Caribou vs. Frazer

Topics: Corporate finance, Balance sheet, Stock market Pages: 6 (1437 words) Published: September 6, 2014
Running Head: Discuss Continued Case Study of Caribou Coffee vs. Fazer

TUI UNIVERSITY
Module Case 2
ACC 501: Accounting for Decision Making
Dr. Tara Murphy
March 10, 2014

This specific case study encompasses a comprehensive financial analysis of two very respectable companies, Caribou Coffee Company, Inc. and Fazer which is probably most known for its chocolate. In this assignment we will examine each organization’s most recent financial statements and balance sheets in order to determine; what components of stockholders’ equity do each of the companies disclose, does the companies have preferred stock shares outstanding, and if so, what special features do these shares contain, and does either of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares? Additionally, from the Income Statement, what are the basic and diluted earnings per share for each company, have the companies reported any discontinued operations, do the companies disclose any stock compensation plans? If so, are they reporting such plans under the fair value or intrinsic value methods? And finally, what was the value of compensation expense measured for any outstanding stock option plans? Stockholders’ Equity is the portion of the balance sheet that represents the capital received from investors in exchange for stock, also known as paid-in capital (investopedia.com). It is to a corporation what owner’s equity is to a sole proprietorship (accountingcoach.com) and it is one of the three main components of a corporation’s balance sheet. The two main sources of stockholders’ equity are the money that was originally invested in the company, along with any additional investments thereafter and retained earnings. The Fazer Group’s Shareholder’s equity consists of: Share Capital, which is a long term source of capital and in return for the investment, shareholders gains a share of the ownership of the company. Also listed is Paid-in capital fund, which is the amount, paid in by investors during common stock and preferred stocks issued. This represents the funds collected by the company from equity and not from “outgoing” operations. Also listed are Retained Earnings, which is the amount of net income during the life of the company and kept for use in the business. The Fazer Group also includes an account, called Profit for the financial year, which in this case, added an additional 34.4 Million Euros to their Shareholder’s Equity. The only explanation I was able to deduce is that this is their way to make an adjustment by the company on their “profit position and may exclude onetime charges or infrequent events” (investopedia.com, 2014). Fazer Group (in millions)

​Share Capital​​126.5
​Paid-in Capital​ 26.5
​Retained Earnings​329.0
​Profit​​​ 34.4
​Total​​​516.4
The Caribou Coffee Company’s components of the Stockholder’s Equity are: Common Stock, additional Paid-in capital or (Contributed Capital) minus the Accumulated deficit and No controlling interest. Common Stock votes to elect officers and establish governing rules and usually more than one class. Additional paid-in capital is the amount received for stock in additional to par value. It is often recorded on the balance sheet on a single line and represents all classes of stock. “No controlling interest is ownership stake in a corporation where the held position gives the investor no influence on how the company is run” (investopedia.com, 2014). Caribou Coffee (in thousands)

​Common Stock​208
​Paid-in capital​​132,643
​Accumulated deficit​(31,718)
​Total​​​101,133

Do the companies have preferred stock shares outstanding? If so, what special features do these shares contain? The Caribou Coffee Company has Preferred stock, par value $.01, 20,000 Shares authorized, and no shares issued and outstanding, according to their Consolidated Balance Sheet. (Sheet A) The Fazer Group has an...

References: Caribou Coffee Inc. Annual Review. (2014). Retrieved from, http://www.cariboucoffee.com/
Fazer Annual Review. (2012). Retrieved from, http://www.fazer.com
Financial Accounting Standards Board. (n.d.). Retrieved from, http://ww.asc.fasb.org
Financial Ratios formulae. (2014). retrieved from, http://www.college.com/business/ resources/casestudies/students/financial.htm
Investopedia.com (nd.) for treasury shares information retrieved from, http://www.investopedia.com/terms/t/treasurystock.asp
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