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

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Researching the Case Situation

Dont go beyond the decision date of the case in your research unless instructed to do so Sources of information: Hoovers Company annual and 10-K reports

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Researching the Case Situation

Ratio analysis- the calculation of ratios from data on financial statements Liquidity ratios Profitability ratios Activity ratios Leverage ratios

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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

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Common size statements- financial statements in

which the dollar figures have been converted into percentages

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Altmans Z Value bankruptcy formula- calculate

the likelihood of going bankrupt. Compare historical statements over time whether a company embarking on a growth strategy will need to take on debt to fund the growth

Index of sustainable growth- used to determine

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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 countrys borders

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1. Why should you begin a case analysis with a financial analysis? When are other approaches appropriate? 2. What are common-size financial statements? What is their value to case analysis? How are they calculated? 3. When should you gather information outside a case by going to the library or using the Internet? What should you look for? 4. When is inflation an important issue in conducting case analysis? Why bother? 5. How can you learn what date a case took place?

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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.
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