...Case Review: Rohm and Haas 11/4/2010 Background 2 1983: $2B worldwide sale from 4 segments Kathon microbiocide products: $25M Polymers, resins, and monomers Industrial chemicals Plastics Fluid Process chemicals Specialty chemicals Kathon 886 MW Thayer School of Engineering Agricultural chemicals Petroleum chemicals Kathon MWX 11/4/2010 Background 3 Metalworking fluid: 60 million gallons in the US Biocides kill microorganisms in metalworking fluids Product name Treatment capacity Market potential Sale Volume Actual sale during 1st five month Thayer School of Engineering K 886 MW K MWX 1,000 gal 50-100 gal reservoirs $18M $20M $5.4M (1983) $0.2M (target in 1984) $2.1M $12,000!!! 11/4/2010 Optimistic Prospects for MWX 4 Great market potential ($38M) Maintenance biocides likely to gain market share Several advantages: • Easy to use • No maintenance • Safe • Higher effectiveness • Large customer surplus Thayer School of Engineering 11/4/2010 ... But it doesn‘t sell! 5 Lack of need recognition for biocides Lack of brand awareness among end consumers Lack of MWX awareness Lack of awareness of the benefits of MWX Lack of incentives for distributors to sell MWX Thayer School of Engineering 11/4/2010 End-User EVC of Kathon MWX 6 Compare costs incurred by end-user who does and does not use Kathon MWX Not Using MWX Using MWX Fluid Concentrate Purchase $ $ Fluid Disposal $ $ Risk of Fluid Disposal % % EVC ...
Words: 1251 - Pages: 6
...Angelica Acevedo Week 1 - Information Systems Strategy Triangle Step 1: Create lists of case details that fit each side of the triangle. Step 2: Then look at each item and think about how that item affects the other sides of the triangle. Step 3: Take a look at the industry. Make a list of triangle attributes you find. Compare the industry items with the case company items. Step 1: Create lists of case details that fit each side of the triangle. Step 2: Then look at each item and think about how that item affects the other sides of the triangle. Step 3: Take a look at the industry. Make a list of triangle attributes you find. Compare the industry items with the case company items. Information Strategy Information Strategy Organizational Strategy Organizational Strategy Business Strategy Business Strategy Business Strategy Elements | Organizational Strategy Elements | Information Strategy Elements | New collection at start of each season | Changes color, cut, fabrics and other details throughout season | POS terminals not connected store to store or to headquarters | Less IT spending | Tries to understand, through its network of stores, not just what people are buying, but also, what they want to buy. | Use dial up modems to send daily sales and inventory orders | Introduce 11,000 new garments per year | Lead time from inception to delivery, of garment, can be as short as 3 weeks | IT staff of 50 – less than .5% of revenue | | No advertising – used...
Words: 1206 - Pages: 5
...institutes etc. * Only Basic and Dearness allowance should be considered as wages for the purpose of Gratuity. * Gratuity payment formula: Example: If an employee leave company after 10 years and his last Basic + Dearness allowance is 10000 then his gratuity will be paid as per following formula. (10000/26)*15* 10 Please note that above formula will remain same irrespective of employee working in 5 days a week establishment. FAQ 1: Can an employee claim Gratuity even before completion of 5 years? Yes, An employee can claim gratuity even before completion of 5 years in followings cases: * Death (to his nominees) * Disablement But the quantum of gratuity will be as per act. FAQ 2: Can employer forfeit Gratuity, even if employee has completed 5 years? Yes, employer can forfeit gratuity even if employee has completed 5 years in following cases: * If the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or * If the service of such employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment. Please note that above act should have been committed by employee during his employment. There should be a proper enquiry held after which employee was found guilty for aforesaid act or misconduct. Once proved guilty, employer should issue termination...
