Summer Technology, Inc. (the Company) is a fast‐growing high‐technology firm and is facing many pressures, including those related to financial reporting. Financial analysts, however, are optimistic about the future of the Company. The firm is about to report its first annual profit, and the preliminary unreported results are just short of the analysts' consensus annual earnings forecast. This case requires financial analysis to evaluate a number of judgments involved in preparing financial statements and to prepare a recommendation to management with respect to reported earnings per share. The case's learning objectives are: (1) to increase understanding and exposure to the integration of financial reporting decisions with financial statement analysis, (2) to help students understand how business decisions impact reporting, (3) to demonstrate how decisions may be influenced by pressures to manage earnings and produce desirable financial results, and (4) to raise ethical issues in an accounting setting.
