MGT220H5 Chapter Notes - Chapter 2: Cash Flow, Financial Statement, Eaton Family
Document Summary
The t. eaton company (eaton"s) was a private canadian company that experienced cash flow problems and hired new management to turn the company around. The company then went public and the shares sold at . However, within months, the share price plummeted and sears bought out eaton"s when it was close to bankruptcy. The investors and potential investors: relied on the financial statements in deciding whether to invest or not. The management of the company: they may have had an interest in showing the company in a better light than in reality and use it for self-interest, such as bonus. When price fell, the management"s reputation is at risk and they may also face lawsuits. The eaton family (previous owner): stood to gain because of the higher share price at the time they took the company public. They would not have been affected by subsequent stock price declines once they had sold their share of the business.
