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Type Concept

Business concept B2B

Business concept B2C

Business concept Cost overrun risk

Business concept Market share

Business concept Market size

Business Concept Relative market share

Financial concept Investment

Financial concept Market capitalization

Financial concept NPV

Financial concept Profit margin

Financial concept Profits

Financial concept ROI

Financial concept ROI

Financial concept ROI

Financial concept Rule 70

 Costs: of a business
Framework
(commercial bank)

Framework Analysis of a business

Framework Costs: Type

Framework A. Operating expenses

Framework B. Overhead costs

Drivers of profitability/
Framework
attract. Of a market

Growing market share +

Framework
decreasing profits

Strategy Automatization

Strategy Strategy

Other %

Other % growth

Other Currency exchange

Other Time
Details

Business-to-business (B2B) - businesses that sell to other businesses

Business-to-consumer (B2C) - businesses that sell to consumers
It involves unexpected costs incurred in excess of budgeted amounts due to an underestimation of the
actual cost during budgeting.
% of an industry or market's total sales that is earned by a particular company
Can refer to number of clients, volume of sales or profits
Your firm's market share (or revenues)
______________________________________________
largest competitor's market share (or revenue)

The are several ways of knowing whether an investment is good: Breakeven, NPV, intangible gains
E.g. 10 M annual return on a 100 M investment. 10 years for breakeven; assuming perpetuity and 20%
discount rate (high), the moment you invest your investment is worth 500 M.
The market value at a point in time of the shares outstanding of a publicly traded company
Assuming perpetuity (cash flows 19k, discount rate 5%)
100k/ 0,05
(P-cost) / P; net profit / revenue
(Price - Variable Costs)* volume - Fixed Costs
In profitability cases, if costs don't change, you need to focus on prices, volumes AND mix of products
(whenever different products are sold) - one by one!

(Earnings- initial investment)/

_____________________________
Initial investment

One issue with the return on investment formula is that it does not account for the time value of mone

If initial investment is $20M and you want a ROI of 20% over three years - need to make sure profits a
higher than 12
If ROI in % is tiny, give number - e.g. 0,4% interests in a 720k account -> 3k/ month
In finance, the rule of 72 and the rule of 70 are methods for estimating an investment's doubling time
rule number is divided by the interest percentage per period to obtain the approximate number of per
required for doubling
Revenues
Interests on loans
Charges for ATM, credit cards, account maintenance

Costs:
Operational (variable)
Interests payments (depósitos) (d.o. int. rate)
Loan losses (d.o. default d.o economy, unemployment rate, etc.)
Fixed
Expenses associated with buildings
Legal fees
Information technology
Employee compensation and benefits

Opportunities: Efficiencies in payment methods, reduction n. of branches and more online-services

Analysis should focus on: operations (products, value chain, etc.) and financials (revenue and costs
streams, etc.)
Operations & overhead
Typical operating expenses include the machinery, materials and energy needed to make your produc
packaging; shipping materials; forklifts; and any other cost you would not have if you temporarily shu
down production

Overhead is the expense involved in running your company and selling your product. If you stopped
making your product for a week, you would still have to pay your rent, insurance, utilities, marketing c
administrative salaries and wages, telephone bill, copy machine bill, Internet costs and all of the expe
related to having a company.

Supply power, Customer power, direct and indirect competitors, barriers to entry (don’t use as a shop
list!)

Two hipotheses for what is happening:

1. Shrinkling market: some competitors leaving or losing more
2. Market ceteris paribus: but our business lower prices

Trade off: substantial initial investment and high fix costs, but will reduce direct labour (variable cost)

Strategy is only clear if ot also means concrete actions for th front line (i.e lower staff)
Division accounts for 40% and bank wants to grow overall profit by 15%.
Solution: 0.15X = Y * 0.4X; Y= 37.5%
800 M, growing 5% yearly for 2 years
800* 1.05^2
1 USD=0,75 EUR; 20 USD = 20*0,75
1h = 3,600 sec; 20 min. = 0,33h