Just answer the last question

QUESTIONS 021 Building Shareholder Value. Describe at least three ways that corporate managers can build shareholder value (increase their firm's share price). Rank-order the various managerial actions you identified according to their effectiveness in building shareholder value. Be prepared to justify your rank-ordering. Litigation Disclosure. Mylan NV. the maker of EpiPens (an allergy treatment), was the subject of a probe in 2017 by the Department of Justice because they classified EpiPens as generic. By using the generic clas- sification, it was alleged that Mylan was able to overcharge Medicaid by over $1 billion. Later, the SEC filed a lawsuit against Mylan for not informing investors about the probe from the Department of Justice. How should Mylan have disclosed the EpiPen-related lawsuits in its 2017 annual report? Basic Versus Diluted Earnings per Share. In its 2019 annual report, Apple, Inc., reported that its basic earnings per share were $11.97 per share while its diluted earnings per share were $11.89 per share. Discuss the factors that might cause the number of shares used in the calculation of earnings per share to increase and thus, cause diluted earnings per share (EPS) to be less than basic earnings per share. Which measure do you feel is me important to shareholders-basic EPS or diluted EPS? Why? Assessing the Quality of Reported Earnings Using Cash Flow Data. Below, you will find a graph of Enron's operating cash flows versus its net income in the years leading up to the company's downfall. You will notice that Enron's income differs quite a bit from its operating cash flows for every year in the chant What could account for the differences? Some users of financial statements use differences between net income and cash flows (particularly operating cash flows) as a rough indicator of how reliable net income is Wha is your opinion of the reliability of Enron's income based on the chart below? 1 Below is the underlying data from anon's financial statements socially reported the low from operations to net income is at the bottom of the table. Does it seem plausible that the com can have pter 3 Menu Cow and Cambridge Business Publishers 6.000 Enron Corp Change in Operating Cash Flows vs. N 5.000 4.000 3.000 2.000 1.000 O 12/31/2000 12/31/1990 12/31/1990 Net Income Net cash flows from operating active 12/31/1997 such a large increase in the ratio in 20002 12/31/1999 4.58 Reported Annual Cash Flow 12/31/2000 12/31/1990 Net income 12/31/1997 $ 979 Net cash flows from operating activities $899 703 4,779 $ 105 CFFO/Not income 1.228 1.640 211 1.38 2.39 2.01 3.5 Earnings Announcements and Share Prices. It is common to see share prices of a co the announcement of good news from the company, such as positive carings. However, always increase with earnings announcements. For example, in October of 2019, McDonald stock dropped 5 percent following its quarterly earnings announcement even though the per share. Discuss why an earnings announcement may lead to a share price increase.be share price decline as experienced by McDonald's 6 Managing Earnings. Some members of the financial community allege that age" their company's reported accounting results. Discuss the possible Can you envision a situation where a manager might manage a company Impairment Losses. In October of 2019, Schlumberger announced a 127 loss, SIO billion was related to goodwill. Goodwill is the excess pandora net assets. Goodwill is impaired if the carrying value of the unit i the $12.7 billion dollar impairment loss (and a $11.4 billion overall impairment loss was announced. Why might this be the ne Special Charges. On September 11, 2001. Two America terrorist attacks on The World Trade Center in New consequence of these actions. AMR Corporation its fleet of aircraft had become impaired and 2001 net income and an additional si dhe Discuss how these special channel cumstances associated with the charges be included in the Impairment of God QUESTIONS 021 Building Shareholder Value. Describe at least three ways that corporate managers can build shareholder value (increase their firm's share price). Rank-order the various managerial actions you identified according to their effectiveness in building shareholder value. Be prepared to justify your rank-ordering. Litigation Disclosure. Mylan NV. the maker of EpiPens (an allergy treatment), was the subject of a probe in 2017 by the Department of Justice because they classified EpiPens as generic. By using the generic clas- sification, it was alleged that Mylan was able to overcharge Medicaid by over $1 billion. Later, the SEC filed a lawsuit against Mylan for not informing investors about the probe from the Department of Justice. How should Mylan have disclosed the EpiPen-related lawsuits in its 2017 annual report? Basic Versus Diluted Earnings per Share. In its 2019 annual report, Apple, Inc., reported that its basic earnings per share were $11.97 per share while its diluted earnings per share were $11.89 per share. Discuss the factors that might cause the number of shares used in the calculation of earnings per share to increase and thus, cause diluted earnings per share (EPS) to be less than basic earnings per share. Which measure do you feel is me important to shareholders-basic EPS or diluted EPS? Why? Assessing the Quality of Reported Earnings Using Cash Flow Data. Below, you will find a graph of Enron's operating cash flows versus its net income in the years leading up to the company's downfall. You will notice that Enron's income differs quite a bit from its operating cash flows for every year in the chant What could account for the differences? Some users of financial statements use differences between net income and cash flows (particularly operating cash flows) as a rough indicator of how reliable net income is Wha is your opinion of the reliability of Enron's income based on the chart below? 1 Below is the underlying data from anon's financial statements socially reported the low from operations to net income is at the bottom of the table. Does it seem plausible that the com can have pter 3 Menu Cow and Cambridge Business Publishers 6.000 Enron Corp Change in Operating Cash Flows vs. N 5.000 4.000 3.000 2.000 1.000 O 12/31/2000 12/31/1990 12/31/1990 Net Income Net cash flows from operating active 12/31/1997 such a large increase in the ratio in 20002 12/31/1999 4.58 Reported Annual Cash Flow 12/31/2000 12/31/1990 Net income 12/31/1997 $ 979 Net cash flows from operating activities $899 703 4,779 $ 105 CFFO/Not income 1.228 1.640 211 1.38 2.39 2.01 3.5 Earnings Announcements and Share Prices. It is common to see share prices of a co the announcement of good news from the company, such as positive carings. However, always increase with earnings announcements. For example, in October of 2019, McDonald stock dropped 5 percent following its quarterly earnings announcement even though the per share. Discuss why an earnings announcement may lead to a share price increase.be share price decline as experienced by McDonald's 6 Managing Earnings. Some members of the financial community allege that age" their company's reported accounting results. Discuss the possible Can you envision a situation where a manager might manage a company Impairment Losses. In October of 2019, Schlumberger announced a 127 loss, SIO billion was related to goodwill. Goodwill is the excess pandora net assets. Goodwill is impaired if the carrying value of the unit i the $12.7 billion dollar impairment loss (and a $11.4 billion overall impairment loss was announced. Why might this be the ne Special Charges. On September 11, 2001. Two America terrorist attacks on The World Trade Center in New consequence of these actions. AMR Corporation its fleet of aircraft had become impaired and 2001 net income and an additional si dhe Discuss how these special channel cumstances associated with the charges be included in the Impairment of God