Blockbuster Case Analysis

Point of View The group decided to view this case as potential investor of Blockbuster frolic participation Case Context Blockbuster Entertainment Corporation reported stick on earnings in 1998 of $15,498,000 on revenues of $136,893,000. This resulted into a net income per common and common parcel of land similar of $.58 earnings per share. (Exhibit 2) A scrawnyr look at figures posted for the periods ending 1997 end 1996 would show a dramatic subjoin in revenues and its equivalent earnings per share. As the corporation was safekeeping its annual stockholders meeting on May 9, 1998, Bear, Stearns and Co., an independent report firm, issued a report critical of Blockbuster Corporations accounting suggesting that the fellowships stock was grossly overvalued. accord to Lee J. Seidler, if not for the corporations unique dodging of using cash combined with disputable accounting practices, the company would have had only $.07 earnings per share in 1998. (Exhibit 6 Table 1) In response to the report, Blockbuster Corporations shares plunged $3.375 a share to $30 1/8 on May 9, falling even further by $3.875 to close at $261/4 on May 10. Problem Definition In view of the reported gross overvaluation of shares, is it sensible to taint shares of stock of Blockbuster Corporation or not?

comment of Framework for Analysis In examining the facts of the case of Blockbuster Entertainment Corporation as a potential investor, Group 3 is interested with determining the veracity of the critical analysis of the Bear, Stearns and Co in relation the companys financial statements and financial strategy, in particularly the usage of accounting methods of the company as to goodwill amortization and depreciation amortization of hit tapes and its power on the companys reported earnings per share (EPS). In addition, the companys cash flows from operating and financing activities are appraised as to ascertain the companys skill to generate cash.... If you want to get a full essay, vow it on our website: Ordercustompaper.com

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