Words: 2148 - Pages: 9
...Table of Contents 1.0 Abstract 2 2.0 Introduction 2 3.0 Questions and answer 4 4.0 Recommendations 14 5.0 References 15 1.0 Abstract Biovail Corporation, a large pharmaceutical company and had applied advanced drug-delivery technologies to improve the clinical effectiveness of medicines. It is recently had its stock downgraded by a well-known pharmaceutical analyst and a number of other analysts were also scrutinizing the company. The outcome was not favorable, as Biovail's acquisition methods were labeled as unethical and their accounting practices were questioned. An investor with the company must decide if she will continue to invest in a company that has been identified with low ethical standards. 2.0 Introduction Biovail Corporation was one of Canada’s largest publicly traded pharmaceutical companies. Its products commercialized both directly in Canada and through strategic partners (internationally). The company was very expert in the development and large scale of manufacturing of pharmaceutical products. Besides that, Biovail’s stock had listed on both the Toronto and New York stock exchanges. Biovail filed annual reports to the U.S. SEC and prepared financial statements in accordance with both U.S. and Canadian generally accepted accounting principles (GAAP). Biovail Company engaged activities on enhance formulate of the existing drugs, clinical testing, manufacture and commercial pharmaceutical products and utilized advanced drug delivery...
Words: 2326 - Pages: 10
...4011 APRIL 7, 2009 CRAIG CHAPMAN Biovail Corporation: Revenue Recognition and FOB Sales Accounting Background Late on October 9, 2003, David Maris, an analyst at Banc of America Securities (BAS), was trying to interpret the shocking events of the previous few days and finish the write-up of his first report on the Canadian pharmaceutical firm, Biovail Corporation. Maris didn’t like what he saw at the company, but he never liked writing “Sell” recommendations. In any event, he wanted to make sure he was giving the best advice to his investment clients. Biovail Corporation was one of Canada's largest publicly traded pharmaceutical companies.1 For many years, Biovail had applied advanced drug-delivery technologies to improve the clinical effectiveness of medicines. The company commercialized its products, both directly (in Canada) and through strategic partners (internationally). Historically, its main therapeutic areas of focus had been central nervous system disorders, pain management, and cardiovascular disease. Biovail's core competency was its expertise in the development and large-scale manufacturing of pharmaceutical products. It leveraged this expertise by focusing on (1) enhanced formulations of existing drugs, (2) combination products that incorporated two or more different therapeutic classes of drugs, and (3) difficult-to-manufacture generic pharmaceuticals. In the United States, Biovail distributed a number of pharmaceutical products. These included Zovirax®...
Words: 3888 - Pages: 16
...than having fraud conducting of revenue recognition, Biovail Corporation also has overestimated the amount of Wellbutrin XL on the truck. The company estimated that revenue associated with this shipment was in the range of $10 million and $20 million and confirmed that the manufacturing cost value of this shipment had been fully insured. The trooper estimated that the truck was about one-quarter full. After the investigation done, the analyst stated if there had been $20 million worth of Wellbutrin XL pills on the truck, it would have been full or nearly full. In addition, Biovail Corporation also has expired of Legacy product patents. The Legacy product portfolio included the well-known brands Cardizem CD, Ativan, Vasotec, Vaseretic and Isordil. These products were not actively promoted by Biovail and represented non-core assets for which patent protection had expired. However, sales of Cardizem CD have represented 40% of product sales at Biovail. Biovail Corporation also having problem in report the revenue because it based on channel stuffing. Channel stuffing is the action sends the distributor more product than they are able to sell in order to increase earning. Distributors hold the excessive amount of product. The conflict of the self-interest is the one of the issue that will be arise as the CEO of the company has the share in Biovail Corporation. Recommendation Have the code of ethics. Biovail Corporation should have the code of ethics in it management. In calculating...
