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Syllabus for case study in financial management
Case 1 NATIONAL FABRICATORS
TEACIN! OB"ECTI#ES
T$e case %ro&ides students 'it$ an o%%ortunity to underta(e t$e follo'ing analysis) a
com%re$ensi&e si*e+u% of a firm,s en&ironment and com%etiti&e %osition- a forecast of future
financing needs and sources of loan re%ayment- and an assessment of t$e (ey ris(s t$at a ban(
assumes in lending to a business 'it$ marginal %erformance.
ST/0ENT ASSI!NENT
1. 0o a si*e+u% of t$e %roblems and o%%ortunities facing National Fabricators.
2. 3$at $as to be done to remedy t$ese %roblems or ca%itali*e on o%%ortunities4
5. As r. 6asmar7 e&aluate t$e ris(s t$at t$is loan re8uest %resents to t$e ban(.
9. 3$at s$ort+ and long+term action s$ould r. 6asmar ta(e4
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Case 2 FINANCIAL :ERFORANCE OF 0ELL CO:/TER COR:ORATION
TEACIN! OB"ECTI#ES
T$is case can be used in an introductory finance course to teac$ students ratio analysis and cross+
com%any com%arisons. T$is case can also be used in a com%etiti&e strategy course 'it$ a $ea&y
financial analysis em%$asis. Furt$ermore7 t$e case is also a%%licable for e;ecuti&e de&elo%ment
%rograms to em%$asi*e creating and en$ancing s$are$older &alue.
T$e case is designed to dee%en a student,s understanding of t$e lin(age among t$e balance s$eet7
income statement and cas$ flo' statement. It can also be used to introduce financial ratios and to
understand $o' ratios can be used as descri%tors of a com%any,s %erformance.
ST/0ENT ASSI!NENT
1 Com%ute t$e financial ratios for 0ell Com%uter Cor%oration and IB.
2 E&aluate t$e information %resented in t$e e;$ibits to enable a com%arison of com%anies.
5 0iscuss 0ell,s com%etiti&e ad&antages and $ig$lig$t '$at $as enabled t$e com%any to
com%ete and substantially out %erform its com%etitors.
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Case 5 CEF
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Case 9 :ALER LIITE0
TEACIN! OB"ECTI#ES
T$e %rimary ob=ecti&e is to %ro&ide %ractice in t$e de&elo%ment of %ro=ected balance s$eets andincome statements. Ot$er ob=ecti&es include)
1. Assessing a construction+related business.
2. Learning $o' loans to contractors7 $old bac(s and mec$anics,liens 'or(.
5. /sing a cas$ budget to assist in structuring a loan and assessing its (ey ris(s.
ST/0ENT ASSI!NENT
1 :re%are a mont$ly cas$ budget outlining t$e firm,s cas$ needs.
2 :re%are a %ro=ected balance s$eet and income statement for t$e year ended 0ecember 517
1DDD.
5 o' muc$ financing is re8uired and '$en 'ill it be re%aid4
9 As elyn(7 '$at 'ould you do4
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Case CO3,S LON0ON
TEACIN! OB"ECTI#ES
T$e case %ro&ides students 'it$ t$e o%%ortunity to underta(e t$e re8uired analysis for a ban( loan)
a si*e+u% of t$e firm,s en&ironment and com%etiti&e %osition- a forecast of t$e future financing
needs- and an assessment of $o' t$e Ban( can mitigate its ris( t$roug$ collateral and co&enant
re8uirements.
T$e case also %ro&ides students 'it$ insig$ts into entre%reneurial acti&ity7 s%ecifically a start+u%
situation in&ol&ing an BA graduate. Em%$asis is gi&en to t$e mar(eting researc$ com%leted
%rior to t$e entre%reneur decision to go a$ead 'it$ t$e idea. Also7 e;%osure to alternati&e sources
of financing7 s%ecifically go&ernment+s%onsored loan %rograms7 is gi&en.
ST/0ENT ASSI!NENT
1 :erform a si*e+u% of t$e ris(s and o%%ortunities facing t$e /dderlies.
2 0e&elo% %ro=ected income statements and balance s$eets for t$e t'o years ending A%ril 5@7
1DD and A%ril 5@7 1DD.
