and acquisitions. The purpose of the case is to teach students how to read and analyze a prospectus and financial statements from an outsider s perspective. After completing the case, students should be able to do the following: Analyze financial statements and detect business problems using relevant information. Page 3 of 10

5 Explore and identify the application of discretionary accounting methods in financial statements. Discuss possible regulatory improvements to deal with similar profit management issues. 9B16B021 McPhee Distillers: Accounting Policy Choices in the Preparation of Financial Statements Mitchell Stein; Vaughan S. Radcliffe; Adam Erickson; In 2014, the master distiller from an established Scotch whisky producer founded McPhee Distillers on Vancouver Island, Canada, hoping to capitalize on the growing demand for whisky in the Asia Pacific region in particular. Rather than competing with larger producers selling by the bottle, McPhee planned to sell whisky exclusively by the barrel, hoping to differentiate McPhee Distillers in the industry. As a first time entrepreneur, the master distiller was surprised by the amount of overhead costs, but she was determined that there were no costs she could cut without compromising the quality of the whisky. Was her business model profitable, or had she made an error by focusing on barrel sales? Could she improve her operations? Publication Date: December 09, 2016 Entrepreneurship; Product Type/Pricing: Case (Gen Exp), Standard Case Pages: 6 Teaching Note(s): 8B16B021; Issues: revenue recogition, accounting policies, inventory valuation Setting: Canada, Small organization, Learning Objective: This case should be introduced after students have attained a baseline understanding of generally accepted accounting principles and are comfortable with some of the fundamental concepts of accounting. After completing the case, students will be able to do the following: prepare financial statements for the new business by recording the relevant transactions; identify various accounting issues, including revenue recognition, inventory valuation, accruals, capitalization of assets, amortization, and accounts payable; and understand how fundamental accounting issues affect the financial statements. 9B16B020 Erie Thames Powerlines: The Hybrid Truck Decision Stephan Vachon; Ryan Mallany; 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 Publication Date: December 01, 2016 Pages: 2 Teaching Note(s): 8B16B020; Issues: cost efficiency, carbon management Industry: Utilities; Setting: Canada, Small organization, 2016 Learning Objective: This case is recommended for use in an environmental management or economic project evaluation course, or in an introductory accounting course for a class in cash flow analysis. The case s main intent is to introduce students to a cash flow analysis that integrates a carbon footprint and other qualitative issues in its decision making. 9B16B019 Pidilite Industries: Assessing Credit Quality Varun Dawar; Debasish Maitra; Arit Chaudhury; In mid 2015, a credit analyst with a leading investment company was tasked with assessing the overall credit quality of a chemical company that equity analysts had recommended as a long term investment for his firm s insurance equity fund. The analyst set out to use various financial parameters liquidity, working capital, profitability, efficiency, capital structure, and debt servicing. He believed that a fair assessment of credit quality could help capture a firm s financial health in its entirety, and had a lot to consider as he began his analysis. The case illustrates best practices for credit analysts in assessing a target company s overall financial risk profile using the company s publicly available audited financial statements. Publication Date: November 23, 2016 International; Pages: 7 Teaching Note(s): 8B16B019; Issues: credit quality, financial statements, quantitative analysis, liquidity, chemicals, materials, textiles, data analysis Setting: India, 2015 Learning Objective: This case is designed for use in MBA level courses on credit analysis or advanced accounting, or in banking courses. It promotes discussion of the framework and key components for sound credit analysis in assessing a company s overall financial risk profile. After completing the case, students should be able to understand the relevance and framework for undertaking credit quality analysis; discuss the financial parameters for evaluating a company s credit quality and overall financial risk profile; understand and estimate various financial credit ratios; develop insight into a company s financial health based on a trend analysis of financial credit ratios; and estimate the overall credit quality of a target company. Page 4 of 10

