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

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 formulacalculate 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
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 cas
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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