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Hanson and ICI assignment




Question;in may 1991, Hanson, the United Kingdom's;most notoriously acquisitive corporation, purchased a 2.8 percent stake in ICI;the United Kingdom's largest manufacturer and the world's fourth-largest;chemical corporation. Amid speculation about the possibility of a takeover bid;the comparative performance of the two companies was a significant issue;because of the claims of the respective management concerning their relative;efficiency and success.;From an accounting perspective, it is;possible to assess performance in terms of both U.S. and U.K. GAAP because;Hanson and ICI are listed in the United States and are required by the SEC;under Form 20-F, to provid reconciliation data. The comparative data below show;net income and shareholder's equity data for the period 1998-2002 in accordance;with both U.K. and U.S. GAAP, together with the data for long-term debt.;Calculate the ?conservatism? index;and returns on equity for Hanson and ICI for the period 1998?2002 under both;U.K. and U.S. GAAP.;Does it appear that U.S. GAAP is more or less conservative than U.K. GAAP? What;could be the main reasons for this?;To what extent do the results affect your assessments of comparative corporate;performance?;Calculate the debt-equity (leverage or gearing) ratio for both corporations;under both U.K. and U.S. GAAPs.;To what extent are the results likely to affect your assessment of the;comparative riskiness of investing in Hanson and ICI?


Paper#50407 | Written in 18-Jul-2015

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