6 9B16B018 Habitual Chocolate: Expansion Opportunities Elizabeth M.A. Grasby; Richard Bloomfield; The owner and chocolatier of a small, chocolate manufacturing and retailing company in London, Ontario, was considering an expansion opportunity within Southwestern Ontario. The company's current production facility was sufficient for handling immediate demand; however, there was limited space for expansion in the same building, and the building s administration had plans to prohibit manufacturing activities within the next five to 10 years. The owner wondered whether the time was right to purchase a new storefront and production facility in a small nearby city. Alternatively, should he continue operations in the present location while looking for other opportunities to expand? He planned to create projected financial statements and conduct internal and external analyses to inform his decision making process. Publication Date: November 10, 2016 Entrepreneurship; Pages: 14 Teaching Note(s): 8B16B018; Issues: cash budgeting, management decisions, fairtrade, general management Industry: Accommodation & Food Services; Setting: Canada, Small organization, 2014 Learning Objective: This case is best suited for an introductory managerial accounting or finance course at the undergraduate level. For correct analysis of this case, students should have a solid understanding of basic business analysis tools and the ability to apply them. This case can also be used as a testing vehicle. After completion of the case, students will be able to do the following: Draw implications from historical qualitative facts relevant to the decisions at hand. Understand the mechanics needed to build a statement of cash flows, differential cash flow, and projected statements. Choose the most suitable future oriented solution (of the multiple options provided) based on analysis of the case. 9B16B014 Pricing Police: An Activity Based Costing Model of Police Services Vaughan S. Radcliffe; Mitchell Stein; Adam Erickson; On January 17, 2015, the Ontario Provincial Police (OPP) released service cost estimates to all municipalities under its new municipal billing model. The new billing model, according to the recommendations of the auditor general, was designed to provide a more consistent, transparent, and accurate reflection of municipal servicing costs. Several mayors were not entirely sold on the new model and had their own opinion on how each municipality should be billed. Municipal officials needed consistent year to year service costs to accurately forecast their annual budgets. The OPP had to demonstrate the merit of the new billing model to ensure its adoption by all municipalities. Publication Date: October 28, 2016 Pages: 9 Teaching Note(s): 8B16B014; Issues: cost accounting, cost drivers, cost behaviour Industry: Public Administration; Setting: Canada, Large organization, 2015/2016 Learning Objective: This case is suitable for graduate level programs in cost analysis and inter departmental cost allocation. It emphasizes the difficulties organizations face in accurately allocating costs. After completion of the case, students will be able to identify cost drivers that reflect true cost behaviour; recognize differing methodologies that may result in significant variations in cost allocations; and understand cost behaviour in different environments. 9B16B017 North West Company: Analyzing Financial Performance Jennifer Alex; Mark MacIsaac; Neil Maltby; In June 2015, a new analyst at an investment fund company had to review the financial performance of a potential investment target, the North West Company Inc. (NWC), and make a recommendation. NWC was a food retailer operating in underserved markets. The company operated retail locations in Western and Northern Canada, Alaska, the South Pacific, and the Caribbean, reporting total sales of CA$1.6 billion in Twelve years after NWC s initial push outside of Canada, international sales accounted for 35.8 per cent of the company s business. Whereas rivalry among competitors and consumer choice defined the mainstream Canadian market, food retail in Northern Canadian markets was characterized by limited offerings, high prices, and few competitors. The analyst s report needed to include an assessment of NWC s profitability, liquidity, and financial structure. The analyst was particularly interested in NWC s international operations; although international expansion carried with it the potential for significant revenue growth, she wondered whether the profit potential was as great as that of NWC s operations in Northern and Western Canada. She also knew that if NWC did choose to expand its international operations, it would require significant capital investment. Was NWC a good investment opportunity? Publication Date: October 26, 2016 International; Pages: 7 Teaching Note(s): 8B16B017; Issues: financial performance, financial statement analysis, international versus domestic, food Industry: Retail Trade; Setting: Canada, Large organization, 2015 Difficulty: Intro/Undergraduate Learning Objective: The case offers students the opportunity to review some strategic considerations around domestic and international growth, and to consider several aspects of serving essential products to communities that, in some cases, have challenging economic or social situations. The case may be used to do the following: Develop understanding of financial statements. Complete a preliminary evaluation of the financial position and historical performance of a firm, and in particular, demonstrate financial statement analysis calculations and understand their purpose, how to interpret them, and the significance of these calculations specifically, in comparison Page 5 of 10

