STRATEGIC MANAGEMENT & BUSINESS POLICY 12TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER

Case method- provides the opportunity to move from a narrow, specialized view that emphasizes functional techniques to a broader, less precise analysis of the overall corporation Prentice Hall, Inc. ©2009

Researching the Case Situation Don’t go beyond the decision date of the case in your research unless instructed to do so Sources of information: Hoover’s Company annual and 10-K reports Prentice Hall, Inc. ©2009

Researching the Case Situation Ratio analysis- the calculation of ratios from data on financial statements Liquidity ratios Profitability ratios Activity ratios Leverage ratios Prentice Hall, Inc. ©2009

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Analyzing Financial Statements Review historical income statements and balance sheets Compare historical statements over time Calculate changes that occur in individual categories form year to year Determine the change as a percentage Adjust for inflation Prentice Hall, Inc. ©2009

Common size statements- financial statements in which the dollar figures have been converted into percentages Prentice Hall, Inc. ©2009

Altman’s Z Value bankruptcy formula- calculate the likelihood of going bankrupt. Compare historical statements over time Index of sustainable growth- used to determine whether a company embarking on a growth strategy will need to take on debt to fund the growth Prentice Hall, Inc. ©2009

Useful Economic Measures Constant dollars- dollars adjusted for inflation Prime interest rate- the rate of interest banks charge on their lowest risk loans Gross domestic product- measures total output of goods and services within a country’s borders Prentice Hall, Inc. ©2009

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Why should you begin a case analysis with a financial analysis? When are other approaches appropriate? What are common-size financial statements? What is their value to case analysis? How are they calculated? When should you gather information outside a case by going to the library or using the Internet? What should you look for? When is inflation an important issue in conducting case analysis? Why bother? How can you learn what date a case took place? Prentice Hall, Inc. ©2009

PowerPoint created by: Ronald Heimler Dowling College- MBA Georgetown University- BS Business Administration Adjunct Professor- LIM College, NY Adjunct Professor- Long Island University, NY Lecturer- California State Polytechnic University, Pomona, CA President- Walter Heimler, Inc. Prentice Hall, Inc. ©2009

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