STRATEGIC MANAGEMENT & BUSINESS POLICY

13TH 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

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

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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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 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

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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 country’s 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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