Sample MBA220 Case #2

In looking over the reports of last semester I found none were perfect.  All could have been improved greatly.  Given that, here are some disclaimers before I attach a sample…

Disclaimers:

  • I can not tell you what grade this report received nor can I tell you my opinion of the report.
  • The comments or lack thereof are no indication of the level of scrutiny to be applied to this semester’s submissions.
  • This report is a sample and is in no way representative of a suggested, desired, excellent, or perfect submission.
  • This report is provided for informative purposes only.
  • This report is not a target you should shoot for.
  • You should strive to make your report much better than the sample provided here to achieve a reasonable grade.

Now, here is the report: Sample_case_2.

Bear in mind the law of unintended consequences: You asked for a sample.  Now I expect your submissions to be significantly better than the sample.

Another free food opportunity: FEI dinner November 27

The next Financial Executives International (FEI) dinner meeting is November 27th at 6:30 pm.  The topic shall be “Sacramento County Airport Systems.”  For more information click here.  If you are nearing graduation this is an excellent opportunity to be in a room full of CFOs.  You should be able to plant seeds of potential employment while you are there.  That is in addition to the free food and knowledge transfer from the presenters.

As before, two students can attend for free.  I shall attend this meeting. Last month the food, wine, and discussion were all very good. If you are interested please send one or two paragraphs explaining why you are interested in attending this month’s meeting.  Please send your application to djmphd@gmail.com by Friday November 16.  This will enable me to make the selection and forward the names to the dinner coordinator.

So, take a look at the meeting info, write a paragraph or two on why you would like to attend, and then email it to me as soon as possible.

 

-David J. Moore

2012H2 FIN101 XC04, XC05, XC06

XC04 – Difference between Berkshire Hathaway Class A & B stock

Class A: Voting 1/1, Dividend 1/1, Convertible into 30 Class B

Class B: Voting 1/200th, Dividend 1/30th

XC05 – Show that P and D grow at g

Solution is here -> DDM_P_and_g

XC06 – Facebook net cash flow approximation vs. cash flow statement number

NCF = net income – non cash revenues + non cash charges

NCF ~ net income + depreciation and amortization

The numbers for Facebook vary from site to site.  They also appear to vary over time.  The accounting at Facebook is questionable.  Nevertheless, the main item driving the difference between our net cash flow approximation and the operating cash flow number is the large amount of “share based compensation.”

In Facebook’s income statement there are costs.  Some of those costs were paid not with cash but with Facebook stock certificates.  This is similar to our government printing money.  🙂  Looking at FB’s statement of cash flows,In the nine months ending September 30 2012 we see 1.388B in “share based compensation” compared to $425M in depreciation and amortization.  However, note that FB’s income statement does not include depreciation and amortization.

In conclusion, FB’s numbers are questionable.  Depreciation and amortization is not the largest non-cash item for FB.The NCF approximation differs from the net cash flow from operations number primarily due to “share based compensation.”  FB pays people with stock certificates rather than cash.  Seems like the game Monopoly to me.