Unit 10 & 11 Notes.docx - Course objectives from syllabus 1 Apply analytical tools and techniques to analyze balance sheets cash flow statements

Course objectives from syllabus: 1. Apply analytical tools and techniques to analyze balance sheets, cash flow statements, income statements, and common indicators of an organization’s financial health. At the end of this unit the student will be able to: 1. Develop a business case using Excel. 2. Define payback periods. 3. Calculate future value. 4. Calculate present value. 5. Calculate net present value. 6. Calculate discounted payback period. 7. Implement Excel's Solver tool. To succeed in any business one needs to have a solid business plan. But fundamental to such a business plan is a solid business case analysis. In any business environment there are very limited resources and it is the management's job to decide which lines of business or which product line gets attention and resources. To do so is to better understand what each of the lines of business are likely to yield towards the bottom line. This is making a business case. In this unit, we will explore this concept of business case development and use Solver to come out with multiple scenarios to add in our decision making process. Assigned Readings Read the following chapters Chapter 11: Examining a Business Case: Investment Chapter 12: Examining Decision Criteria for a Business Case Before you read the chapters and or listen to the lecture, revisit the objectives of the unit. With a clear understanding of the objectives pay special attention to how the lecture and the readings help in accomplishing them. Lecture Every organization is always constrained for resources. There are going to be multiple projects or multiple activities that are competing for the same limited resource. Thus it is very critical that when a firm decides to make an investment that it do so with utmost diligence. It could even be that you are working as a project manager in a firm and you are proposing that the firm invest in a new line of product. Have you covered the fundamentals? Listen the the introduction video that talks about what it takes in building business a business case and how one can about it. Introduction to Business Case Development Notes From Video _________________ Why is developing a business case important ? ● Seeking Investments ○ Justify Investments will yield desired results Steps in developing a Business Case ● Identify the desired area of impact ○ Has to be strategic impact ○ Helping the Customer ○ Financial what does it mean ○ Operational what does it mean ● Identify the desired value of the project (competing projects or alternative better ?) ○ Better : a better job ○ Faster : than in the market place ○ Cheaper : than in the market place ○ Do more : than in the market place ○ Compete/Survive ● Build Multiple Scenarios ○ Base Case ○ Best Case

○ Moderate ○ Worst Case ● Is the Project Feasible ? within the company ○ Economic feasibility ○ Technical feasibility ○ Organizational feasibility ○ What are the risks ?