Financial Restatement Paper

In October 2010, Puma AG announced they would restate their financial statements. They found the accounting error during an independent audit of the company. The reason for the restatement was due to a series of criminal acts that resulted in faulty numbers on the initial report. Numbers were corrupted to allow certain individuals to profit from the company during this period of time. Due to the accounting error, the company went through immediate financial decline. The day that the company announced the restatement would be done, the stock went down 2.1%. This obviously had a tremendous effect on the shareholders of the company. Not only did the stock price fall, but the company ended up losing about $162 million from the restatement of the financial statements. By restating these statements, the shareholders were on the receiving end of an immediate decline. Though the restatement was for 2009, this had an immediate effect on the company in 2010. The company currently is working on a plan to try to recover completely from the restatement, but the goal of the plan is to have the growth they expected to have been caught up by 2015. Not only did this affect the company, but due to the costs that were involved, the company was set back by 6 years. While the company has also grown from the time of the announcement in 2010, the stock fell a great percentage while the restatement was occurring.

Puma AG did still see growth during the 2010 fiscal year. The sales of the company continued to go up and the company did have other companies that did have growth to help overcome some of the costs from the restatement. But the stock price, which was already down from the recession, fell farther. Puma decided to purchase their own stock, but this was something they had been doing every year. They did purchase additional stocks during this time to try to offset some of the negative growth for the company. While this did help offset the downturn, it had a great impact on...