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虽然知道离Busiess020 的最后考试还有一段时间。但是贴出来给大家先有个映像,别到考试的时候抱佛脚。我还会陆续贴出History028E的去年考试卷子。9 W1 c* u6 q6 P/ x4 G! s
{' F8 y, q$ |7 \+ r7 {GM Overview
l3 \! D; t- X/ f5 A/ t4 W# ]• Role, Timing, Issues/Decisions, C&Cs" C( Y* k; C* j/ \7 `5 H
• Objectives, o) V, @4 h( y( N& X4 ~$ O- D
– What do we “WANT” to do?3 z4 d2 z) J7 s" D
• External Analysis
' q2 _/ w' [& l- `4 J* g# @6 B– What do we “NEED” to do?
3 d+ \& \+ d% R# A# s7 h& l– PEST, Consumer, Competition, Trade. P+ h5 F1 W( L8 r- C
• opportunities & threats
( K9 p4 i$ x# X) t$ o5 s– IMPLICATIONS: KSFs
! h! }( M) \) m5 w, W' I8 Z• Internal Analysis2 {# {# j1 K5 }5 P6 F
– What “CAN” we do?5 j+ {% |# v1 d$ w3 h+ J
– Finance, Marketing, Ops, HR. c6 P2 t# }9 ~0 V. X9 R. @
• abilities, strengths & weaknesses! T3 W! c# U7 q: i
– IMPLICATIONS: KSFs, CORPORATE CAPABILITIES4 A F' Z0 e+ X# P' }8 v
Q# t9 D; {& k5 r2 l
• Alternative Evaluation
, z* o4 @9 m6 {, b– What are the options?
$ y$ y5 y( p7 F2 {– Evaluate the pros & cons of the options
$ u" u: o8 S2 U2 z: p: w8 f– How does this option “FIT”?
( C) |' _6 f4 y6 x– (you may be able to eliminate options based exclusively on the poor “FIT”qualitatively - if so, make sure you explain why this option was nixed)
* A+ A$ A! q7 b6 x8 m( j– Financial Feasibility (of AT LEAST 2-3 options that might “work”) + O, Q# P' d4 p
- w, O. R, j9 Y+ Y! l
• Decision4 @! V3 m) y/ J
– Justify why you chose a particular option(s).5 h" {9 ~ p- ^- K' F2 w' }1 F
– YOU SHOULD BE CONVINCING& _3 P; K9 M+ ~, m4 n5 O- |9 ^
• Which strategy best meets the firm’s objectives?: b' @$ j0 Z& I' N% A# f- Q
• Does it satisfy the personal objectives as well?5 u! J9 M# f/ |% j
• Have you addressed the cons of the chosen alternative?/ S: r) P' G `3 t
• Is this decision consistent with the analysis you’ve done? EXPLAIN! (FITS)
5 Q! M) ?% H) f• Why NOT the other options?
, M/ i9 X* o* q+ R5 Q• How does this choice affect Finance, Marketing, Ops and HR? What changes
% L8 L7 \- e( r5 q9 wneed to be made?
- s8 A: @1 t; i& G# t, S% Z6 m
' z! H3 D! }, w/ L; Y* K$ _% ~8 j• Action Plan" V) k* b) N0 [7 A2 q& @
• Map out a clear and precise implementation plan which includes;
/ Q0 S! G9 o6 x9 p# b- r$ A– details which address what steps you have to take to implement your
: p- a7 c+ k1 \% wdecision
# l% O& J0 O1 B9 W* e" V" ~– details about timing
# l0 }( m1 n1 X– details about WHO will be responsible for accomplishing the ‘task’
. E& y' `& @4 W/ ~ W4 B– how will you follow-up your plan (measure success); G/ _& y# i& d6 D" L
– make sure to consider both the short term and long term
( K' \$ [( Z9 ~5 i, ]' C
. ?. B6 p2 ]/ f1 C n9 EFirm Valuation
; h* f6 B5 a4 r+ `6 ?• Used to help managers determine the “price” of a company.
