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The Hardest Cycle Climb at TCC : A Financial Instruments Case

  • TCC AG is a fast-growing bicycle production company and is headed by an ambitious top management team that wants to reinforce the firm’s expansion strategy with a sophisticated financial funding scheme. However, combined with an income decline, the financing strategy unexpectedly poses an existential threat to TCC. Complex accounting questions arise including the likely breach of a financial covenant, the detailed contractual clauses of a prospectus and the execution of a debt-for-equity swap. The underlying accounting requirements cover the recognition, the measurement and the disclosures of non-derivative financial instruments according to the International Financial Reporting Standards (IFRS). To foster a holistic understanding of financial instruments, the educational resource further combines the accounting concepts with related corporate finance theory. With this integrative approach, the case intends to encourage students’ critical reflection upon the far-reaching economic consequences resulting from accounting decisions.

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Document Type:Working Paper
Author:Josefine Boehm, Daniel Voll, Henning ZülchORCiD
Chairs and Professorships:Chair of Accounting and Auditing
Series (Serial Number):HHL-Arbeitspapier / HHL Working paper (160)
Issue:February 2017
Year of Completion:2017
Page Number:27
Content Focus:Academic Audience
Licence (German):License LogoUrheberrechtlich geschützt