Colorscope Inc Case Study Analysis Apa

Case | HBS Case Collection | June 2017

AT&T Versus Verizon: A Financial Comparison

V.G. Narayanan and Joel L. Heilprin

This case asks students to prepare a report comparing the financial and operating performance of AT&T and Verizon. Taking the perspective of a communications industry analyst, they must also consider the differences between and implications of the companies' business strategies and the differences between the technology and growth rates of the wireless and wireline business segments. As part of this exercise, students reorganize the balance sheets in terms of operating and financial components, calculate changes in working capital, derive unlevered free cash flow (FCF), and apply DuPont style ratios and margin analysis on a consolidated—as well as a segment—basis. Students must also consider the effects of actuarial gains and losses on operating results and how analysts might adjust for those effects. The case was designed for first-year MBA students in financial statement analysis (FSA) and accounting classes, but it could also be used in other courses to prepare for discounted cash flow (DCF) exercises.

Keywords: Financial Statements; Operations; Analysis; Business Model; Accounting; Performance Effectiveness; Telecommunications Industry;

COLORSCOPE, INC I. Summary 1. Company History Andrew Cha – Andy – was born in Anhui, China, 1938. In 1967, he inmigrated to the USA. Through fortune and hard work, cha found jobs that took advantage of his artistic skills in draftsmanship and photography. On March 1, 1976, he established Colorscope Inc, as a special – effects photography laboratory serving local advertising agencies in Southern California. His Saatchi, Grey Advertising, and J.Walter Thompson and large retailing and entertainment companies such as The Walt Disney company and R. H. Macy & Co. During 1988, Donnelley was interested in acquiring Colorscope for approximately $10 million. The interest in Colorscope was twofold, 1 st , Cha had built solid relationships with highly valuable print & pre-press buyers in the market place and 2 nd , cha’s operation was considered one of the most efficient in the business. But he disagreed and decided against the sale of his company. While serving his existing base of high-margin clients, Cha ignored certain trends in the business, particularly the price pressures. As these devices increased in functionality, small ad agencies and print shops began to take pieces of business away from Colorscope. Cha, however, had felt protected from the trend by the strong personal relationships he had built with

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