! k/ p2 v! X0 m- a• 3 methods of valuing a firm;
4 |; a7 t1 e& J1 A% Z– Net Book Value
# F. e+ l7 L0 e, w2 X L" ~2 W2 g– Economic Appraisal6 z& I9 a+ V$ Y3 C4 G
– Capitalization of Earnings
/ k) B+ ~3 ~$ w! e) s• Using all 3 methods (if possible) helps us to determine a RANGE of what the
# U/ Q# Q4 \( O/ ^' v' acompany is worth.: X7 a! g9 ]) s, Q$ r
• THINK!!! What are you really selling? Will anyone pay for it? How much will they pay???
) t" R4 e: T1 g$ b/ a7 W* e' [
4 m, y+ \7 U5 J; R: w; { Net Book Value (NBV)! b2 w$ e+ K3 b+ b5 {
– Total Assets - Total Liabilities
& E$ T0 @* A' S; v/ q• a.k.a.. the equity
6 E5 h% c# ?9 p' U& X/ h– Does not account for the present market value of the assets
7 F7 Z$ h& g' O# Q: C' q+ Z; H– Calculated using the most recent given balance sheet
* p. |9 i9 j0 I. x– Preferred method for banks, creditors, and/or buyers who are interested in selling off the assets of the business4 N+ O; ^7 H% J# @, U* M
# h0 O6 B3 T+ r" O2 O- B, b. g
Economic Appraisal (EA)$ O3 H1 B! M$ L1 r" Z. ?) b: U
– Similar to NBV, but tries to reflect the current market value of the assets
- ~4 u4 W, e( p0 J- S– Total Appraised Assets – Total Liabilities
# m; g: \( b) u– Preferred by buyers who are interested in a company for its assets
+ p/ R4 r% s/ d2 W4 `. u, a Q+ g" f' U/ F" @$ |
Capitalization of Earnings (CE)
3 d) }; D# `5 X7 |– Focuses on the I/S instead of the B/S: L2 `# v, X( n7 Q
• Attempt to value the company in terms of the future income it may provide.$ p3 k7 t! R/ q* ]
– NPAT * P/E ratio = value* T% U# e% b5 B& o' \+ @0 e8 u# \
– Must evaluate two different earnings figures (to determine risk & range)) P+ z* b. ]* \8 R* a) d
• Assuming changes (projected statement)
! [8 s$ y; a" I6 B• Assuming no changes (current given I/S)+ J" _1 ~# F7 ]
– Select a reasonable P/E multiple
4 X7 G3 H9 P6 n0 k2 J– Preferred by buyers interested in the ongoing operation of the company (i.e.taking over as management)
8 W/ a, U3 U5 Y( J& c" |' y# e1 b7 \3 U& h4 M6 w
• P/E Multiple, H! l$ L$ P- J( ]/ ^
– Rules of thumb;
; K; |' y; Y& Q$ g! g• Mature industries with stable earnings tend to have multiples
9 @2 O5 F' j9 P9 i9 G4 _- ]from 5 to 15.
" M- b7 g- M' }+ ~9 z• High growth industries tend to have multiples exceeding 20.
* H# ^. d: S9 X* x• “Growth is good; risk is rotten!”7 c' f3 C" A/ k4 w
– growth increases a multiple# o1 |& U8 `. p. C, E$ r$ R
– risk decreases a multiple
$ T( p9 q+ U3 A: ^* Z+ A' e+ w5 C% w. N: J/ `* w1 p
Their Associated Ratios% B8 ~. o8 Z/ ?
