Business Administration 2257 Lecture Notes - Lecture 1: Cash Flow, Techstars, Sensitivity Analysis

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: Rick Appleby

Document Summary

Return on assets (roa) net income/ total assets. Ccc = days of sales outstanding plus days of inventory outstanding minus days of payables. Looki(cid:374)g at lo(cid:448)epop"s effi(cid:272)ie(cid:374)(cid:272)y, (cid:449)e see that their (cid:272)ash (cid:272)o(cid:374)(cid:448)ersio(cid:374) (cid:272)y(cid:272)le (cid:894)ccc(cid:895) de(cid:272)reases fro(cid:373) de(cid:272) (cid:1006)(cid:1004)(cid:1005)(cid:1008) to april 2015. The ccc deter(cid:373)i(cid:374)es ho(cid:449) lo(cid:374)g the (cid:272)o(cid:373)pa(cid:374)y"s (cid:373)o(cid:374)ey (cid:449)ill stay i(cid:374) its operatio(cid:374)al a(cid:272)ti(cid:448)ities, in this case lovepop has made their ccc better by it decreasing as it makes it easier for lovepop to access cash. The inventory turnover decreased from 2. 71 to 0. 76 which means lovepop is selling their inventory much faster in than they were in 2014. The profit margin has also increased from 0. 14 to 0. 41 meaning they are making more sales and making a move towards a positive cash flow. A sensitivity analysis consists of multiple what if scenarios to convey a range of possible outcomes. Lo(cid:448)epop"s (cid:272)ase they (cid:374)eed to i(cid:374)(cid:272)rease sales (cid:449)hile de(cid:272)reasi(cid:374)g their lia(cid:271)ilities.