Table of Contents
TOC \o "1-3" \h \z \u 1.0 Executive Summary PAGEREF _Toc399195885 \h 22.0 Statement of Problem PAGEREF _Toc399195886 \h 23.0 Causes of the Problem PAGEREF _Toc399195887 \h 34.0 Decision Criteria and Alternative Solutions PAGEREF _Toc399195888 \h 45.0 Recommended Solution, Implementation and Justification PAGEREF _Toc399195889 \h 96.0 Conclusion PAGEREF _Toc399195890 \h 107.0 References PAGEREF _Toc399195891 \h 11
1.0 Executive SummaryBiovail Corporation is one of the largest publicly traded pharmaceutical companies. The company faces downgraded stock recommendation by a well-known pharmaceutical analyst. A number of other analysts were also scrutinizing the company. Biovail suffer loss in revenue and income when the company stated this incident is associated with a significant in-transit loss of Wellbutrin® XL which is the Biovail’s antidepressant product because of a traffic accident. However, the accounting practices are questionable to be too aggressive and been doubt by analyst. The analyst at Banc of America Securities (BAS) wants to give the best advice to his investment clients by write-up report on Biovail Corporation. 2.0 Statement of ProblemThere are several problems regarded to Biovail’s case which comprises of: How many truckloads of product are actually required to carry $10 million of product? Show your calculations. How should the company recognize revenue based upon the two possible FOB contract structures mentioned in the case? Why? How does the accident affect the stated revenues under the different FOB contract structures? Explain your reasoning. Are you concerned about the company’s treatment of analysts who cover the stock? Would you want to be the analyst covering this company?3.0 Causes of the ProblemThe problem arises when Biovail intend to keep their reputation and grading of their stock. Jerry Treppel who was Marris’s predecessor at BAS had downgrade his stock recommendation for Biovail and this resulted more...
References: BIBLIOGRAPHY Brady, D. (2003, October 8). What 's Really Banging Up Biovail? Retrieved from Bloomberg Business Week: http://www.businessweek.com/stories/2003-10-08/whats-really-banging-up-biovail
Carton, B. (2010, September 16). Flashback: Accounting for Biovail 's Truck Accident. Retrieved from Compliance Week: http://www.complianceweek.com/blogs/enforcement-action/flashback-accounting-for-biovails-truck-accident#.VCA2mvmSxP0
Chapman, C. (2009). Biovail Corporation: Revenue Recognition and FOB Sales Accounting. Harvard Business School Brief Cases, 1-9.
Huckman, M. (2008, March 24). Biovail 's Travails And The "Haunting" Truck Accident. Retrieved from CNBC: http://www.cnbc.com/id/23782262#.
Larcker, D. (2011). Retrieved from Stanford Graduate School Of Business: http://www.gsb.stanford.edu/sites/default/files/documents/03.Board%20Duties_1.pdf
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