7 to a rival or industry indicators. Learn about a distinct segment of a major industry food retail in underserved, remote markets and the unique characteristics of the industry. 9B16B013 Using Accounting Analytics to Make an Investment Decision Jayasree Mangalagiri; G.B.S. Naidu; In 2015, Hanuman Singh, a portfolio investor, was looking for investment opportunities in India. His friend Ram Naik suggested Singh invest in Tata Consultancy Services Limited, an information technology company based in Mumbai. Singh s normal practice was to look at the company balance sheets, understand the company s strategy, and then decide whether to invest. But he recently had a bitter investing experience when the company he invested in went bankrupt. Singh now understood that a deeper analysis was required before investing. He was looking for an accounting analysis that would give him insight into any possible manipulations so that his investment decision would yield his expected results. Publication Date: October 17, 2016 Entrepreneurship; International; Pages: 12 Teaching Note(s): 8B16B013; Issues: red flag, manipulation, accounting analysis, fraud, financial statements Industry: Information, Media & Telecommunications; Setting: India, Large organization, 2015 Difficulty: MBA/Postgraduate Learning Objective: This case is suitable for MBA students taking a course in fraud and forensic accounting and for financial analysts who give clients investment advice. After completing the case, students and financial analysts will be able to understand financial statements thoroughly by focusing on key variables for analysis; recognize popular fraud prediction models; understand the interpretation of fraud prediction models; and make accurate investment decisions. 9B16B012 Asante Teaching Hospital: Activity Based Costing Melissa Jean; Courtney Young; In August 2015, an intern at Asante Teaching Hospital, a prestigious not for profit hospital in Johannesburg, South Africa, wanted to organize the cost data she had gathered from staff interviews into clear recommendations for the hospital's chief executive officer. Asante Teaching Hospital's maternity ward competitors had begun offering bundled pricing for natural births, and the intern wondered if Asante Teaching Hospital should do the same. In order to calculate the costs of the service, she planned to employ both activity based and time driven activity based costing techniques. With this information, she could present the results of her analysis and recommendations for a pricing strategy. Publication Date: September 14, 2016 International; Pages: 6 Teaching Note(s): 8B16B012; Issues: activity based costing, cost control, pricing, health administration, data analysis, health informatics, medical, obstetrics Industry: Health Care Services; Setting: South Africa, Medium organization, 2015 Learning Objective: The case is intended for upper year undergraduate or graduate students in management or cost accounting courses. Upon successful completion of the case, students should be able to perform the following tasks: Perform a competitive analysis to identify the risks and opportunities related to the hospital s pricing strategy. Prepare an activity based and time driven activity based costing analysis to determine pricing for each of the three levels of care. Qualitatively analyze the alternative pricing options to help shape the recommendations. Make a pricing recommendation to the CEO for natural birth maternity ward services. 9B16B011 Toshiba: Accounting Fraud Anupam Mehta; In July 2015, the chief executive officer of Toshiba Corporation (Toshiba) resigned over the revelation of a JP billion accounting scandal that shocked the world. Toshiba, a Japanese multinational conglomerate with net sales of JP 6.5 trillion and total assets of 6.2 trillion, had been widely criticized in the news for the multi billion dollar accounting fraud. The company s stock prices declined by 38 per cent after the accounting probe was announced, and the company withdrew the dividend that had been declared earlier. These setbacks challenged company investors, who had always regarded Toshiba as a reputable company. The investors were wondering the same thing as everyone else watching the scandal unfold: How could a company with a 140 year history do this, and why? What were the consequences? What should Toshiba do in response to this crisis? Publication Date: June 27, 2016 Discipline: International; Accounting; Pages: 7 Teaching Note(s): 8B16B011; Issues: computers, electronics, accounting fraud, scandal, fraud triangle, ethics Industry: Information, Media & Telecommunications; Setting: Japan, Large organization, 2015 Learning Objective: This case is appropriate for use at the undergraduate and graduate level. Students will have the opportunity to apply the fraud triangle theory to Toshiba in order to understand the motives, opportunities, and rationalizations behind the fraud; evaluate the financial performance of the company to understand the financial pressures that Toshiba might have been experiencing; examine the circumstances that allowed Toshiba s fraudulent accounting practices to continue for so long; analyze the repercussions of the accounting fraud for the various stakeholders, especially the company s investors; and understand how corporate culture can play a vital role in the failure of a management control system. Page 6 of 10