5 As :aul acNeil7 $o' 'ould you assess any re8uested loans4
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Case SO:ISTICATE0 :ETITES
TEACIN! OB"ECTI#ES
T$e case gi&es students %ractice at) &erifying financial needs t$roug$ a %ro=ected income
statement and balance s$eet- carrying out a sensiti&ity analysis- %erforming a com%lete si*e u% of
are tailing o%eration in an uncertain economic en&ironment- and structuring a loan.
ST/0ENT ASSI!NENT
1 :erform a si*e u% of t$e ris(s and o%%ortunities facing So%$isticated :etites.
2 Create a %ro=ected income statement and balance s$eet for t$e year ended 0ecember 517
1DD@7 based on t$e assum%tion t$at t$e e;%ansion ta(es %lace.
5 As Ann oore7 '$at 'ould you do about t$e re8uested loan4
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Case LON0ON S6I CL/B
TEACIN! OB"ECTI#ES
1. :re%are a %ro=ected income statement and balance s$eet-2. Assess t$e ris(s of a loan to a not+for+%rofit s(i club- and
5. Structure a loan deal.
ST/0ENT ASSI!NENT
1. As :aulette Root7 do an assessment of t$e ris(s and o%%ortunities %resented by t$e London S(i
Club account.
2. 3ould you ma(e t$e loan4
5. If not7 '$at action is re8uired7 and if so7 structure t$e deal.
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Case G :EA6 ROOFIN! CO:ANH
TEACIN! OB"ECTI#ES
1. Si*e u% a business72. :re%are %ro=ected financial statements7 and
5. Structure bot$ a term and an o%erating loan.
ST/0ENT ASSI!NENT
1 As 0illabaug$7 %erform a si*e+u% of :ea( Roofing.
2 Create annual %ro=ected income statements and balance s$eets for :ea( Roofing for t$e t'o+
year %eriod ending 0ecember 517 2@@1.
5 Based on your si*e+u% and %ro=ections7 does it ma(es sense to do business 'it$ t$is client4
9 :ro%ose a deal t$at meets t$e needs of bot$ t$e ban( and t$e client.
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Case D SRI OFFICE :RO0/CTS INC.
TEACIN! OB"ECTI#ES
T$is case in&ol&es credit management. T$e student is gi&en financial statements for t$edistribution com%any and a tec$ni8ue t$e com%any uses to establis$ credit limits. Information is
a&ailable about SRIs e;%erience 'it$ t$e distributor7 t$e difficulties associated 'it$ c$anging
distributors7 and ot$er rele&ant information. Students must decide '$at to do.
ST/0ENT ASSI!NENT
3$at action 'ould you ta(e 'it$ res%ect to t$e acdonald Stationery and Office Su%%lies Ltd.
account and t$e distribution of SRI %roducts in Atlantic Canada4
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Case 1@ ALFRE0 BROO6S ENS3EAR LIITE0
TEACIN! OB"ECTI#ES
T$is case is designed to ta(e on t$e %ers%ecti&e of t$e cor%oration7 or t$e ban( su%%lying funds to
t$e cor%oration7 or bot$. From t$e stand%oint of t$e cor%orationJs CFO7 t$e case introduces
students to t$e financial management im%lications for a firm t$at bot$ im%orts and e;%orts goods.
Some ideas in t$e case include) identifying t$e amount and duration of a firm
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Case 11 A0#ANCE TECNOLO!IES INC.
TEACIN! OB"ECTI#ES
T$is introductory case 'ill allo' students to)
>1? understand and 8uantify t$e ris(s >income and cas$ flo'? associated 'it$ e;c$ange rate
fluctuations-
>2? understand some of t$e factors t$at affect e;c$ange rates- and
>5? understand some of t$e instruments a&ailable to manage t$is ris(7 including %uts7 calls and
for'ard contracts.KAt t$e moneyK and *ero cost collars are also discussed.
T$e ideal bac(ground before underta(ing t$is case is to read a c$a%ter of a basic te;t t$at
discusses currency o%tions and for'ard contracts as 'ell as t$e (ey determinants of e;c$ange
rates. It 'ould also be $el%ful if students $ad some (no'ledge of accounting for foreign e;c$ange
transactions.
ST/0ENT ASSI!NENT
1 E;%lain '$y arrison is concerned about currency e;c$ange rate fluctuations.
2 Calculate Ad&ance,s foreign e;c$ange e;%osure and assess t$e im%act on cas$ flo' and
income of a 'ea(ening Canadian dollar.
