To maximize their effectiveness, colour cases should be printed in color. State Street Corp. reports a 13% increase in EPS in 2008 amidst a world-wide monetary catastrophe. 59% are declined by the stock price on the day of the earnings report. This one day decline was exceeded in the preceding 12 month period by just one non-bankrupt S&P 500 firm. That business was AIG, Inc. which dropped 61% on the day Lehman Brothers declared insolvency.
While State Street reported $5.0 billion in gains over the 4-year period 2005-2008, the company also confirmed $10.0 billion in after tax mark to market losses on its "available for sale" investment portfolio and the investment portfolios of its conduits. The query is, how has the firm performed over the previous four years? Fair value accounting plays a vital role in the dilemma. How should a financial services firm measure and report income in the face of illiquid and disorderly markets for its principal assets?
State Street Corporation case study solution
PUBLICATION DATE: March 23, 2009 PRODUCT #: 209112-HCC-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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