AFM433 Lecture Notes - Lecture 7: Asset Turnover, Contribution Margin, Value Chain

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM433
• Professor: Mark Arnason

Document Summary

Definition for a business model: create and deliver value, key elements of the business work together. Four interlocking elements to describe a business model: customer value proposition (cvp, external advantage through the eyes of the customer, profit formula, revenue model, cost structure. Inputs: physical, tangible resources, e. g. buildings, land. Including leadership: cash position, access to financing, debt, margin model, resource velocity, asset turnover. Lower price for recover: return on assets or investments, key resources, key processes. Interdependencies of four elements: customer value proposition and profit, price and volume generate revenue, processes to profit, more activities more cost, resources to profit formula, asset and resources generate cost, resources to processes. Inputs to processes and activities: resources to customer value proposition, must do activities to delivery cvp, change one thing will change something else, all four must be in balance. Key activities and resources: value chain, chain of activities, deliver value to customers, resource types, physical, building.