5 0o you belie&e7 based on t$e limited information %ro&ided in t$e ne's%a%er article and case7
t$at t$e dollar 'ill fall or rise4
9 E&aluate t$e costs and benefits of t$e alternati&e $edging strategies %resented in t$e case.
As arrison7 '$at 'ould you do to $edge against foreign e;c$ange ris(4 3$y4
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Case 12 S:ENCER ALL >A?
TEACIN! OB"ECTI#ES
Students are introduced to interest rate ris( management t$roug$ t$e use of financial mar(ets.
T$roug$ t$is7 students are e;%osed to deri&ati&e securities suc$ as CA:s7 Ca%s and Collars.
/ltimately7 students are introduced to an analytical frame'or( t$at aids decision ma(ers '$en
c$oosing bet'een $edging &e$icles.
ST/0ENT ASSI!NENT
1 3$y 'ould t$e Board of 0irectors of S%encer all c$oose to finance t$e e;%ansion using
s$ort+term rates4 3$at are t$e %roblems 'it$ suc$ a strategy4
2 In a %erfect 'orld7 $o' s$ould t$e e;%ansion be financed4 3$y4
5 As Stu Finlayson7 '$ic$ $edging &e$icle 'ould you use and '$y4 3$at factors 'ould you
consider in t$e c$oice4
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Case 15 BOR0ERS OTEL COR:.
TEACIN! OB"ECTI#ES
T$e case is designed to be t$e first long+term financing case for students. Sensiti&ity7 EBIT and
ris( analyses are re8uired. T$e limits to sensiti&ity analysis are establis$ed7 as are t$e financing
c$oices. T$e case introduces t$e im%act of debt and %referred stoc( financing on t$e le&el and
&ariation of common stoc( returns.
ST/0ENT ASSI!NENT
1 :re%are an estimate of t$e beginning balance s$eet for Borders otel for eac$ of t$e
financing %ro%osals. Treat all stoc( issue and stoc( com%ensation as organi*ation costs.
2 3$at are t$e earnings before interest and ta;es >EBIT?7 assuming 1@@ %er cent occu%ancy4
%ercent occu%ancy4 and @ %ercent occu%ancy4
5 3$at is t$e im%act of eac$ financing %ro%osal on t$e earnings a&ailable to 0aniels4
9 o' attracti&e 'ould eac$ of t$e financing %ro%osals be to outside in&estors4
o' attracti&e are t$e financing %ro%osals to 0aniels4
3$at action 'ould you ta(e as 0aniels4
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Case 19 ROC6H O/NTAIN I! S6I RESORT
TEACIN! OB"ECTI#ES
T$e case is designed to en$ance studentsJ understanding of t$e %rocess a c$ief financial officer
>CFO? goes t$roug$ '$en ma(ing ca%ital structure decisions. T$e financing o%tions are
establis$ed. Students must de&elo% decision+ma(ing criteria and do a com%arati&e analysis of t$e
four o%tions. T$e case also %ro&ides an o%%ortunity to re&ie' t$e follo'ing conce%ts) E:S7 :E
multi%le7 ris(return trade off and financial le&erage.
ST/0ENT ASSI!NENT
1 Calculate R,s net income and earnings %er s$are for fiscal 1DD9 for eac$ of t$e four
alternati&es.
2 3$at ot$er factors s$ould be considered in e&aluating t$e financing alternati&es4
5 As C$ristine ayes7 '$at 'ould you recommend to t$e board of directors4
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Case 1 TEL/S) TE COST OF CA:ITAL
TEACIN! OB"ECTI#ES
T$e %ur%ose of t$is case is to %ro&ide an o%%ortunity for t$e students to) re&ie' t$e conce%t of cost
of ca%ital- re&ie' $istorical data on ris( %remiums- de&elo% a %rocess for estimating t$e &arious
com%onents of t$e cost of ca%ital- and determine t$e cor%orate cost of ca%ital.
