Case Study 3
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files (2)FinalNPV.docx
CaseStudyProjectionsNPVCompilationAssignmentInstructions1.docx
FinalNPV.docx
1. NEW FINANCIAL PROJECTIONS (3 years)
You must create:
· Projected Income Statement (without strategy)
· Projected Income Statement (with strategy)
· Projected Balance Sheet (without & with strategy)
· Projected Cash Flow Statement (without & with strategy)
✔️ “Without strategy” = business continues as-is ✔️ “With strategy” = ONLY change the accounts impacted by your chosen strategy
🔹 2. NPV CALCULATION (Net Present Value)
This is the single most important calculation.
How to calculate it:
Step 1 — Find initial cost (cf0)
From your cost analysis tab (software, equipment, hiring, marketing, training, etc.)
Step 2 — Each year, compute:
👉 Cash flow = EBIT (with strategy) – EBIT (without strategy) This is the benefit/return of implementing the strategy.
Step 3 — Use discount rate (r)
Usually your opportunity cost of capital (8–12%).
Step 4 — Plug into NPV formula
Most students use Excel:
=NPV(r, year1_cashflow, year2_cashflow, year3_cashflow) + cf0
✔️ If NPV > 0 → your strategy is financially GOOD ✔️ If NPV < 0 → your strategy does NOT add value
🔹 3. IMPLEMENTATION PLAN (final written section)
This goes in the Word document:
You must state:
Who
· Which departments/roles carry out the strategy
What
· Key actions and milestones
· What needs to be purchased, upgraded, launched, hired, or changed
How
· Processes, training, software, resources needed
· Costs must align with your cost sheet
When
· A clear timeline (Year 1 → Year 3)
📦 When these three items are completed, the assignment is DONE.
CaseStudyProjectionsNPVCompilationAssignmentInstructions1.docx
BUSI 690
Case Study: Projections, NPV, Compilation Assignment Instructions
Overview
Continue working on the individual case study started in Case Study: Matrices Assignment of ABC Corporation. Complete this portion of the case study: Case Study: Projections, NPV, Compilation Assignment.
A formal, in-depth case study analysis requires you to utilize the entire strategic management process. Assume your group is a consulting team asked by the ABC Corporation to analyze its external/internal environment and make strategic recommendations. You must include exhibits to support your analysis and recommendations.
Instructions
· Cover page (must include the company name, your name, the date of submission, and a references page; the document must follow current APA guidelines)
· A total of 12 - 15 pages (for all there parts, combined) of narrative text, this does not include the financial statements, reference pages, or matrices
· Reference page (follow current APA guidelines)
· Historical Financial Statements, Proforma Financial Statements, NPV Calculations and a Cost Sheet for the strategy in an Excel document
· Matrices, which must be exhibits/attachments in the appendix and not part of the body of the analysis (The Strategy Club has excellent templates/examples for exhibits and matrices).
You will use the information completed in Case Study: Matrices, and Case Study: Historical Financial Analysis as part of your Case Study: Projections, NPV, Compilation Assignment final document. Be sure to make any corrections to Part One and Part Two based on feedback given on each of the assignments.
Your Case Study: Projections, NPV, Compilation Assignment paper must include:
1. Executive Summary – this should be no more than one page and provide the reader with an overview of what will be contained in the following pages. The problem and strategic solution being recommended should be in this summary. Details for the choice and implementation and data to support the decision should be contained in the following sections.
2. Existing mission, objectives, and strategies
3. A new mission statement (include the number of the component in parenthesis before addressing that component)
4. Analysis of the firm’s existing business model
5. SWOT Analysis
6. TOWS Matrix
7. Competitive forces analysis
8. Historical Financial Statements (Income Statement, Balance Sheet, and Statement of Cash Flows) from the 3 most current years for the firm
9. Historical Ratio Analysis
10. Competitors Ratio Analysis
11. Alternative strategies (giving advantages and disadvantages for each). There should be at least two alternative strategies identified and discussed.
12. Projected Financial Statements (Income Statement, Balance Sheet and Statement of Cash Flows) for 3 years into the future. This must be broken down by year into two (2) columns: 1 column without your strategy and 1 column with your strategy. The without column should serve as the basis for your with strategy column and only those financial statement accounts that will be changed, based on your strategy, should be impacted.
13. Include Projected ratios for the without and with strategy by year. Discuss how these ratios compare and contrast with the historical findings.
14. Cost Analysis completed on an Excel tab that outlines the cost that will be incurred to implement the strategy. This information should correspond with the With Strategy on the Projected Financial Statements, linking of cells to the financial statements is encouraged.
15. Net Present Value analysis of proposed strategy’s new cash flow – you may also use Excel to solve for this. From the income statement the change in operating income between your with and without strategy should serve as your cash inflow for each year. NOTE: To construct the first cash flow (cf1) the new revenue from your strategy(s) must be discounted back to the present value by calculating EBIT (Operating Income on the Income Statement) and that figure will be your cfn for each year. cf0 (initial cost of your strategy), cf1 (discounted cash flow first year), r (opportunity cost of capital, the rate of the next best alternative use of cash/debt/equity resources).
a.
16. Implementation strategy – how and when will the strategy be implemented, this should outline the who, how, what, and when of the implementation process.
17. Specific recommended strategy and long term objectives Explain why you chose the strategy, discuss the advantages/benefits to organizational success and sustainability. Incude a discussion of the challenges or disadvantages that may arise as a result of the strategic choice.
18. Text must follow this order with current APA level headings for each component.
Place the results of the case study analysis in a Word document include matrices as appendices and a reference page. Submit a separate Excel document for your Historical financials, Projections, NPV, and Cost of the strategy.
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