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Case
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Reference no. W24571
Published by: Ivey Publishing
Originally published in: 2021
Version: 2021-08-26
Length: 14 pages
Data source: Published sources

Abstract

Jane Zhou, an equity analyst at a large asset management firm, was preparing a report on EOS Imaging (EOS), a French medical device company that her firm had invested in. EOS's drastic fall in First Quarter (Q1) 2019 revenue caught Zhou's attention, as the company had maintained a continuous growth record up until 2018. In Q1 2019, EOS only achieved 1 per cent of its Q1 2019 equipment sales revenue. Also, during Q1, EOS made a significant change to its general sales agreement, leading to a corresponding change in revenue recognition timing. Zhou wondered if the revenue slowdown could be mainly attributed to the accounting method change rather than to weakening demand. It was crucial for Zhou to understand the impact of this change and to decide whether she should recommend her portfolio manager to liquidate the firm's position in EOS or not.

Teaching and learning

This item is suitable for undergraduate and postgraduate courses.
Location:
Size:
Medium
Other setting(s):
2019

About

Abstract

Jane Zhou, an equity analyst at a large asset management firm, was preparing a report on EOS Imaging (EOS), a French medical device company that her firm had invested in. EOS's drastic fall in First Quarter (Q1) 2019 revenue caught Zhou's attention, as the company had maintained a continuous growth record up until 2018. In Q1 2019, EOS only achieved 1 per cent of its Q1 2019 equipment sales revenue. Also, during Q1, EOS made a significant change to its general sales agreement, leading to a corresponding change in revenue recognition timing. Zhou wondered if the revenue slowdown could be mainly attributed to the accounting method change rather than to weakening demand. It was crucial for Zhou to understand the impact of this change and to decide whether she should recommend her portfolio manager to liquidate the firm's position in EOS or not.

Teaching and learning

This item is suitable for undergraduate and postgraduate courses.

Settings

Location:
Size:
Medium
Other setting(s):
2019

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