Valuation Challenges Arising From the New Leasing Standard ASC 842: A Teaching Note

Accounting Standards Codification (ASC) Topic 842, the new accounting standard on leasing, aims to improve transparency related to leasing and to enable users of financial statements to more readily compare firms that lease with firms that borrow to buy assets. The standard is effective for 2020 and has had a significant impact on the balance sheets of many firms. This note provides an overview of the accounting changes and highlights key issues related to financial analysis and valuation with guidance on how to avoid common errors and accurately calculate and compare enterprise value, EBIT, EBITDA, valuation multiples and key valuation ratios. We also explain how financial data providers, Bloomberg, Capital IQ and FactSet, have adapted the information provided on these metrics

Workplace Harassment: The Social Costs of Bullying

Most research on workplace bullying uses survey results to understand working conditions, target and bully characteristics, and results of bullying situations. This study uses content analysis to determine themes emerging from a writing assignment that asks students to respond to questions about workplace bullying. The intent of the research is to enable bullying targets to better understand the situation, to help managers to learn how to mitigate possible bullying situations, and to assist witnesses to better react to workplace incidents

Finance Flies High: How Unilever Redesigned the Finance Function to Build Brand Value and Drive Growth

Unilever\u27s finance team played a key role in the success of their brands. The company achieved its fourth consecutive year of accelerating organic sales growth from less than 0.5% in 2004 to more than 7% in 2008, according to Jim Lawrence, Unilever\u27s CFO. Its strategy is to focus on volume growth and strengthening the competitive position of the company\u27s brands. In this article, the authors examine how the finance function at Unilever was redesigned to deliver the firm\u27s strategic goals, including an emphasis on volume growth and competitive position of its brands. Beginning in 2005, the finance team at Unilever asked on how the finance function should operate to achieve their goals. The result was the creation of a five-step process dubbed Finance of the Future. The steps are: 1. Define Finance of the Future. 2. Develop strategic thrusts. 3. Create global Finance Excellence Center. 4. Develop innovative business partners. 5. Organize for success: The New Finance Structure

The Balanced Scorecard at Philips Electronics

The drive to implement the balanced scorecard at Philips Electronics came from the top down - as a directive from the Board of Management in Europe to all Philips divisions and companies worldwide. The directive went to each of the companies and their quality departments, with the effort in the medical division headed by the Quality Steering Committee that reports to the president of Philips Medical Systems. Philips Electronics has used the balanced scorecard to align company vision, focus employees on how they fit into the big picture, and educate them on what drives the business. An essential aid to communicating the business strategy, the BSC works as a vehicle to take key financial indicators and create a quantitative expression of the business strategy. In fact, Philips Electronics\u27 management team uses it to guide the quarterly business reviews worldwide in order to promote organizational learning and continuous improvement

A Transformational Change Program in IT - The Case of a Global Consumer Products Company

This paper presents a framework for development of a transformational change management program (Flamholtz and Randle, 2008) in an information technology (IT) organization of a global Fortune 200 consumer products company. The goal of the transformation was to build leading edge global IT service offerings, to internal and ultimately external customers. the program played a pivotal role in the company\u27s Path to Growth Strategy. This strategy included very specific targets for sales, margins and earnings growth over a five year period. The case illustrates how a well conceived change program, integrated with an organization\u27s overall strategic plan, is a competitive advantage

“Choice of Service, Choice of Cost”- A Transformational Change Program in IT - The Case of a Global Consumer Products Company: Case Study

This paper presents a framework for development of a transformational change management program (Flamholtz and Randle, 2008) in an information technology (IT) organization of a global Fortune 200 consumer products company. The goal of the transformation was to build leading edge global IT service offerings, to internal and ultimately external customers. The program played a pivotal role in the company’s Path to Growth Strategy. This strategy included very specific targets for sales, margins and earnings growth over a five-year period. The case illustrates how a well conceived change program, integrated with an organization’s overall strategic plan, is a competitive advantage

What\u27s In Your Leadership Toolbox?

Senior finance executives play a pivotal role in achieving corporate strategic vision, fostering growth, and enhancing return on invested capital. But their role is becoming more and more complex. In addition to traditional functions, they and their finance teams must now do financial modeling, integrate data analytics, handle strategies for cyber security and complicated risk management, and more. To find out what capabilities must today\u27s financial leaders have to be successful, the authors interviewed CFOs and human resources (HR) executives and identified the key required competencies. They identified six competencies frequently named by finance and HR executives that they believe contribute to the development of exceptional finance leaders: 1. Communicate a vision and path. 2. Assess the competitive environment with an external orientation. 3. Foster breakthrough thinking. 4. Develop outstanding financial talent. 5. Build team commitment. 6. Propel to action

Integrating Environmentally Focused Experiential Learning into the Curriculum: An Interdisciplinary Case Study

This paper details the use of a local environmental issue as a case study for an interdisciplinary project in an Economics and an English course

After the Acquisition: Here are Seven Steps to Successfully Integrating Finance and Accounting Functions After a Merger or Acquisition

Although much has been written regarding the factors critical to successful integration after a merger or acquisition, very little research has focused on the particulars of integrating the finance and accounting functions of the companies involved. As with overall business integration, detailed planning, effective communication, and speed of execution are critical. The authors recommend a seven-step process that will help balance the needs of the business during an acquisition as well as ensure financial controls are established. The overall steps provide the key activities to be accomplished and provide specific and explicit guidance. This seven-step process includes: 1. Begin planning, creation of timeline, and benchmarking. 2. Evaluate personnel in finance and accounting functions. 3. Safeguard the assets of the business. 4. Ensure adequacy of financial controls. 5. Review information technology systems. 6. Integrate financial and management accounting. 7. Assess progress, and perform post-integration analysis

The New Accounting for Operating Leases: Unintended Consequences in the Airline Industry

By 2020, new accounting rules for operating leases were applicable to publicly traded companies reporting under either the US Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). The accounting authorities under both standards noted that the new rules were developed to increase the transparency of lease transactions to provide more relevant and comparable information. We compare two Brazilian airlines reporting under IFRS, Azul and Gol, with an operationally similar US airline reporting under US GAAP, JetBlue, to determine whether the new standards improve the ability to understand, evaluate, and compare performance, managerial decision making and credit metrics. We conclude that unintended consequences of the new rules have in some areas hindered rather than enhanced the comparability and transparency. Based on our analysis, we recommend two changes that would enhance comparability and transparency in the airline industry as well as other industries with heavy reliance on operating leases