Chapman International is firm which provides services for corporations, individuals and institutions by helping all of them to develop their individual, professional and marketplace influences. Over the past years, firm was operating very well and positive results were visible. They were known for stock growth but today they are facing the problem. Last year their earnings were high and their fourth quarter was very strong. In the first quarter they had 52 cents per share in the last year and now it looks like they are going to have 47 cents per share. This indicates that they preliminary figures for the first quarter are not good. They put a lot of effort to last quarter in order for stock price to climb and also they did some things that badly influenced on next year, such as cutting …show more content…
Now they are in very nervous market. Through analysis they concluded that because they wanted to have higher earnings last year, they defer some costs. When they did this, they immediately made obligations for the next year, so that means that they have to pay now both defer costs and normal costs (or costs from this year), and because of that first quarter earnings are less than the last year's. Other problem is related to their overseas operations, because they are falling, while regular operations are on track. Earlier, they purchased Brazilian dividends but because of legal problems, purchase of dividend became limited. Next problem is related to Grazzini company because Chapman wanted all of Grazzini's full year profits to be included in their full year's results. But at the end it seems that Grazzini are just poor bookkeepers who created problems for inventories and receivables. Inventories were damaged and receivables bad debt reserves were too low. Due to some changes in the dollar relative to many overseas currencies they may at the end of the year lose