BU121 Lecture Notes - Lecture 9: Sensitivity Analysis, Fixed Cost, Income Statement

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9 Feb 2016
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
  !"#$
 "!! % 
! 
     $
NOW, for the big question … Will this translate into revenue?
Forecasting Demand
!  !!& #% '!% $
(!  '&) % *    research  logic an
educated guess that you can defend
+! market potential ,! !&-NOT 
' $
o% !%

.      " ' & ! 
! & " & & $
"   !$
' 

&%%  /
o! "
TOP-DOWN FORECASTING ,0 -
o 
o1!&  &!'' 
&$
o2% 
 
*!& '! ! $
EXAMPLE: 3 % & 
4 ! !"/4 " & ! 
/ 4 % %    ! 5 '  
% & /
o3 ' $
6! & /
EXAMPLE: 7 &!!& &! 
 & $
& 8%8%!&
% %  / 4 !   / (&
 %8! /
6   %!& %
'&*  % '!% "
 & & !$
BOTTOM-UP FORECAST,0%-
o6&

o!%  
o7      % !  &! ' ! &
 

"/1 &!" !&/
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o! 

 "!%&%
EXAMPLE: (! & '   !   &  !
&  '& ! !& '
& !& &!$!!
9 '   %   ' ! &   

&/
This is REALITY
o. &% "! 
!"
  $
0"    &:%' $
0"! !" "  *
""$
o3"
0 ; !! $
!% % ' <!!!!
 !& $(! &
$
o. =
o3">. =
6&%  " 
0"
83&86" . &%   &% 
 & ?
3&% !!&% !/
.%
2 % !"  '
. %
o2!'  !!&  
!"% !$" !$(!
!  * 
% %& 
!&$
o! !& !!!" '
 $
Forecasting Demand
Example: 3@ ' .
TOP DOWN PROCESSING – DON’T EVER DO THIS EVER
o4 !&!A$
o6B ' $A& ?
oNot everyone who drives a car listens to the radio. What
percentage of people listen to the radio?
oWhat percentage of people will care about the bene8ts that
radio satellite will bring?
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oWhat percentage would actually pay the price?
oWhat is the percentage of ‘adoption rate’?
BOTTOM UP PROCESSING
o!" ' % %$
o&%$
oCDC
C %$
o6 %%8
Entrepreneurial Finance
  '  !!   '! 
 '$
!% !!"
&!"$
E6
o
New venture 8nancing
o
Cash budgeting
o
Cash burn
o
New venture valuation
o
Strategies for growth/exit
We are now going to be looking at 8nance (look at puzzle diagram)
. 
6!"=' &,.3-
o@  '!' ! !$
'!&!!" $7
 !&$
7 Principles of Entrepreneurial Finance
@!&5%&<' & $
oF" %! %?
o@%%!)  "!  '
%!$
o7  %' ! ' %$
o%&%  ')!% %
 ' &$(! ' !&$
o%!&   % 
o6%' &" " "
@% !!
o@@G' !! & $
o'& %
o %!
"!!
$
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