Must use at least five scholarly and/or credible articles from ProQuest Business, industry databases Nasdaq.com and EY.com, and comprehensive accounting databases FASB codification, AICPA, and SEC reference library sources in addition to the course text.
�
8FRXZSL�X�3J\�(MFQQJSLJ��7NXNSL�(TRUTSJSY (TXYX �&X�8FRXZSL�9WNJX�YT�0JJU�5WTKNYX�:U� (TRUTSJSY�(TXYX�5WJXJSY�:SJ]UJHYJI (MFQQJSLJ��� &KHQJ��-RQDWKDQ���:DOO�6WUHHW�-RXUQDO��2QOLQH����1HZ�<RUN��1�<��>1HZ�<RUN��1�<@���$SU�������Q�D�� 3UR4XHVW�GRFXPHQW�OLQN
$%675$&7 b��
$FFRUGLQJ�WR�D�WHDUGRZQ�E\�PDUNHW�UHVHDUFK�ILUP�,+6�WKLV�PRQWK��6DPVXQJ V�QHZ�*DOD[\�6��ZLWK����JLJDE\WHV�RI
PHPRU\�FRVWV���������WR�PDQXIDFWXUH��
��� )8//�7(;7 b�
6(28/��$V�WKH�ZRUOG V�ELJJHVW�VPDUWSKRQH�PDNHU�WULHV�WR�NHHS�SURILWV�XS�LQ�LWV�PDLQVWD\�PRELOH�SKRQH�EXVLQHVV�
RQH�NH\�FKDOOHQJH�ZLOO�FRPH�IURP�DQ�XQH[SHFWHG�SODFH��WKH�ULVLQJ�FRVWV�RI�WKH�FRPSRQHQWV�WKDW�JR�LQWR�LWV�GHYLFHV��
��
2Q�7XHVGD\��6DPVXQJ�(OHFWURQLFV�&R� V�ILUVW�TXDUWHU�HDUQLQJV�VKRZHG�WKDW�LWV�VPDUWSKRQH�PDUJLQV�UHPDLQHG�IODW
IURP�D�\HDU�DJR��KLJKOLJKWLQJ�WKH�QHHG�IRU�WKH�6RXWK�.RUHDQ�WHFKQRORJ\�JLDQW�WR�NHHS�FRVWV�ORZ�DPLG�XQFHUWDLQ
GHPDQG�IRU�LWV�QHZ�IODJVKLS�*DOD[\�6��VPDUWSKRQH��
��
6DPVXQJ�H[HFXWLYHV�VDLG�WKDW�WKH�*DOD[\�6��VPDUWSKRQH��ZKLFK�RIILFLDOO\�ZHQW�RQ�VDOH�HDUOLHU�WKLV�PRQWK��ZDV
UHFHLYHG�SRVLWLYHO\�E\�WKH�PDUNHW�DQG�ZRXOG�OLNHO\�GR�EHWWHU�WKDQ�WKH�SUHYLRXV�PRGHO��ZLWKRXW�HODERUDWLQJ��%XW
DQDO\VWV�VDLG�PDUJLQV�FRXOG�ZHOO�VOLS�WKLV�TXDUWHU��
��
7KH�FRPSDQ\�SDFNHG�LWV�ODWHVW�SKRQH�ZLWK�SULFH\�IHDWXUHV��VXFK�DV�DQ�LPSURYHG�FDPHUD��D�ILQJHUSULQW�VFDQQHU�DQG
D�KHDUW�UDWH�VHQVRU��KRSLQJ�WR�JLYH�LW�D�OHJ�XS�DJDLQVW�D�FURZGHG�ILHOG�RI�ULYDOV�WKDW��OLNH�6DPVXQJ V�GHYLFHV��UXQ
*RRJOH�,QF� V�$QGURLG�RSHUDWLQJ�V\VWHP��
��
