Diana Karen Veloz Aguilar.

3482212

Business Intelligence.

CASE ANALYSIS: CVP ANALYSIS AND DOL.

In case no. 20 shows three competing companies, Adidas, Puma, and Nike.
Thanks to the information provided, we can analyse these three companies
from different perspectives (or what we can call domains), such as their
turnover, costs, etc. It can also be mentioned that in the last part of Excel there
is a table called "CVP Analysis", which reduces everything presented in this
document and also helps us to simply compare with the given data These three
companies Let's start with the analysis:

 To begin the analysis, it is important to mention that the degree of operating

leverage shows how many times the contribution margin represents the
operating profit, the higher the percentage, the greater the risk of fixed charges,
if so, this can be very important Problem, because fixed costs are always the
same, revenue increases and decrease directly affect the business. In this
case, the figure is 41.3%, and we can say that the company has too many
problems because it is almost 50%!

o So firstly we can say the OP Leverage Degree of the company is a problem

and they need to figure out a way to reduce it, eliminate unnecessary fixed
expenses and increase the number of units sold.  Nike's revenue is higher
than the other three companies, which can give it a big advantage because,
considering the average among them, we can say that Nike is above the
average and the target cost will increase its sales. Because your brand's target
cost is relatively low, it applies the economic principle that as price decreases,
demand increases.  Nike's operating income is much higher than its two
competitors, on the other hand, Puma's operating income is too low.  In terms
of contribution margin, Adidas has a 50% advantage which is a good thing for
the company because it means that the company earns 50% for every product
sold, 50% of which is already free profit. for the company! However, despite the
company having higher sales, Nike has not been able to achieve this goal, but it
is worth mentioning that despite being the lowest, a 46% contribution margin is
not bad for one of the biggest companies in the world.  In terms of margin of
safety, Nike has a big advantage because remember that the margin of safety
means that if the intrinsic value of the stock remains the same and the stock
price decreases, the margin of safety will increase, so Nike can not only benefit
from the sale, but also gain income from the sale of the stock, but also to profit
from the sale of shares, giving them a competitive advantage.

 Regarding the operating leverage again we can say that Nike has a big
advantage because it is at a very good level compared to the high of 13.09
because we must remember that the operating leverage refers to the degree of
volatility of the operating income, so the higher the number, the Less is better
for the company. Summarizing this analysis, I dare to say that my two choices
as an investor are adad and Nike, among which I would prefer Nike because of
its high profit, high resource utilization, and good management. On the other
hand, Puma has been much less successful in the market in recent years, and
seeing the numbers in Excel, I can see why Puma hired consultants and
improved their management to regain their place in the market.