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Scenario 1: You’ve invested in a car manufacturer. For each of the following events, indicate whether it will be positive or negative for the business.
Competitor develops a fully electric model at 20% lower cost:
Scenario 1: You’ve invested in a car manufacturer. For each of the following events, indicate whether it will be positive or negative for the business.
Government invests heavily in public transport to reduce traffic congestion and carbon emissions:
Scenario 1: You’ve invested in a car manufacturer. For each of the following events, indicate whether it will be positive or negative for the business.
After a deadly pandemic, fear of contagious diseases persists:
Scenario 2: You’ve invested in a commercial bank. For each of the following events, indicate whether it will be positive or negative for the business.
Economic downturn leads to rise in payment delinquencies:
Scenario 2: You’ve invested in a commercial bank. For each of the following events, indicate whether it will be positive or negative for the business.
Bank raises capital beyond the minimum requirement:
Scenario 2: You’ve invested in a commercial bank. For each of the following events, indicate whether it will be positive or negative for the business.
Bank rolls over troubled loans to avoid damaging its balance sheet:
Scenario 2: You’ve invested in a commercial bank. For each of the following events, indicate whether it will be positive or negative for the business.
New peer-to-peer lending platform attracts growing interest from savers and businesses:
Scenario 2: You’ve invested in a commercial bank. For each of the following events, indicate whether it will be positive or negative for the business.
Bank adopts new guidelines for performance-linked pay: performance will be assessed over 10 years and adjusted for risks taken:
Scenario 2: You’ve invested in a commercial bank. For each of the following events, indicate whether it will be positive or negative for the business.
Book value of banks understates the real value of property the bank owns:
Scenario 3: You’ve invested in a medical technology firm. For each of the following events, indicate whether it will be positive or negative for the business.
The U.S. Food and Drug Administration (FDA) approves use of the newest drug developed by the firm:
Scenario 3: You’ve invested in a medical technology firm. For each of the following events, indicate whether it will be positive or negative for the business.
Government improves prescription benefits for the elderly:
Scenario 3: You’ve invested in a medical technology firm. For each of the following events, indicate whether it will be positive or negative for the business.
Company announces breakthrough in the treatment of parasitic infections:
Scenario 3: You’ve invested in a medical technology firm. For each of the following events, indicate whether it will be positive or negative for the business.
Leading pharmacy chain agrees to promote new painkiller of the firm in exchange for discounts on bulk purchases:
Scenario 3: You’ve invested in a medical technology firm. For each of the following events, indicate whether it will be positive or negative for the business.
Sales increased in the last quarter while the sole distributor reports a big jump in inventories:
Scenario 4: Mark has worked for 30 years in marketing at a consumer goods company. He’s approached by Denise, a friend who is a dental assistant and has an idea for a new dental care product. Mark is considering to enter a partnership with Denise and invest £100k in a start-up. They envisage contract manufacturing in China.
Indicate for each of the following factors whether they are strengths or weaknesses of the business idea.
Industry contacts:
Scenario 4: Mark has worked for 30 years in marketing at a consumer goods company. He’s approached by Denise, a friend who is a dental assistant and has an idea for a new dental care product. Mark is considering to enter a partnership with Denise and invest £100k in a start-up. They envisage contract manufacturing in China.
Indicate for each of the following factors whether they are strengths or weaknesses of the business idea.
Industry expertise:
Scenario 4: Mark has worked for 30 years in marketing at a consumer goods company. He’s approached by Denise, a friend who is a dental assistant and has an idea for a new dental care product. Mark is considering to enter a partnership with Denise and invest £100k in a start-up. They envisage contract manufacturing in China.
Indicate for each of the following factors whether they are strengths or weaknesses of the business idea.
Manufacturing prowess:
Scenario 4: Mark has worked for 30 years in marketing at a consumer goods company. He’s approached by Denise, a friend who is a dental assistant and has an idea for a new dental care product. Mark is considering to enter a partnership with Denise and invest £100k in a start-up. They envisage contract manufacturing in China.
Indicate for each of the following factors whether they are strengths or weaknesses of the business idea.
Product range:
Scenario 4: Mark has worked for 30 years in marketing at a consumer goods company. He’s approached by Denise, a friend who is a dental assistant and has an idea for a new dental care product. Mark is considering to enter a partnership with Denise and invest £100k in a start-up. They envisage contract manufacturing in China.
Indicate for each of the following factors whether they are strengths or weaknesses of the business idea.