8 9B16B McAdam Elizabeth M.A. Grasby; Jessica Bond; The owner of a designer handbag company, 442 McAdam, found she could no longer manufacture in house the quantity of handbags required to meet existing orders. Manufacturing would need to be outsourced, and the owner would have to choose between a local manufacturer and an overseas manufacturer. Local manufacturers offered the same quality as overseas manufacturers but charged higher prices. International manufacturers, while offering lower prices, required larger minimum order quantities. Regardless of the manufacturing option she chose, the owner wondered whether the minimum levels of inventory she needed to order could be sold within the upcoming six month style season. Publication Date: May 25, 2016 Pages: 4 Teaching Note(s): 8B16B010; Issues: inventory planning, control, manufacturing strategy, cost/benefit analysis, management accounting Setting: Canada, Small organization, 2015 Learning Objective: This case can be taught in an introductory managerial accounting course at the undergraduate university level. To aid in their decision making, students can use cost behaviour and contribution analysis as financial tools, as well as an analysis of inventory management. More specifically, students are required to perform the following: Calculate unit contribution and contribution margin ratio. Project overall contribution levels for each manufacturing option. Determine how much, if any, excess inventory may exist as a result of outsourcing manufacturing. 9B16B009 Totally Tidy by Tilly Elizabeth M.A. Grasby; Brian Langen; Spring cleaning season 2015 was about to begin in a small community north of Toronto, Ontario, Canada, and a prospective business owner was deciding whether to launch a new business. Totally Tidy by Tilly would provide cleaning services, professional organizing services, or both. Before moving forward, this new entrepreneur first needed to understand the environment for her new venture. Based on that understanding, she needed to decide what services to offer and at what prices, and how best to promote her new business. To determine financial feasibility, she projected the company's financial performance for the first three years of operations. Should the entrepreneur stay close to home, within her community, or would a viable and profitable business plan involve a larger area? Would the business provide a reasonable income, or would this significant change in her lifestyle only prevent her from enjoying the flexibility of being a stay at home parent? Pages: 10 Teaching Note(s): 8B16B009; Issues: cash budgeting, marketing management, entrepreneurial marketing Industry: Other Services; Setting: Canada, Small organization, 2015 Learning Objective: This case can be taught in class or can be used as a testing vehicle (a take home, individual, or group report) and is best suited for an introductory course in business management at the undergraduate university level. The case covers multiple business concepts (marketing management, financial projections, etc.) and the basics of business strategy, accounting, and finance. Students are expected to analyze this case by completing the following activities: Perform an external analysis: industry, competition, and consumer. Perform an internal analysis: company s strengths, weaknesses, opportunities, and threats. Develop a marketing plan. This plan should include a decision regarding the services to be offered and their respective prices, the targeted location(s), and the promotional tools to be used. Project three years of financial statements (cash budgets, statements of earnings, and statements of financial position). 9B16B008 American Apparel: Drowning in Debt? Anupam Mehta; The American clothing retailer American Apparel recently experienced a loss of $106 million and faced huge debt repayments. In addition, the chief executive officer (CEO) and founder was dismissed because of personal misconduct. Students must evaluate the financial status of the company and address the impact of the CEO s termination on the financial performance of the company. Publication Date: April 14, 2016 Pages: 8 Teaching Note(s): 8B16B008; Issues: Financial performance; financial analysis; trend analysis; financial health Industry: Retail Trade; Setting: United States, Large organization, 2014 Learning Objective: This case is intended for introductory classes on financial statement analysis. It is suitable for both postgraduate introductory lectures and undergraduate accounting courses. Students should have a basic knowledge and understanding of accounting concepts. Learning objectives are as follows: To conduct a comprehensive financial evaluation of a company. To use various financial assessment tools, including trend analysis, common size statements, and financial ratios. Publication Date: May 11, 2016 Discipline: Entrepreneurship; Accounting; Product Type/Pricing: Case (Field), Standard Supplement Page 7 of 10