Words: 486 - Pages: 2
...4011 APRIL 7, 2009 CRAIG CHAPMAN Biovail Corporation: Revenue Recognition and FOB Sales Accounting Background Late on October 9, 2003, David Maris, an analyst at Banc of America Securities (BAS), was trying to interpret the shocking events of the previous few days and finish the write-up of his first report on the Canadian pharmaceutical firm, Biovail Corporation. Maris didn’t like what he saw at the company, but he never liked writing “Sell” recommendations. In any event, he wanted to make sure he was giving the best advice to his investment clients. Biovail Corporation was one of Canada's largest publicly traded pharmaceutical companies.1 For many years, Biovail had applied advanced drug-delivery technologies to improve the clinical effectiveness of medicines. The company commercialized its products, both directly (in Canada) and through strategic partners (internationally). Historically, its main therapeutic areas of focus had been central nervous system disorders, pain management, and cardiovascular disease. Biovail's core competency was its expertise in the development and large-scale manufacturing of pharmaceutical products. It leveraged this expertise by focusing on (1) enhanced formulations of existing drugs, (2) combination products that incorporated two or more different therapeutic classes of drugs, and (3) difficult-to-manufacture generic pharmaceuticals. In the United States, Biovail distributed a number of pharmaceutical products. These included ...
Words: 3888 - Pages: 16
...Weaknesses of Biovail 3 RECOMMENDATIONS 4 CONCLUSION 5 INTRODUCTION Biovail corporation was one of Canada’s largest publicly traded pharmaceutical companies. Biovail is a specialty pharmaceutical company engaged in the formulation, clinical testing, registration, manufacture and commercialization of pharmaceutical products, utilizing advanced drug-delivery technologies. The company currently has over 20 distinct, proprietary drug-delivery technologies and has access to other technologies through licensing agreements with development partners. In September 2010, the stockholders of Biovail Corporation and Valeant Pharmaceuticals International voted in favour of combining the two companies to become one under the Valeant name. The new combined company is known as Valeant Pharmaceuticals International, Inc. and its shares are traded on both the New York Stock Exchange and the Toronto Stock Exchange. In the case, on September 30, 2003, a truck of Biovail carrying a shipment to Biovail’s Distributor, was involved in a multi-vehicle traffic accident near Chicago. David Maris found that Biovail intentionally and falsely attributed nearly half of its failure to meet its third quarter 2003 earnings guidance to a truck accident. Biovail intentionally misstated both the effect of the accident on Biovail’s third quarter earnings as well as the value of the product involved in the truck accident. In fact, the accident had no effect on third quarter earnings. Besides, Biovail applied FOB...
Words: 2292 - Pages: 10
...4011 APRIL 7, 2009 CRAIG CHAPMAN Biovail Corporation: Revenue Recognition and FOB Sales Accounting Background Late on October 9, 2003, David Maris, an analyst at Banc of America Securities (BAS), was trying to interpret the shocking events of the previous few days and finish the write-up of his first report on the Canadian pharmaceutical firm, Biovail Corporation. Maris didn’t like what he saw at the company, but he never liked writing “Sell” recommendations. In any event, he wanted to make sure he was giving the best advice to his investment clients. Biovail Corporation was one of Canada's largest publicly traded pharmaceutical companies.1 For many years, Biovail had applied advanced drug-delivery technologies to improve the clinical effectiveness of medicines. The company commercialized its products, both directly (in Canada) and through strategic partners (internationally). Historically, its main therapeutic areas of focus had been central nervous system disorders, pain management, and cardiovascular disease. Biovail's core competency was its expertise in the development and large-scale manufacturing of pharmaceutical products. It leveraged this expertise by focusing on (1) enhanced formulations of existing drugs, (2) combination products that incorporated two or more different therapeutic classes of drugs, and (3) difficult-to-manufacture generic pharmaceuticals. In the United States, Biovail distributed a number of pharmaceutical products. These included ...
Words: 4152 - Pages: 17
...UNIVERSITI UTARA MALAYSIA COLLEGE OF BUSINESS FIRST SEMESTER SESSION 2013/2014 BKAL3063 INTEGRATED CASE STUDY GROUP F (2) CASE 3: BIOVAIL CORPORATION - REVENUE RECOGNITION AND FOB SALES ACCOUNTING PREPARED FOR: AMIN BIN ALI PREPARED BY: GAN PEI WEN 205401 SARA LEE HWEI MEI 206998 THEH JIA HUI 207133 JUMAIAH BINTI YASIN 207827 AISHA ANUAR 207919 DATE OF SUBMISSION: 21st OCTOBER 2013 TABLE OF CONTENTS INTRODUCTION 1 ISSUES 1 QUANTITATIVE ANALYSIS 2 QUESTION 1 2 QUALITATIVE ANALYSIS 3 QUESTION 2 3 QUESTION 3 4 QUESTION 4 5 RECOMMENDATION 6 CONCLUSION 6 REFERENCE 7 INTRODUCTION Biovail Corporation is one of the largest Canadian pharmaceutical companies, public traded on the New York Stock Exchange. The company’s products are commercialized and distributed locally (in Canada) and internationally through strategic partners. Biovail applies advanced technology on drug delivery, focusing on several main therapeutic areas such as central nervous system disorder, pain management, and cardiovascular disease. Biovail utilizes its expertise in development and large scale manufacturing, by focusing on enhanced formulations of existing drugs, combination products which use different drug classes, and difficult-to-manufacture generic pharmaceuticals. David Maris is an analyst at Banc of America Securities (BAS), assigned to cover on Biovail’s stocks. Maris did not like what he saw at the company, but neither did he like giving...
Words: 1874 - Pages: 8
...11 INTRODUCTION Biovail Corporation was one of the Canada’s largest pharmaceutical publicly traded companies which expert in the development and large scale of manufacturing of pharmaceutical products. Biovail Company engaged activities on enhance formulate of the existing drugs, clinical testing, manufacture and commercial pharmaceutical products and utilized advanced drug delivery technologies. This company had listed on the Toronto and New York Stock Exchange (NYSE). In the case, on September 30, 2003 there was a truck carrying a shipment of Wellbutrin® XL from Biovail’s manufacturing facility in Manitabo to Biovail’s Distributor, North Carolina was involved in a multi-vehicle traffic accident near Chicago. The company announced that the loss of the quarterly earnings which target by $260 million is because of the truck accident happened that contributed a significant unfavourable variance where the company estimated that revenue of the truck that involved in accident was in the range of $10 million to $20 million. There are several issues that addressed in this case which included accounting policy based on the revenue recognition; how Biovail Corporation should account the sales based on two different “Freight On Board” (FOB) point which are FOB Shipping point and FOB Destination point, and ethic of earning management where Biovail is suspected might significantly overestimate the value of the product that involved in the truck accident due to Biovail fail to meet its...
Words: 2643 - Pages: 11
...To find out how many truckloads of product are required to carry $10 million of product, we need to calculate the revenue from one tablet without mark-up for Distributor as well as wholesaler margin. X + 4X + 0.35X = 2.83 1X+ 4X + 0.35X = 2.83 5X + 0.35X = 2.83 5.35X = 2.83 X= 0.52 e) The revenue from all tablets that could fit into a trailer is: 127, 500, 000 X 0, 52 = 66, 300, 000 f) How many truckloads of product are required to carry $10 million of product: 10,000,000 / 0, 52 = 19,230,769 tablets According to calculation $10 million of product could be fit into the truck. 2. How should the company recognize revenue based upon the two possible FOB contract structures mentioned in the case? Why? In the case they mentioned two possible FOB contract structures: FOB shipping point and FOB destination. Biovail’s chief financial officer, Brian Crombie, told analysts that Biovail’s contract with the Distributor had title change in Manitoba when it left the shipping dock (FOB shipping...
Words: 977 - Pages: 4
...Financial Accounting MFAB, July 2016 Assignment for Biovail Corporation Due before 8.30 am, Sunday, July 31, 2016 Please answer the following questions: 1. What is the manufacturer revenue per pill?1 How many pills equate to $10m in revenue? What is the volume of $10m worth of pills? How many truckloads are required to carry $10 million worth of pills? Show your calculations. (5 points) 2. How should the company recognize revenue based on each of the two possible FOB contract structures mentioned in the case? Explain. (4 points) 3. How does the accident affect third-quarter revenue under the two possible FOB contract structures? Explain. (4 points) 4. What should Maris do? (2 points) Your group’s responses to these questions should be typewritten and about 1-2 pages long (single-spaced), excluding any tables. Each group should present its own work and not rely on the work of any other group or any previous analyses of the Biovail Corporation Case. In addition, your answers should be based only on information provided in the case. A clarifying note on terminology: The case uses the terms “mark-up” and “margin.” Both these terms measure the difference between a product’s price and its cost, but they do it relative to different benchmarks. For “markup,” the price-minus-cost numerator is divided by cost. For “margin,” the price-minus-cost 1 A hint: the cost to the retailer is $2.83 per tablet, i.e., this constitutes the price at which the wholesaler sells...
Words: 312 - Pages: 2
...Plaintiff SECURITIES AND EXCHANGE COMMISSION New York Regional Office 3 World Financial Center New York, NY 10281 (212) 336-1120 UNITED STATES DISTRICT COURT -SOUTHERNDISTRICT OF NEW YORK SECURITIES AND EXCHANGE COMMISSION, Plaintiff, 08 Civ. ECF CASE BIOVAIL CORPORATION, EUGENE N. MELNYK, BRIAN CROMBIE, JOHN MISZUK, and KENNETH G. HOWLING, Defendants. COMPLAINT Plaintiff Securities and Exchange Commission, for its Complaint against Defendants Biovail Corporation ("Biovail" or the "Company"), Eugene N. Melnyk, Brian Crombie, John Miszuk and Kenneth G. Howling (collectively, "Defendants"), alleges as follows: SUMMARY OF ALLEGATIONS 1. This case involves chronic fraudulent conduct - including financial reporting fraud and other intentional public misrepresentations - by Biovail Corporation, a Canadian pharmaceutical company whose common stock is traded on the New York and Toronto stock exchanges. Obsessed with meeting quarterly and annual earnings guidance, Biovail's executives repeatedly overstated earnings and hid losses in order to deceive investors and create the appearance of achieving that goal. And, when it ultimately became impossible to continue to conceal the Company's poor performance, Biovail actively misled investors and analysts as to its cause. This corrupt strategy was employed by Biovail's most senior officers: Eugene Melnyk, former chairman and chief executive officer; Brian Crombie, former chief financial officer; Jo,hn Miszuk, vice...
Words: 14976 - Pages: 60
...[pic] SCHOOL OF ACCOUNTANCY UNIVERSITI UTARA MALAYSIA FIRST SEMESTER 2014/2015 (A141) COURSE CODE : BKAL3063 COURSE : INTEGRATED CASE STUDY PRE-REQUISITE : BKAF3073 FINANCIAL ACCOUNTING & REPORTING IV 1. SYNOPSIS This is a capstone course for the accountancy programs, which integrates knowledge from financial accounting & reporting, management accounting, taxation, audit, finance, management and business–related, information technology and other social sciences courses. Experiential exercises are embedded in this course to support learners’ effort in independent learning. 2. OBJECTIVES This course is designed to enable learners to integrate knowledge from the various related disciplines and to enhance their technical core competencies and their problem solving skills in the unstructured business environment. 3. LEARNING OUTCOMES Upon completion of the course, students are able to: i) interprete various accounting and business related issues in an organisational context. ii) undertake independent research. iii) develop alternative solutions to issues, devise action plans, and resolve implementation issues. iv) communicate ideas, views and recommendations effectively both verbally and in writing. v) demonstrate awareness of ethical considerations as part of the decision making process. vi) demonstrate leadership and teamwork in issues...
Words: 1126 - Pages: 5
