Off-Balance Sheet Financing at Big 5 Sporting Goods Corporation Harvard Case Solution & Analysis

Katka Suvarinova, financial analyst Southern Cross LLC, and a recent MBA graduate, was asked to prepare an analysis of recent Big 5 Sporting Goods Corporation's financial performance, as well as an analysis of its accounting practices. Big 5 was a West Coast chain of sports equipment and clothing outlets, with 398 stores at the end of 2010. After investment report Deutsche Bank maintained Hold rating and a new price target of $ 13 per share, Big 5, the Southern Cross decided to look at the company as a possible addition to its portfolio of shorts. Shorts Fund includes companies that Southern Cross is believed to have moved to a substantial share price falls on the basis of fundamental analysis. Portfolio manager of the Southern Cross Suvarinova asked to pay close attention to the company's accounting practices and, in particular measures that the company had significant off-balance sheet debt, which was not uncommon in the retail industry. Retailers often leased many of their stores, and not to buy sockets with borrowed money. Her program MBA, Suvarinova reminded that, in accordance U.S. Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), certain lease were not presented as a debt on the balance sheet of the company. "Hide
by Graeme Rankine Source: Thunderbird School of Global Management 17 pages. Publication Date: 09 Oct 2012. Prod. #: TB0309-PDF-ENG

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