Advertising budget:
Scenario 5: Angelina has worked as a insurance actuary for 15 years. She has an idea for an app that uses algorithms to help individuals and businesses identify key risk areas and design insurance plans accordingly. She figure it will take around £50,000 to hire coders and develop a beta-version. She wants to team up with an insurance company and earn commissions on policies they sell through her app.
Indicate for each of the following factors whether they are strengths or weaknesses of the business idea.
Need for the product:
Scenario 5: Angelina has worked as a insurance actuary for 15 years. She has an idea for an app that uses algorithms to help individuals and businesses identify key risk areas and design insurance plans accordingly. She figure it will take around £50,000 to hire coders and develop a beta-version. She wants to team up with an insurance company and earn commissions on policies they sell through her app.
Indicate for each of the following factors whether they are strengths or weaknesses of the business idea.
Distribution channels:
Scenario 5: Angelina has worked as a insurance actuary for 15 years. She has an idea for an app that uses algorithms to help individuals and businesses identify key risk areas and design insurance plans accordingly. She figure it will take around £50,000 to hire coders and develop a beta-version. She wants to team up with an insurance company and earn commissions on policies they sell through her app.
Indicate for each of the following factors whether they are strengths or weaknesses of the business idea.
Business model:
Scenario 6: Consider a manufacturing company with the following financial statement:
| INCOME STATEMENT | |
| Selling volume | 1000 units |
| Sales revenue | £100,000 |
| Cost of good sold | £40,000 |
| General & administrative | £25,000 |
| Depreciation | £10,000 |
| Net finance costs | £5,000 |
| Income tax | £10,000 |
| Net income | |
| Dividends | £5,000 |
| BALANCE SHEET | |
| Land and buildings | £200,000 |
| Equipment | £150,000 |
| Inventories | £30,000 |
| Accounts receivable | £20,000 |
| Cash | £10,000 |
| Long-term debt | £150,000 |
| Short-term debt | £50,000 |
| Accounts payable | £20,000 |
| Equity |
Calculate the gross profit:
Scenario 6: Consider a manufacturing company with the following financial statement:
| INCOME STATEMENT | |
| Selling volume | 1000 units |
| Sales revenue | £100,000 |
| Cost of good sold | £40,000 |
| General & administrative | £25,000 |
| Depreciation | £10,000 |
| Net finance costs | £5,000 |
| Income tax | £10,000 |
| Net income | |
| Dividends | £5,000 |
| BALANCE SHEET | |
| Land and buildings | £200,000 |
| Equipment | £150,000 |
| Inventories | £30,000 |
| Accounts receivable | £20,000 |
| Cash | £10,000 |
| Long-term debt | £150,000 |
| Short-term debt | £50,000 |
| Accounts payable | £20,000 |
| Equity |
Calculate the net profit margin:
Scenario 6: Consider a manufacturing company with the following financial statement:
| INCOME STATEMENT | |
| Selling volume | 1000 units |
| Sales revenue | £100,000 |
| Cost of good sold | £40,000 |
| General & administrative | £25,000 |
| Depreciation | £10,000 |
| Net finance costs | £5,000 |
| Income tax | £10,000 |
| Net income | |
| Dividends | £5,000 |
| BALANCE SHEET | |
| Land and buildings | £200,000 |
| Equipment | £150,000 |
| Inventories | £30,000 |
| Accounts receivable | £20,000 |
| Cash | £10,000 |
| Long-term debt | £150,000 |
| Short-term debt | £50,000 |
| Accounts payable | £20,000 |
| Equity |
Calculate the retained earnings:
Scenario 6: Consider a manufacturing company with the following financial statement:
| INCOME STATEMENT | |
| Selling volume | 1000 units |
| Sales revenue | £100,000 |
| Cost of good sold | £40,000 |
| General & administrative | £25,000 |
| Depreciation | £10,000 |
| Net finance costs | £5,000 |
| Income tax | £10,000 |
| Net income | |
| Dividends | £5,000 |
| BALANCE SHEET | |
| Land and buildings | £200,000 |
| Equipment | £150,000 |
| Inventories | £30,000 |
| Accounts receivable | £20,000 |
| Cash | £10,000 |
| Long-term debt | £150,000 |
