Class Notes (997,877)
CA (575,346)
UW (20,787)
AFM (998)
AFM211 (21)
Lecture 1

AFM 211 Lecture 1: 211-Courier-Case

5 Pages
114 Views
Spring 2016

Department
Accounting & Financial Management
Course Code
AFM211
Professor
Nancy Vanden Bosch
Lecture
1

This preview shows pages 1-2. Sign up to view the full 5 pages of the document.
Assess the Situation
Role: Geoffrey Taylor, owner and manager of BCC
Request: Wants to understand negative cash & a plan of action
Size up the business – What matters?
April 7th 1997 – specific date and end of the first quarter, partway through the fiscal year
oPay his drivers in the next few days (not sure if he has enough cash to make payroll)
Revenue streams through delivery for its customers
oMain clients are service organizations  wholesalers, retailers, law offices, consultants &
financial institution
Channels: sales people (building a relationship beforehand)
Value proposition: on time delivery, reliable, competitive pricing, quick delivery, delivery
confirmation, quick responses (get there fast and you deliver fast)
Activities: hire drivers to deliver packages
Key resources are the drivers  are they employees? Drivers are more like contractors
(independent)
Cost structure: commissions to the drivers, 65%  the commission is more variable
oFixed costs: rent, salaries
Have to deliver a lot of packages to cover fixed costs
o(could have calculated a break-even cost analysis)
Why does the business exists?
oGOALS  cash in bank, enough money to hire another salesperson (Growth),
Etobicoke
Only 2 years old and has been growing in the GROWTH PHASE
oNot an unusually position for these kinds of company
Growth requires cash
Key Stakeholder/user
find more resources at oneclass.com
find more resources at oneclass.com
Drivers want to be paid on time, which is every two weeks
Customers  value proposition
Geoffrey wants the customers want to pay on time
oBills them every two weeks
Bargaining power  Geoffrey with the drivers, the drivers could have more power because they
can leave and work for someone else
oCustomers have power because they don’t care who delivers their package, b/c it’s a
pretty standard service
Bank provided an overdraft and it is now close to the limit
oYou can run a negative balance
oYou pay interest on overdraft – a high cost similar to interest rates for credit cards
Determine what is required
Illustrating a case where they are hinting where the problems may lie but there is no factual or
definite proof for it
o(a) find the problem for negative cash flow and
o(b) he wants a plan of action – so to develop a solution
Case Plan > 90 mins
1. “collect data” (ex.) in Excel
2. Prepare a cash flow statement
a. Make it for the first quarter, monthly
3. Calculate Ratios – A/R turnover, look at profit margin, revenue growth, A/R cash conversion
cycle
4. Summarize issues (cause)
5. Propose solutions
a. Think
b. Write
c. If time, sensitivity analysis (quantitative)
find more resources at oneclass.com
find more resources at oneclass.com

Loved by over 2.2 million students

Over 90% improved by at least one letter grade.

Leah — University of Toronto

OneClass has been such a huge help in my studies at UofT especially since I am a transfer student. OneClass is the study buddy I never had before and definitely gives me the extra push to get from a B to an A!

Leah — University of Toronto
Saarim — University of Michigan

Balancing social life With academics can be difficult, that is why I'm so glad that OneClass is out there where I can find the top notes for all of my classes. Now I can be the all-star student I want to be.

Saarim — University of Michigan
Jenna — University of Wisconsin

As a college student living on a college budget, I love how easy it is to earn gift cards just by submitting my notes.

Jenna — University of Wisconsin
Anne — University of California

OneClass has allowed me to catch up with my most difficult course! #lifesaver

Anne — University of California
Description
Assess the Situation  Role: Geoffrey Taylor, owner and manager of BCC  Request: Wants to understand negative cash & a plan of action Size up the business – What matters?  April 7 1997 – specific date and end of the first quarter, partway through the fiscal year o Pay his drivers in the next few days (not sure if he has enough cash to make payroll)  Revenue streams through delivery for its customers o Main clients are service organizations  wholesalers, retailers, law offices, consultants & financial institution  Channels: sales people (building a relationship beforehand)  Value proposition: on time delivery, reliable, competitive pricing, quick delivery, delivery confirmation, quick responses (get there fast and you deliver fast)  Activities: hire drivers to deliver packages  Key resources are the drivers  are they employees? Drivers are more like contractors (independent)  Cost structure: commissions to the drivers, 65%  the commission is more variable o Fixed costs: rent, salaries  Have to deliver a lot of packages to cover fixed costs o (could have calculated a break-even cost analysis)  Why does the business exists? o GOALS  cash in bank, enough money to hire another salesperson (Growth),  Etobicoke  Only 2 years old and has been growing in the GROWTH PHASE o Not an unusually position for these kinds of company  Growth requires cash Key Stakeholder/user  Drivers want to be paid on time, which is every two weeks  Customers  value proposition  Geoffrey wants the customers want to pay on time o Bills them every two weeks  Bargaining power  Geoffrey with the drivers, the drivers could have more power because they can leave and work for someone else o Customers have power because they don’t care who delivers their package, b/c it’s a pretty standard service  Bank provided an overdraft and it is now close to the limit o You can run a negative balance o You pay interest on overdraft – a high cost similar to interest rates for credit cards Determine what is required  Illustrating a case where they are hinting where the problems may lie but there is no factual or definite proof for it o (a) find the problem for negative cash flow and o (b) he wants a plan of action – so to develop a solution Case Plan > 90 mins 1. “collect data” (ex.) in Excel 2. Prepare a cash flow statement a. Make it for the first quarter, monthly 3. Calculate Ratios – A/R turnover, look at profit margin, revenue growth, A/R cash conversion cycle 4. Summarize issues (cause) 5. Propose solutions a. Think b. Write c. If time, sensitivity analysis (quantitative) d. you can do qualitative 6. analyze pros/cons of options 7. make recommendations (pick one) a. writ
More Less
Unlock Document

Only pages 1-2 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

You've reached the limit of 4 previews this month

Create an account for unlimited previews.

Already have an account?

Log In


OR

Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit