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On 2/21/2019, Kraft Heinz Co. announced that it wrote down the goodwill value of its Kraft and Oscar Mayer brands by $15.4 billion. Companies record
On 2/21/2019, Kraft Heinz Co. announced that it wrote down the goodwill value of its Kraft and Oscar Mayer brands by $15.4 billion. Companies record goodwill as an asset on their books when they buy a business for more than the value of its book assets. The buyers must review the fair value of their reporting units each year and, if that figure is less than the amount on the balance sheet, impair the goodwill. Also, the company disclosed that it was under investigation by received a subpoena from the Securities and Exchange Commission regarding its accounting practices of the procurement department, and decided to cut its quarterly dividends to 40 cents per share from 62.5 cents and considered selling off some of its businesses to help pay down debt. Kraft Heinz shares plunged nearly 25 percent the next day after the announcement. According to your research on Kraft Heinz Co, please discuss the following questions: What is Kraft Heinz's financial position? What challenges is the company facing? What are the conditions that contributed to the decline in Kraft Heinz's goodwill? Why is there some concern about the company's internal controls? Do you think the write-down or the disclosure of an investigation by federal securities regulators, or the slashing of its dividend had the most significant impact on Kraft Heinz stock? Explain
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