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Business Analysis & Valuation
MGMT E-2620
Case Questions
Version of November 13, 2012
Professor: Viktoria Dalko, PhD. TA: Deepu Pylee
These are team assignments, maximum 4 people can be in each team. Please form your own team before preparing and submitting the first written assignment. Please upload your answers to the following question before the class begins, and bring a hard copy to class. The due dates are in your syllabus as well as on the course web page. In case of conflict between these two, follow the course web page drop box deadlines.
The case write ups in general should be 3-4 pages single spaced, plus exhibits, unless noted otherwise. Answer only the listed questions specifically, and in the order stated.
The role of capital market intermediaries in the dot-com crash of 2000
1. List the ideal role of each financial intermediary
2. What are their respective financial interests?
3. How can you align their interest with their ideal role?
America Online
1. Prior to 1995, why was America Online (AOL) so successful in the commercial online industry relative to its competitors, CompuServe and Prodigy?
2. As of 1995, what are the key changes taking place in the commercial online industry? How are they likely to affect AOL’s future prospects?
3. Was AOL’s policy to capitalize subscriber acquisition costs justified prior to 1995?
4. Given the changes discussed in question b, do you think AOL should change its accounting policy as of 1995? Is the company’s response consistent with your view?
5. What would be the effect on AOL’s 1994 and 1995 ending balance sheets if the company had followed the policy of expensing subscriber acquisition outlays instead of capitalizing them? What would be the effect of expensing subscriber acquisition costs on AOL’s 1995 income statement?
Harnischfeger Corp.
1. Identify all the accounting policy changes and accounting estimates that Harnischfeger made during 1984. Estimate, as accurately as
MGMT E-2620
Case Questions
Version of November 13, 2012
Professor: Viktoria Dalko, PhD. TA: Deepu Pylee
These are team assignments, maximum 4 people can be in each team. Please form your own team before preparing and submitting the first written assignment. Please upload your answers to the following question before the class begins, and bring a hard copy to class. The due dates are in your syllabus as well as on the course web page. In case of conflict between these two, follow the course web page drop box deadlines.
The case write ups in general should be 3-4 pages single spaced, plus exhibits, unless noted otherwise. Answer only the listed questions specifically, and in the order stated.
The role of capital market intermediaries in the dot-com crash of 2000
1. List the ideal role of each financial intermediary
2. What are their respective financial interests?
3. How can you align their interest with their ideal role?
America Online
1. Prior to 1995, why was America Online (AOL) so successful in the commercial online industry relative to its competitors, CompuServe and Prodigy?
2. As of 1995, what are the key changes taking place in the commercial online industry? How are they likely to affect AOL’s future prospects?
3. Was AOL’s policy to capitalize subscriber acquisition costs justified prior to 1995?
4. Given the changes discussed in question b, do you think AOL should change its accounting policy as of 1995? Is the company’s response consistent with your view?
5. What would be the effect on AOL’s 1994 and 1995 ending balance sheets if the company had followed the policy of expensing subscriber acquisition outlays instead of capitalizing them? What would be the effect of expensing subscriber acquisition costs on AOL’s 1995 income statement?
Harnischfeger Corp.
1. Identify all the accounting policy changes and accounting estimates that Harnischfeger made during 1984. Estimate, as accurately as