| Short-term debt | £50,000 |
| Accounts payable | £20,000 |
| Equity |
Calculate the total assets:
Scenario 6: Consider a manufacturing company with the following financial statement:
| INCOME STATEMENT | |
| Selling volume | 1000 units |
| Sales revenue | £100,000 |
| Cost of good sold | £40,000 |
| General & administrative | £25,000 |
| Depreciation | £10,000 |
| Net finance costs | £5,000 |
| Income tax | £10,000 |
| Net income | |
| Dividends | £5,000 |
| BALANCE SHEET | |
| Land and buildings | £200,000 |
| Equipment | £150,000 |
| Inventories | £30,000 |
| Accounts receivable | £20,000 |
| Cash | £10,000 |
| Long-term debt | £150,000 |
| Short-term debt | £50,000 |
| Accounts payable | £20,000 |
| Equity |
Calculate the net worth:
Scenario 6: Consider a manufacturing company with the following financial statement:
| INCOME STATEMENT | |
| Selling volume | 1000 units |
| Sales revenue | £100,000 |
| Cost of good sold | £40,000 |
| General & administrative | £25,000 |
| Depreciation | £10,000 |
| Net finance costs | £5,000 |
| Income tax | £10,000 |
| Net income | |
| Dividends | £5,000 |
| BALANCE SHEET | |
| Land and buildings | £200,000 |
| Equipment | £150,000 |
| Inventories | £30,000 |
| Accounts receivable | £20,000 |
| Cash | £10,000 |
| Long-term debt | £150,000 |
| Short-term debt | £50,000 |
| Accounts payable | £20,000 |
| Equity |
Calculate the long term debt-to-equity ratio:
Scenario 6: Consider a manufacturing company with the following financial statement:
| INCOME STATEMENT | |
| Selling volume | 1000 units |
| Sales revenue | £100,000 |
| Cost of good sold | £40,000 |
| General & administrative | £25,000 |
| Depreciation | £10,000 |
| Net finance costs | £5,000 |
| Income tax | £10,000 |
| Net income | |
| Dividends | £5,000 |
| BALANCE SHEET | |
| Land and buildings | £200,000 |
| Equipment | £150,000 |
| Inventories | £30,000 |
| Accounts receivable | £20,000 |
| Cash | £10,000 |
| Long-term debt | £150,000 |
| Short-term debt | £50,000 |
| Accounts payable | £20,000 |
| Equity |
Calculate the current ratio:
Scenario 6: Consider a manufacturing company with the following financial statement:
| INCOME STATEMENT | |
| Selling volume | 1000 units |
| Sales revenue | £100,000 |
| Cost of good sold | £40,000 |
| General & administrative | £25,000 |
| Depreciation | £10,000 |
| Net finance costs | £5,000 |
| Income tax | £10,000 |
| Net income | |
| Dividends | £5,000 |
| BALANCE SHEET | |
| Land and buildings | £200,000 |
| Equipment | £150,000 |
| Inventories | £30,000 |
| Accounts receivable | £20,000 |
| Cash | £10,000 |
| Long-term debt | £150,000 |
| Short-term debt | £50,000 |
| Accounts payable | £20,000 |
| Equity |
Which of the following is a potential weakness of the company:
Scenario 6: Consider a manufacturing company with the following financial statement:
| INCOME STATEMENT | |
| Selling volume | 1000 units |
| Sales revenue | £100,000 |
| Cost of good sold | £40,000 |
| General & administrative | £25,000 |
| Depreciation | £10,000 |
| Net finance costs | £5,000 |
| Income tax | £10,000 |
| Net income | |
| Dividends | £5,000 |
| BALANCE SHEET | |
| Land and buildings | £200,000 |
| Equipment | £150,000 |
| Inventories | £30,000 |
| Accounts receivable | £20,000 |
| Cash | £10,000 |
| Long-term debt | £150,000 |
| Short-term debt | £50,000 |
| Accounts payable | £20,000 |
| Equity |
What could the company do to improve its financial position?
Scenario 6: Consider a manufacturing company with the following financial statement:
| INCOME STATEMENT | |
| Selling volume | 1000 units |
| Sales revenue | £100,000 |
| Cost of good sold | £40,000 |
| General & administrative | £25,000 |
| Depreciation | £10,000 |
| Net finance costs | £5,000 |
| Income tax | £10,000 |
| Net income | |
| Dividends | £5,000 |
| BALANCE SHEET | |
| Land and buildings | £200,000 |
| Equipment | £150,000 |
| Inventories | £30,000 |
| Accounts receivable | £20,000 |
| Cash | £10,000 |
| Long-term debt | £150,000 |
| Short-term debt | £50,000 |
| Accounts payable | £20,000 |
| Equity |
If the unit price falls to £90 while everything else is unchanged, what are the implications?