�'HVSLWH�LQFUHDVLQJ�VDOHV�YROXPHV��D�GHFOLQH�LQ�SURILWV�VHHPV�LQHYLWDEOH�GXH�WR�IDOOLQJ�SULFHV�DQG�LQWHQVLI\LQJ
FRPSHWLWLRQ���VDLG�*UHJ�5RK��DQ�DQDO\VW�ZLWK�+0&�,QYHVWPHQW�6HFXULWLHV�LQ�6HRXO��
��
,Q�WKH�ILUVW�TXDUWHU��WKH�VDOH�RI�PRELOH�SKRQHV�DFFRXQWHG�IRU�����RI�6DPVXQJ V�UHYHQXH�DQG�WKUHH�TXDUWHUV�RI�LWV
SURILWV��6DPVXQJ�VDLG�LWV�SURILW�PDUJLQV�IRU�WKDW�XQLW�FDPH�LQ�DW��������XQFKDQJHG�IURP�D�\HDU�HDUOLHU��%XW�PDUJLQV
ZHUH�KLJKHU�WKDQ�WKH�IRXUWK�TXDUWHU�GXH�WR�RQH�RII��DGMXVWPHQWV�WR�UHVHUYH�LWHPV���WKH�FRPSDQ\�VDLG��GHFOLQLQJ�WR
HODERUDWH��
��
%XW�WKH�SUHVVXUH�RQ�PDUJLQV�LV�RQO\�OLNHO\�WR�JHW�PRUH�LQWHQVH�DV�&KLQHVH�ULYDOV��LQFOXGLQJ�+XDZHL�7HFKQRORJLHV
&R���/HQRYR�*URXS�/WG��DQG�=7(�&RUS���FUDQN�RXW�LQFUHDVLQJO\�FRPSHWLWLYH�VPDUWSKRQHV��,Q�WKH�ILUVW�TXDUWHU�
6DPVXQJ�VDZ�LWV�JOREDO�VPDUWSKRQH�PDUNHW�VKDUH�VOLS�WR�������IURP���������WKH�ILUVW�DQQXDO�GHFOLQH�LQ�IRXU�\HDUV��
3')�*(1(5$7('�%<�6($5&+�35248(67�&20 3DJH���RI��
DW�WKH�H[SHQVH�RI�ULYDOV�/HQRYR�DQG�+XDZHL��DFFRUGLQJ�WR�GDWD�IURP�6WUDWHJ\�$QDO\WLFV��
��
0U��5RK�VDLG�KH�H[SHFWV�RSHUDWLQJ�SURILW�PDUJLQV�DW�6DPVXQJ V�PRELOH�GLYLVLRQ�WR�IDOO�WR�������LQ�WKH�WKLUG�TXDUWHU
DQG�������LQ�WKH�IRXUWK�TXDUWHU��
��
6DPVXQJ�RQ�7XHVGD\�VDLG�QHW�SURILW�URVH������IURP�D�\HDU�HDUOLHU�WR������WULOOLRQ�ZRQ��������ELOOLRQ��DV�VWURQJ�FKLS
VDOHV�KHOSHG�FXVKLRQ�VORZLQJ�VDOHV�DW�LWV�NH\�PRELOH�XQLW��6DOHV�URVH������WR������WULOOLRQ�ZRQ��
��
1RW�KHOSLQJ�6DPVXQJ V�FDXVH�LV�WKH�FRPSDQ\ V�FRQWLQXHG�UHOLDQFH�RQ�LWV�PDVVLYH�DGYHUWLVLQJ�EXGJHW�WR�NHHS�LWV
VDOHV�KXPPLQJ��DQG�WKH�ULVLQJ�FRVW�RI�PDNLQJ�LWV�RZQ�GHYLFHV��
��
'XULQJ�D�FRQIHUHQFH�FDOO�ZLWK�DQDO\VWV�RQ�7XHVGD\��6DPVXQJ�H[HFXWLYHV�VDLG�WKDW�WKH\�ZHUH�ZRUNLQJ�WR�NHHS
PDUNHWLQJ�FRVWV�LQ�OLQH�ZLWK�VDOHV��7KH\�VDLG�WKH\�ZRXOG�VHOO�PRUH�SKRQHV�IRU�OHVV�WKDQ������WR�WDUJHW�WKH�SRUWLRQ