• Profitability;, e9 l% W E# L" Q
– Business goal - to make $$
4 f# e4 b4 E" C; _6 Z* Y4 ~ m0 U$ V– Ratios measures how much money we had to spend to make $X in sales
! I3 }6 R! X- ?( e4 r2 ]• Stability;
8 K) i+ K5 T( ~$ r– Business goal - to have a stable financial structure (balance its ownership of assets with debt and equity)# k, C! u4 D1 y0 S3 i
– Ratios measure the firm’s means of financing assets and ability to pay interest on debts
' f2 i& l- X9 z8 R/ L) }2 u+ B8 p5 w; V$ q# F3 u
5 Financial Goals &Their Associated Ratios
1 w4 `. T6 [1 w* s( W4 g • Liquidity;
+ Q3 L' `4 F4 t1 f– Business goal - ability to meet s-t obligations. k# W" G% ?7 h2 F+ T9 C) d
– Ratios measure how liquid the firm is (how able the firm is to pay its shortterm
! Y" S. v3 D) r& _! F8 ~" Mobligations)! N# W- v. u8 l
• Efficiency;& h8 y# ]6 s: L
– Business goal - to efficiently use assets
% c# _" O2 c! |$ H0 B4 U– Ratios tell us how efficiently we are using our investments
* V2 P+ u4 w+ Y' o8 h( ~5 g" q
- p9 s, x2 y c, V6 m6 {" ^• Growth;
+ P3 F! W' y0 g0 [– Business goal - to increase in size$ `1 O% I% |$ Y- y, R4 x! B
– Ratios tell us whether the company is achieving any growth+ n9 s. ?# ~% N6 V; C' ?
9 Q6 T$ R/ N% y7 |% @& I. i9 N4 i: N) K
Interpreting the Ratios8 F8 C) X: C" P2 S! T) g8 S
• Profitability;
: G1 x2 S. h' q5 a: |0 J2 d– Vertical Analysis (of I/S)
# y& d! a+ g. Q( X7 bI/S items * 100 = %
5 O! N; ]! s k6 ]. U3 c+ S Sales
- v% ^0 J( s$ J" O; W• Tells us it cost us X% of sales to make those sales8 ^( R8 J/ @' [" K9 q$ {: D
– Return on Investment/Equity
' G& i' Y% f5 T; E/ G# U% JProfit ATB4D = %
' _$ {- _1 w& J( `Average Equity
- D# ^! t; |- }2 u" c[(Yr. 1 E + Yr. 2 E)/2]
; y+ j5 \) g0 u+ a d5 q& t• Tells us how much profit we made relative to the investment made by the owners0 Y$ r% }+ s& l! g
% K% Y1 F8 o5 ~" m( s4 N• Stability;
. M/ J% J% @6 b" @- h– Net Worth: Total Assets
3 g8 }4 _8 A; Q: eTotal Equity = %
, p+ i2 E# h/ L' RTotal Assets
; K# m1 G M1 S. G, z. O• tells us what % of assets were financed through owner’s money
p4 m" J% y% N7 `# y– Debt to Assets
' ~& i' H7 h+ D9 w0 I& xTotal Debt = % : N; T. G; \, X2 \; q! D& N. G
Total Assets
5 w+ x4 }# t6 D4 @ Y5 F) a$ r• Tells us what % of the assets were financed through debt; X6 P9 a% R2 a: T |
– Interest Coverage
6 c8 D; `& K! S0 r- { EBIT = # times
. [, y5 S; y: g/ @5 l4 QInterest Expense
7 G3 Y! T7 F; Y! U- z9 p& E• tells us how many times we can pay interest
. X5 R7 y4 q8 c- C
7 {) d9 F% D0 ]• Liquidity;
2 D2 S1 U1 D5 c– Current Ratio; i! a; K0 g2 {9 N8 [: E; F
Current Assets = X:1& r7 J; ?$ [, `4 V; B- \2 A
Current Liabilities/ P0 u0 W+ o( Z. ?/ H
• Tells us, if we liquidated all our current assets, how many times we can pay our debts3 V; v6 M3 b% z2 N
RULE OF THUMB: 2:1
3 I' h$ h& G$ R6 T$ u– Acid Test
# `$ U2 w4 p1 D9 {* { Z0 p ^Cash + M/S + A/R = X:1% A8 O2 ?. ^7 J8 Y- t7 _
Current Liabilities
& |0 \6 |# W' m4 `• Tells us how many times we can pay our debts with the money easily available to us8 q n( u9 R6 O1 z) Q; p1 {, s
RULE OF THUMB: 1:15 M$ M/ \1 q" l. W1 D2 b- T
* q( W9 s7 t, Z5 g3 a; g# e! ?