9 9B16B007 Anandam Manufacturing Company: Analysis of Financial Statements Vinay Goyal; S.K. Mitra; In July 2015, the owner of the Anandam Company approached a bank for additional funding to meet the growing requirements of his garment manufacturing firm. The owner was confident about the financial prospects of his firm, with its fourfold increase in revenue and phenomenal increase in profit after taxes over the last three years. In a lengthy discussion with the bank manager, the owner shared the development of his company and the dynamics and growth opportunities of the garment and textile market in India. He believed his firm was performing strongly in a highly competitive industry environment. The bank manager instructed the loan officer to process the loan application as soon as possible and make a decision. Determining the health of the company would involve preparing a trend analysis and a common size statement, interpreting selected ratios, and preparing a basic statement of cash flows. Was the Anandam Company a good candidate for receiving a loan? Publication Date: April 13, 2016 Entrepreneurship; International; Pages: 6 Teaching Note(s): 8B16B007; Issues: Ratio analysis, cash flow analysis, financial analysis, bank loan Setting: India, Small organization, 2014 Learning Objective: This case is suitable for use in the early stage of an MBA or undergraduate core course in accounting where students are required to study the financial analysis of an organization. It is also relevant in bank management courses where the approval/rejection of loans is taught. The case requires students to conduct a financial analysis of the Anandam Company for the purpose of obtaining a loan from the bank. It entails the use of financial statement analysis, balance sheets, and income statements to provide a complete picture of a firm s financial health. The case allows students to calculate a series of financial ratios and perform basic financial statement analysis, which requires the preparation of a cash flow statement, trend analysis, and common size statements. The case will help demonstrate shortcomings in ratio analysis and will serve as a caution to students against misreading and misinterpreting financial statements. 9B16B003 Foxy Originals: The Online Expansion Elizabeth M.A. Grasby; Jessica Bond; The founders of a jewelry company, Foxy Originals, needed to decide how best to increase sales. The company sold its jewelry both online and through retailers across the United States and Canada. The founding partners had to decide whether they should focus more of their time and money on developing online sales or continue attending trade shows that attracted additional retail locations for Foxy Originals' products. Both partners wanted to ensure that they achieved a healthy work life balance. Publication Date: March 18, 2016 Product Type/Pricing: Case (Field), Standard Supplement Pages: 5 Teaching Note(s): 8B16B003; Issues: Contribution analysis, distribution, profitability analysis, management accounting Setting: Canada, Small organization, 2014 Learning Objective: This case is best taught in an introductory managerial accounting course at the undergraduate level. Objectives are: To identify costs relevant to the decision and categorize them as investments, fixed costs, or variable costs. To calculate unit contribution, contribution margin ratio, and weighted average contribution margin rates. To perform a breakeven analysis and interpret its meaning using relevant parameters (i.e., the potential number of orders trade shows/online sales could generate). To project the profitability of each distribution strategy. To perform a sensitivity analysis on the expected sales level for each distribution strategy. 9B16B005 Screen Microtech Inc. Vaughan S. Radcliffe; Deep Dhillon; 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? Publication Date: March 18, 2016 Product Type/Pricing: Case (Gen Exp), Standard Case Pages: 10 Teaching Note(s): 8B16B005; Issues: Accruals, adjustments, revenue recognition Setting: United States, Medium organization, 2015 Page 8 of 10