RI�WKH�PDUNHW�PRVW�XQGHU�WKUHDW�IURP�ORZ�FRVW�&KLQHVH�FRPSHWLWRUV��
��
%XW�DW�WKH�KLJKHU�HQG��6DPVXQJ V�UHODWLYHO\�KLJK�PDQXIDFWXULQJ�FRVWV�UHVWULFW�WKH�FRPSDQ\ V�DELOLW\�WR�FRPSHWH�RQ
SULFH�DW�D�WLPH�ZKHQ�VHOOLQJ�SULFHV�FRQWLQXH�WR�IDOO��
��
$FFRUGLQJ�WR�D�WHDUGRZQ�E\�PDUNHW�UHVHDUFK�ILUP�,+6�WKLV�PRQWK��6DPVXQJ V�QHZ�*DOD[\�6��ZLWK����JLJDE\WHV�RI
PHPRU\�FRVWV���������WR�PDQXIDFWXUH��7KDW�VXP�KDQGLO\�RXWVWULSV�$SSOH�,QF� V�L3KRQH��6��ZKLFK�FRQWDLQV��������
ZRUWK�RI�FRPSRQHQWV��DQG�LV�D�IDU�FU\�IURP�XOWUDFKHDS�$QGURLG�VPDUWSKRQHV�VROG�LQ�&KLQD�DQG�,QGLD��VRPH�RI
ZKLFK�FDQ�EH�PDQXIDFWXUHG�IRU�DV�OLWWOH�DV������
��
,+6�VD\V�LWV�SUHOLPLQDU\�DQDO\VLV�LV�EDVHG�RQO\�RQ�KDUGZDUH�DQG�PDQXIDFWXULQJ�FRVWV��DQG�H[FOXGHV�VRIWZDUH�
OLFHQVLQJ�DQG�RWKHU�FRVWV��$�6DPVXQJ�VSRNHVPDQ�GHFOLQHG�WR�FRPPHQW�RQ�WKH�WHDUGRZQ��
��
7KH�KLJK�FRVWV�FRPH�DPLG�WKH�FRPSDQ\ V�VWDWHG�JRDO�RI�VLPSOLFLW\�DQG�PRGHUDWLRQ�ZLWK�WKH�*DOD[\�6���D�GHYLFH
WKDW�FRPSDQ\�H[HFXWLYHV�FKDUDFWHUL]HG�DV�D��EDFN�WR�EDVLFV��GHYLFH�UDWKHU�WKDQ�RQH�ZLWK�DQ\�IODVK\�EXW�OLWWOH�XVHG
IHDWXUHV��
��
,Q�D�)HEUXDU\�LQWHUYLHZ�SUHYLHZLQJ�WKH�GHYLFH��6DPVXQJ�H[HFXWLYH�YLFH�SUHVLGHQW�/HH�<RXQJKHH�VDLG�WKDW�WKH
FRPSDQ\�ZDV�VWHHULQJ�FOHDU�RI�JLPPLFN\�QHZ�IHDWXUHV�LQ�IDYRU�RI�D�VLPSOH�GHYLFH�WKDW�ZRXOG�RIIHU��YHU\
FRPSHWLWLYH�SULFLQJ���
��
2Q�$7 7�,QF� V�ZHEVLWH��WKH�*DOD[\�6���ZLWK����JLJDE\WHV�RI�PHPRU\��VHOOV�IRU�DERXW������ZLWKRXW�D�FRQWUDFW��ZKLOH
9HUL]RQ�&RPPXQLFDWLRQV�,QF� V�9HUL]RQ�:LUHOHVV�ZHEVLWH�VHOOV�WKH�GHYLFH�IRU�DERXW�������DERXW�WKH�VDPH�DV�IRU�WKH
*DOD[\�6��ZKHQ�LW�ILUVW�ZHQW�RQ�VDOH��
��
:KLOH�6DPVXQJ V�SURILW�PDUJLQ�KDV�EHHQ�VTXHH]HG�DPLG�D�GHFOLQH�LQ�WKH�DYHUDJH�VHOOLQJ�SULFH�RI�LWV�VPDUWSKRQHV�
WKH�FRPSDQ\�KDV�PRUH�FRQWURO�WKDQ�PRVW�RI�LWV�ULYDOV�RYHU�WKH�FRVW�RI�PDQXIDFWXULQJ�LWV�GHYLFHV�DQG�FRPSRQHQWV
