The case for Le Beau Footwear, which is based on actual events, examines the financial and legal decisions concerning a privately held Canadian retailer whose leased premises and entire inventory were destroyed by a suspicious fire in 1990. The focus of the case is on determining the monetary value of the lost profits that resulted from the insurer's delays in paying the indemnified amount. Within this context, this case provides a rich and comprehensive example of the application of the accounting return on investment (ROI) and the market-based opportunity cost of capital (OCC) techniques for valuation of a privately held firm. Further, the case demonstrates a sharp example of applying the results from previous studies of initial public offering (IPO) and small firm effect to make valuation adjustments that reflect the retailer's private ownership status and its small size. This case is intended for use in advanced accounting and finance courses in M.B.A., M.S. in Accountancy, and M.S. in Finance programs.

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