List and discuss two major difficulties discussed in class associated with attempting to analyze a business by examining its financial statements: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ To address the issues raised above, compare and contrast the use of dashboards with financial ratios in evaluating business performance: Define Dashboard: _________________________________________________________________________________________________________________________________________________________________________________________________________________________________ How does the use of a Dashboard measure address the issues raised in Question 1, above? (why do most business owners insist on the necessity of knowing what the financials will look like a long time before they are ready for release?)______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Please discuss and calculate the impact of price policy on gross margin, fixed costs, and capacity: Impact of cutting selling price by 7% when beginning from: A cost plus markup of 1.35 Volume increase required __________ Implications for capacity and fixed costs ____________________________________________________________________________________________________________________________ A cost plus markup of 1.73 Volume increase required __________ Implications for capacity and fixed costs ____________________________________________________________________________________________________________________________ Impact of increasing selling price by 9% when beginning from: A cost plus markup of 1.40 Volume decrease permitted ____________ Implications for capacity and fixed costs ____________________________________________________________________________________________________________________________ A cost plus markup of 1.85 Volume decrease permitted __________ Implications for capacity and fixed costs ____________________________________________________________________________________________________________________________ Discuss how sales mix is reflected in gross margin: ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Please discuss how product/service/industry life cycle is reflected in the financial statements with respect to profits, cash flow, growth rates, level of customer sophistication, and competitive intensity in the following stages: Emergence: ____________________________________________________________________________________________________________________________________________ Growth: ______________________________________________________________________________________________________________________________________________________ Maturity: ______________________________________________________________________________________________________________________________________________________ Decline: ______________________________________________________________________________________________________________________________________________________ Describe the concepts of Float, and operating cycle, and calculate their respective values for the March financials you have developed. Float: $ value as of March 31 statements ______________ Concept: ________________________________________________________________________________________________________________________________________ Operating cycle: $ value as of March 31 statements ______________ Concept: ________________________________________________________________________________________________________________________________________ Give examples of three drivers of business value which are reflected on the financial statements but not measured directly by them, and discuss dashboards you might develop to measure them directly. _________________________________________________________________________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________