– Working Capital
. Q s9 c9 I; H* O5 DC.A - C.L = $X% y8 M" v2 p! C6 k! F- C
• Tells us how much money we have to work with AFTER s-t debts are paid
6 P, f8 P. `- v2 s' ^' k. O
5 F% ^2 a2 y5 c' wEfficiency;' l( e- j+ E% U
– Age of Receivables
) H4 f( u: x6 eAccounts Receivabl = # Days
: ^4 I2 d u, c9 D' G (Sales / 365)
% F: l- u ~+ ?1 A- w9 h$ Q• Tells us how long it takes us to collect our $$7 F: D# z# u1 |+ O% I+ s
- G5 J# ?* W6 H. A, Z/ c– Age Of Payables
* \$ Q% Q! G: S3 {1 d2 rAccounts Payable = # Days0 f1 I! @* f, ^: J8 p# v6 {+ }
(Purchases* / 365)
! K9 P" s; f0 H+ _" k• Tells us how long it takes us to pay our bills
7 {0 t: J7 e' A$ [" q) V9 L- h
* T6 M3 s2 h7 Y0 T2 s- r: j$ N, e– Age of Inventory
4 h _% [* ^; c4 w% N# T Inventory = # Days
9 w: B6 P# \4 }4 ?8 R(COGS / 365)
2 B" G" `1 y" R. L• Tells us how long we are holding on to our inventory in the warehouse' L6 ~6 |: ~4 ]7 r0 S9 u5 j3 T
- ^0 T; X" I* h- b& r, q% y2 `• Growth;0 V* Z/ e2 h' j. f; I. V+ ~& P) }
– Sales
5 `. D! x2 `+ D/ S5 r i0 m– Net Income. w- h2 t7 k0 B" _
– Total Assets3 J4 Y) i5 e" ?- v! ~: a$ J5 @
– Equity& c8 x0 f2 u5 T2 }+ G! z: Q* |
Yr. 2 - Yr. 1 = %' h5 U3 u# w* t1 h9 i# A1 x
Yr. 10 O+ a2 b% l% B: }3 J
• Tells us whether the accounts are growing (and hence the company)& i* n/ j9 K6 y
; o% [9 H% C# c
Understanding Ratios
4 u; k' G# K4 r A. i• DO NOT CONCLUDE THAT “THE RATIO IS GOOD/BAD”( e7 @" |$ R9 o% n, q1 R
• Either the NUMERATOR or the DENOMINATOR affects the ratio" w: }& `9 O2 t! ^9 t3 d
• Ask yourself: “WHY HAS THE RATIO CHANGED & WHAT DOES THIS MEAN?”3 t: W+ E2 n K0 ~; l; n- f
– Which number caused the change?( h0 R) F% D; d7 H$ ]7 ^
– Look for increasing or decreasing trends over time.6 g3 O! p1 [0 \0 S* J; R9 d
– Will these trends continue?" a O: X" e k- b7 e
– How does the company compare to the industry?
/ x- {1 }# i- l/ V/ a
4 b {8 H- ^, q6 ^9 L
0 j# V- D7 }! h- u6 iClassifying Costs! j( J% g& F' Z H# l7 C. `
• Variable Costs
. _3 K; B0 T5 r# \; u– a cost incurred with every unit sold/produced (volume)
# J0 r5 h9 C8 @2 \3 Z7 _% F2 E• Fixed Costs
3 G4 |5 d( g/ F+ b7 G3 ?9 V– cost that does not vary with volume |
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