List and discuss two major difficulties discussed in class associated with attempting to analyze a business by examining its financial statements:

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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

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A cost plus markup of 1.73

Volume increase required __________

Implications for capacity and fixed costs

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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

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A cost plus markup of 1.85

Volume decrease permitted __________

Implications for capacity and fixed costs

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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:

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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:

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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.

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