ST/0ENT ASSI!NENT
1. Com%ute t$e cost of ca%ital for Telus Cor%oration.
2. o' 'ould you recommend t$at Telus s$ould em%loy t$is cost of ca%ital4
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Case 1 SCOTT
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Case 1 /NIOST COR:ORATION
TEACIN! OB"ECTI#ES
T$e %ur%ose of t$is case is to %ro&ide t$e students 'it$ an understanding of $o' financialdecisions im%act t$e o&erall strategy of a firm. Additionally7 t$is case %ro&ides t$e students 'it$
an understanding of t$e %ublic financing %rocess and a brief introduction of alternati&e
met$odologies for raising ca%ital in t$e %ublic mar(ets. T$e /ni$ost case also %ro&ides t$e
o%%ortunity to discuss $ig$ yield debt and $o' it fits into a com%any,s cor%orate and financial
structureand$o'financialco&enants'illim%actt$ecom%any,so%erationsint$efuture.
ST/0ENT ASSI!NENT
1 0etermine /niost,s financing re8uirements o&er t$e ne;t t$ree years.
2 If /ni$ost needs to raise outside ca%ital7 $o' s$ould it %roceed 'it$ its ne;t issue4 3it$ t$e
one after t$at4 3$at are t$e (ey factors affecting your decisions4 As %art of your analysis you
s$ould identify t$e most a%%ro%riate maturity and co&enant structures for t$e debt alternati&es.
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Case 1G TE T. EATON CO:ANH LIITE0
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Case 1D /ANEN! :O3ER INTERNATIONAL INC. RAISIN!
CA:ITAL IN !LOBAL AR6ETS
TEACIN! OB"ECTI#ES
T$is case is designed to be used in eit$er) an introductory finance course '$ere students $a&e $ad
some e;%osure to cost of ca%ital and time &alue of money conce%ts7 or in a global en&ironment of
business+ty%e course '$ere t$e em%$asis is on t$e in&estment climate in a country and $o' t$at
climate affects business decisions and ris(. S%ecifically7 t$e case is intended to %ro&ide an
o%%ortunity for students to)
(1)Learn about C$ina and its %olitical7 economic7 social and tec$nological >:EST? en&ironment
>2? Learn about global and Asian ca%ital mar(ets7 cross+listing s$ares internationally.
ST/0ENT ASSI!NENT
Hou $a&e been $ired by a large /.S. institutional in&estor considering %urc$asing :I stoc(.
:ro&ide an analysis of t$e :RC7 t$e %o'er industry7 (ey success factors7 and :I,s strengt$s and
'ea(nesses.
3$at benefits are t$ere to a non+/.S. firm listing on a /.S. e;c$ange4 Are t$ere ot$er alternati&es
t$at :I s$ould $a&e considered4
1 3as t$e c$osen issue %rice for :I a reasonable &alue4 :resent your recommendation on
'$et$er7 '$ere7 $o' and '$y :I s$ould $a&e %roceeded 'it$ t$e issue.
2 As an institutional in&estor7 'ould you $a&e boug$t stoc( in t$is com%any4
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Case 2@ :E:SICO CAN!C/N "OINT #ENT/RE) CA:ITAL E:EN0IT/RE ANALHSIS
TEACIN! OB"ECTI#ES
T$is case could be used as an introduction to ca%ital budgeting tec$ni8ues suc$ as N:# and IRR.
It also %ro&ides students 'it$ an o%%ortunity to use t$e financial %ro=ection information and
de&elo% a basic financial model on a =oint &enture %ro=ect. Students can t$en use t$e model to
de&elo% sensiti&ity analysis. T$is case also %ro&ides an o%%ortunity to e;%lore to%ics suc$ as cost
of ca%ital and terminal &alue.
T$e uni8ue setting of t$is case can also be used as an introduction to =oint &entures7 a %o%ular
form of foreign direct in&estments in de&elo%ing countries suc$ as t$e :eo%le,s Re%ublic of C$ina.
ST/0ENT ASSI!NENT
1 /se t$e information in t$e case to construct t'o sets of N:# and IRR analysis on t$e
%ro%osed C$angc$un bottling =oint &enture) one set e;cluding t$e concentrate sales7 t$e ot$er set
including t$e concentrate sales. Based on t$e results7 '$at 'ould be your decision on t$e %ro%osed
C$angc$un =oint &enture4
2 Comment on t$e financial %ro=ections t$at :e%siCo used in its ca%ital budgeting e;ercise7
es%ecially t$e NO:BT Ca%7 foreign e;c$ange rate %ro=ection and t$e discount rate.
5 3$at differences mig$t t$ere be as to $o' t$e :RC %artners do t$e analysis >or loo( at t$e
future cas$ flo's? &ersus :e%siCo4
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