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Vitessa and the Dot-Com Bubble
Hugh Grove
published: 2006 | Case Study | Accounting/Finance
Subject Area: Accounting/Finance
Key Issues: Corporate Financing; Pro-forma Financial Statements; Cash Burn Rates; Business Valuation Methods
Case Description: The students are placed in the role of the Chief Financial Officer (CFO) who must try to save Vitessa from looming bankruptcy by putting together additional financing. First, students assess the reasonableness of the assumptions used for the pro-forma financial statements. Second, students calculate Vitessa’s cash burn rate to determine when Vitessa will run out of money without additional financing. Third, students apply business valuation methods to Vitessa to see if additional financing is feasible. Fourth, students review Vitessa’s existing equity and debt financing for impacts on possible additional financing alternatives for Vitessa. Finally, students make their financing recommendations to try to save Vitessa from potential bankruptcy or liquidation.
# Case Pages: 13
Case Number: 020031-23-3
Teaching Note: Yes
revised May 24/06
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