10 Learning Objective: This case is written for an introductory MBA course but could be used with a mature undergraduate audience. After completion of the case, students should be able to understand: Provision for returns and bad debts. Gain on sale of an asset. The application of different methods of depreciation. Write offs and reversals due to unforeseen events. 9B16B006 The Miswak Company Melissa Jean; Jonathan Drewnowsky; 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. Publication Date: March 16, 2016 Entrepreneurship; Pages: 10 Teaching Note(s): 8B16B006; Issues: Financial analysis, projections, break even, Canada Industry: Retail Trade; Setting: Canada, Small organization, 2014 Difficulty: Intro/Undergraduate Learning Objective: This case is intended for use with senior undergraduate students in courses that focus on entrepreneurship, financial management, or managerial accounting. Before attempting the case, students must be capable of performing industry, competitive, and consumer (SWOT) analyses, as well as conducting unit contribution and breakeven analyses and projecting financial statements. The case can be positioned as a course assessment tool in an individual or group setting. Upon successful completion of the case, students should be able to conduct the following activities: Perform industry, competitive, and consumer analyses in order to identify the risks and opportunities associated with the venture. Prepare detailed cash budgets, incorporating sensitivity analysis to determine financing requirements. Prepare projected income statements and balance sheets. Perform a breakeven analysis to assess the riskiness of the venture. Make a recommendation about whether to proceed with the venture, including any alterations to the original plans. 9B16B004 Textbooks for Change Elizabeth M.A. Grasby; Shannon Wright; In May 2015, the chief executive officer (CEO) of a small social enterprise was trying to decide how to expand its business. Textbooks for Change collected used texts from universities and supported African entrepreneurs and universities by donating text sales proceeds or through the distribution of donated materials to deserving schools. The CEO was considering expanding the business to collect textbooks from universities outside its region, and wanted to assess the potential financial viability of three targeted universities. Publication Date: March 09, 2016 Product Type/Pricing: Case (Field), Standard Supplement Pages: 5 Teaching Note(s): 8B16B004; Issues: Break even analysis, growth strategy, social enterprise, contribution analysis Industry: Educational Services; Setting: Canada, Small organization, 2015 Learning Objective: This case is recommended for introductory courses in managerial accounting at the first or second year undergraduate level. After completion of this case, students should be able to: Classify costs and use this knowledge to analyze a decision quantitatively. Understand the purpose and mechanics of a breakeven analysis. Practise using breakeven analysis as an analytical tool. Recognize the importance of working within corporate constraints when making a decision. Learn about social enterprise businesses and find out what makes them successful. 9B16B002 Hospitality Services Eatery Challenges Elizabeth M.A. Grasby; Richard Bloomfield; 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. Publication Date: March 07, 2016 Pages: 11 Teaching Note(s): 8B16B002; Issues: Contribution analysis, segment reporting, cost allocation, sub unit evaluation Industry: Accommodation & Food Services; Setting: Canada, Medium organization, 2015 Page 9 of 10

11 Learning Objective: This case is suitable for use in an introduction to managerial accounting course. After completion of the case, students will be able to: Complete a brief industry, corporate, and consumer analysis. Conduct a sub unit evaluation to understand the costs related to each unit s contribution. Qualitatively analyze options for performance and profitability. Make recommendations from the viewpoint of the associate director of hospitality services. 9B16B001 Smith Commercial Developments Elizabeth M.A. Grasby; Brian Langen; 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. Publication Date: February 29, 2016 Pages: 6 Teaching Note(s): 8B16B001; Issues: Managerial accounting, investor relations, financing, differential analysis Industry: Real Estate and Rental and Leasing; Setting: Canada, Medium organization, 2014 Learning Objective: Students use the differential cash flow model (relevant costs) to evaluate the alternatives within the case. Qualitatively, students are expected to analyze the potential success of the plaza. Based on their complete analysis, students are asked to complete the following: Perform a business size up. Analyze the potential success of a new plaza development from a qualitative perspective. Perform a differential analysis for the plaza development to determine the return on investment and payback period from an investor. Determine whether to pursue the development of the plaza and outline a plan to convince investors to invest. For more information or to order any of these or other materials, contact: Ivey Publishing Ivey Business School at Western University 1255 Western Road, London, Ontario, Canada N6G 0N1 t tf (in Canada and the United States) f e. cases@ivey.ca