BWC Case Study: Financial Strategies After Hurricane Florence's Impact

This case study presents a scenario where the CFO of BWC, a company based in Wilmington, NC, faces a shortfall in earnings per share (EPS) after Hurricane Florence. The CFO must develop strategies to meet the previously announced EPS guidance of 90 cents, as the preliminary financial statements show only 60 cents. The assignment analyzes 15 different accounting scenarios and potential adjustments, evaluating their impact on EPS. These include capitalizing hurricane-related expenses, adjusting depreciation, deferring or accelerating expenses, managing revenue recognition, and addressing contingent liabilities. The goal is to explore various accounting techniques to influence EPS and meet market expectations, thereby avoiding a significant drop in the company's stock price. Each point presents a potential accounting treatment and its impact on the EPS, requiring the CFO to make strategic decisions based on accounting principles and market implications.