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Master Case Assignment 2

Master Case Assignment 2 - CEG GSB 703 Master Case...

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CEG GSB 703 Master Case Assignment #2 Adam Ohanesian Email: [email protected] Table of Contents I. Risks and benefits for shareholders for Anacomp’s new product development strategy a. Evaluation b. Loan c. RTS associates goes bankrupt II. Anacomp’s accounting influenced by new product development a. Capitalizing research and development b. Revenue III. Cash flow performance vs. accounting performance a. Statement of cash flows b. My evaluation IV. My assessment of Anacomp’s future 1. Evaluate Anacomp’s new product development strategy. What are the risks and benefits of this strategy for Anancomp’s shareholders? The new software system development strategy, if initiated today would be an off balance sheet entity. Although the intention of Anacomp’s management was to shield the company’s
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stockholders from the financial risks involved in the project, some issues regarding the limited partnership does seem to have made the risk absorbed by the stockholders increase. For example, notice that the $2.2 million Anacomp received from the limited partnership from RTS associates, as a partial payment for the development fee of $6 million appears to have come mostly from the $2.2 million loan extended by Anancomp. Even though this loan was guaranteed by the limited partners, Anacomp stockholders would still stand to lose a significant
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Master Case Assignment 2 - CEG GSB 703 Master Case...

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