EHFDXVH�LW�PDNHV�VHPLFRQGXFWRUV�DQG�GLVSOD\V�LQWHUQDOO\��
��
6DPVXQJ V�ODWHVW�VPDUWSKRQH�KDV�DERXW����VHQVRUV��LQFOXGLQJ�WKH�RQHV�WKDW�XQGHUSLQ�WKH�KHDUW�UDWH�DQG�ILQJHUSULQW
VFDQQHUV��,W�DOVR�LQFOXGHV�D�FDPHUD�WKDW�6DPVXQJ�H[HFXWLYHV�VD\�FDQ�PDWFK�WKH�IXQFWLRQV�W\SLFDOO\�IRXQG�RQ�WKH
FKXQN\�GLJLWDO�6/5�FDPHUDV�IDYRUHG�E\�SURIHVVLRQDO�SKRWRJUDSKHUV��
��
%XW�WKDW�FDPHUD�PD\�SRVH�D�KHDGDFKH�IRU�6DPVXQJ��DIWHU�WKH�FRPSDQ\�FRQILUPHG�UHSRUWV�RI�FDPHUD�JOLWFKHV
3')�*(1(5$7('�%<�6($5&+�35248(67�&20 3DJH���RI��
SODJXLQJ�DQ�XQGLVFORVHG�QXPEHU�RI�*DOD[\�6��VPDUWSKRQHV�ZKLFK�UHQGHU�WKH�VPDUWSKRQH V�VKRRWHU�XVHOHVV��
��
&UHGLW��-RQDWKDQ�&KHQJ�
�� '(7$,/6
6XEMHFW� 6PDUWSKRQHV��&RPSHWLWLRQ��)LQDQFLDO�SHUIRUPDQFH��&RUSRUDWH�SURILWV��&RVWV��6DOHV�
3URILW�PDUJLQV
&RPSDQ\���RUJDQL]DWLRQ� 1DPH��=7(�&RUS��1$,&6����������1DPH��/HQRYR�*URXS��1$,&6����������1DPH�
*RRJOH�,QF��1$,&6��������
3XEOLFDWLRQ�WLWOH� :DOO�6WUHHW�-RXUQDO��2QOLQH���1HZ�<RUN��1�<�
3DJHV� Q�D
3XEOLFDWLRQ�\HDU� ����
3XEOLFDWLRQ�GDWH� $SU���������
6HFWLRQ� 7HFK
3XEOLVKHU� 'RZ�-RQHV� &RPSDQ\�,QF
3ODFH�RI�SXEOLFDWLRQ� 1HZ�<RUN��1�<�
&RXQWU\�RI�SXEOLFDWLRQ� 8QLWHG�6WDWHV��1HZ�<RUN��1�<�
3XEOLFDWLRQ�VXEMHFW� %XVLQHVV�$QG�(FRQRPLFV
6RXUFH�W\SH� 1HZVSDSHUV
/DQJXDJH�RI�SXEOLFDWLRQ� (QJOLVK
'RFXPHQW�W\SH� 1HZV
3UR4XHVW�GRFXPHQW�,'� ����������
'RFXPHQW�85/� KWWSV���VHDUFK�SURTXHVW�FRP�GRFYLHZ�����������"DFFRXQWLG �����
&RS\ULJKW� �F�������'RZ�-RQHV� &RPSDQ\��,QF��5HSURGXFHG�ZLWK�SHUPLVVLRQ�RI�FRS\ULJKW�RZQHU�
)XUWKHU�UHSURGXFWLRQ�RU�GLVWULEXWLRQ�LV�SURKLELWHG�ZLWKRXW�SHUPLVVLRQ�
/DVW�XSGDWHG� ����������
'DWDEDVH� 3UR4XHVW�&HQWUDO
3')�*(1(5$7('�%<�6($5&+�35248(67�&20 3DJH���RI��
'DWDEDVH�FRS\ULJKW�©������3UR4XHVW�//&��$OO�ULJKWV�UHVHUYHG� 7HUPV�DQG�&RQGLWLRQV &RQWDFW�3UR4XHVW
3')�*(1(5$7('�%<�6($5&+�35248(67�&20 3DJH���RI��