GB550: Unit 2 DQ 1 of 2
1. Use the 2002 Financial Statement data to replicate the Meyer's report calculations
that illustrate the following conclusion based on the 2001 data reached in the report:
eBay has never been profitable. Why? Why not?
As indicated in the case study, EBay has not at any time paid cash dividends on the company
stock. They intended to be persistent with maintaining company’s earnings to fund growth in the
future.
“After the proxy Meyer usually bounces to the cash-flow statement. Rather than looking
only at free cash flow, which is usually described as operating cash flow minus capital
spending minus dividends, he takes it one step further to arrive at his "unfettered free
cash flow," which takes into account the cost of making investors whole after employee
stock options are exercised” (Greenberg, 2003, para. 5).
Through the preparation of the unfettered free cash flow statement it reveals EBay’s capabilities
for purchasing back the worker stock alternatives if they were utilized immediately and how they
would not have the capability to pay the stock alternatives if they happen to be utilized
immediately.
2. Do you agree with Meyer's report concept of "unfettered" cash flow? Why? Why
not?
I am in agreement Meyer’s report concept of unfettered cash flow presently. From viewing the
data in the statements I am convinced by the sure executions for instance giving out shares to
workers who produce surplus shares. As I stated above if EBay attempted to re-buy the shares
they would be absent of free cash flow to accommodate. EBay could utilize some reorganization
of the company with a view to achieving greater efficiency and profit or to adapt to a changing
market. If the repurchasing of stock is want the business desires this would be necessary. The
repurchasing of stock with increased prices is not promising for the business’ prosperity. The
financial statement neglects to reveal the price to cover the cost of buying back the stock.
3. What other conclusions can you reach about the company from the case study?
Despite the fact that EBay appears lucrative by the financial statements as they obtain recent debt
and become larger they could be placing the company in harm’s way if they fail to start working
on the differently organizing their statements of finances. I can reach this conclusion because
Meyer has a specialty for raising red flags about a company’s accounting and their stock
(Greenberg, 2003). I consider him as a reliable source.
Investors in this company would have a problem with the financial reports, especially the
negative amounts of residual cash flows.
“The free cash flow numbers are interesting because these free cash flows, estimated by
Meyer, must be used by management to pay providers of capital. After one applies the
1. Use the 2002 Financial Statement data to replicate the Meyer's report calculations
that illustrate the following conclusion based on the 2001 data reached in the report:
eBay has never been profitable. Why? Why not?
As indicated in the case study, EBay has not at any time paid cash dividends on the company
stock. They intended to be persistent with maintaining company’s earnings to fund growth in the
future.
“After the proxy Meyer usually bounces to the cash-flow statement. Rather than looking
only at free cash flow, which is usually described as operating cash flow minus capital
spending minus dividends, he takes it one step further to arrive at his "unfettered free
cash flow," which takes into account the cost of making investors whole after employee
stock options are exercised” (Greenberg, 2003, para. 5).
Through the preparation of the unfettered free cash flow statement it reveals EBay’s capabilities
for purchasing back the worker stock alternatives if they were utilized immediately and how they
would not have the capability to pay the stock alternatives if they happen to be utilized
immediately.
2. Do you agree with Meyer's report concept of "unfettered" cash flow? Why? Why
not?
I am in agreement Meyer’s report concept of unfettered cash flow presently. From viewing the
data in the statements I am convinced by the sure executions for instance giving out shares to
workers who produce surplus shares. As I stated above if EBay attempted to re-buy the shares
they would be absent of free cash flow to accommodate. EBay could utilize some reorganization
of the company with a view to achieving greater efficiency and profit or to adapt to a changing
market. If the repurchasing of stock is want the business desires this would be necessary. The
repurchasing of stock with increased prices is not promising for the business’ prosperity. The
financial statement neglects to reveal the price to cover the cost of buying back the stock.
3. What other conclusions can you reach about the company from the case study?
Despite the fact that EBay appears lucrative by the financial statements as they obtain recent debt
and become larger they could be placing the company in harm’s way if they fail to start working
on the differently organizing their statements of finances. I can reach this conclusion because
Meyer has a specialty for raising red flags about a company’s accounting and their stock
(Greenberg, 2003). I consider him as a reliable source.
Investors in this company would have a problem with the financial reports, especially the
negative amounts of residual cash flows.
“The free cash flow numbers are interesting because these free cash flows, estimated by
Meyer, must be used by management to pay providers of capital. After one applies the
