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What Is a Case Study?
When you’re performing research as part of your job or for a school assignment, you’ll probably come across case studies that help you to learn more about the topic at hand. But what is a case study and why are they helpful? Read on to learn all about case studies.
Deep Dive into a Topic
At face value, a case study is a deep dive into a topic. Case studies can be found in many fields, particularly across the social sciences and medicine. When you conduct a case study, you create a body of research based on an inquiry and related data from analysis of a group, individual or controlled research environment.
As a researcher, you can benefit from the analysis of case studies similar to inquiries you’re currently studying. Researchers often rely on case studies to answer questions that basic information and standard diagnostics cannot address.
Study a Pattern
One of the main objectives of a case study is to find a pattern that answers whatever the initial inquiry seeks to find. This might be a question about why college students are prone to certain eating habits or what mental health problems afflict house fire survivors. The researcher then collects data, either through observation or data research, and starts connecting the dots to find underlying behaviors or impacts of the sample group’s behavior.
Gather Evidence
During the study period, the researcher gathers evidence to back the observed patterns and future claims that’ll be derived from the data. Since case studies are usually presented in the professional environment, it’s not enough to simply have a theory and observational notes to back up a claim. Instead, the researcher must provide evidence to support the body of study and the resulting conclusions.
Present Findings
As the study progresses, the researcher develops a solid case to present to peers or a governing body. Case study presentation is important because it legitimizes the body of research and opens the findings to a broader analysis that may end up drawing a conclusion that’s more true to the data than what one or two researchers might establish. The presentation might be formal or casual, depending on the case study itself.
Draw Conclusions
Once the body of research is established, it’s time to draw conclusions from the case study. As with all social sciences studies, conclusions from one researcher shouldn’t necessarily be taken as gospel, but they’re helpful for advancing the body of knowledge in a given field. For that purpose, they’re an invaluable way of gathering new material and presenting ideas that others in the field can learn from and expand upon.
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Finance Case Studies
Featured finance case studies:.
Canary Wharf: Financing and Placemaking
Fondaco dei Tedeschi: A New Luxury Shopping Destination for Venice
Nathan Cummings Foundation: Mission-Driven Investing
The Decline of Malls
Expand the sections below to read more about each case study:, nathan cummings foundation, ellie campion, dwayne edwards, brad wayman, anna williams, william goetzmann, and jean rosenthal.
Asset Management, Investor/Finance, Leadership & Teamwork, Social Enterprise, Sourcing/Managing Funds
The Nathan Cummings Foundation Investment Committee and Board of Trustees had studied the decision to go “all in” on a mission-related investment approach. The Board voted 100% to support this new direction and new goals for financial investments, but many questions remained. How could NCF operationalize and integrate this new strategy? What changes would it need to make to support the investment strategies' long-term success? How could NCF measure and track its progress and success with this new strategy?
William Goetzmann, Jean Rosenthal, Jaan Elias, Edoardo Pasinato, Lukas Cejnar, Ellie Campion
Business History, Competitor/Strategy, Customer/Marketing, Innovation & Design, Investor/Finance, Sourcing/Managing Funds, State & Society
The renovation of the Fondaco dei Tedeschi in Venice represented a grand experiment. Should an ancient building in the midst of a world heritage site be transformed into a modern mall for luxury goods? How best to achieve the transformation and make it economically sustainable? Would tourists walk to the mall? And would they buy or just look? What could each stakeholder learn from their experiences with the Fondaco dei Tedeschi?
Gardner Denver
James quinn, adam blumenthal, and jaan elias.
Asset Management, Employee/HR, Investor/Finance, Leadership & Teamwork
As KKR, a private equity firm, prepared to take Gardner-Denver, one of its portfolio companies, public in mid-2017, a discussion arose on the Gardner-Denver board about the implications of granting approximately $110 million in equity to its global employee base as part of its innovative "broad-based employee ownership program." Was the generous equity package that Pete Stavros proposed be allotted to 6,100 employees the wisest move and the right timing for Gardner Denver and its new shareholders?
Home Health Care
Jean rosenthal, jaan elias, adam blumenthal, and jeremy kogler.
Asset Management, Competitor/Strategy, Healthcare, Investor/Finance
Blue Wolf Capital Partners was making major investments in the home health care sector. The private equity fund had purchased two U.S. regional companies in the space. The plan was to merge the two organizations, creating opportunities for shared expertise and synergies in reducing management costs. Two years later, the management team was considering adding a third company. Projected revenues for the combined organization would top $1 billion annually. What was the likelihood that this opportunity would succeed?
Suwanee Lumber Company
Jaan elias, adam blumenthal, james shovlin, and heather e. tookes.
Asset Management, Investor/Finance, Sustainability
In 2016, Blue Wolf, a private equity firm headquartered in New York City, confronted a number of options when it came to its lumber business. They could put their holdings in the Suwanee Lumber Company (SLC), a sawmill they had purchased in 2013, up for sale. Or they could continue to hold onto SLC and run it as a standalone business. Or they could double down on the lumber business by buying an idle mill in Arkansas to run along with SLC.
Alternative Meat Industry: How Should Beyond Meat be Valued?
Nikki springer, leon van wyk, jacob thomas, k. geert rouwenhorst and jaan elias.
Competitor/Strategy, Customer/Marketing, Investor/Finance, Sourcing/Managing Funds, Sustainability
In 2009, when experienced entrepreneur Ethan Brown decided to build a better veggie burger, he set his sights on an exceptional goal – create a plant-based McDonald’s equally beloved by the American appetite. To do this, he knew he needed to transform the idea of plant-based meat alternatives from the sleepy few veggie burger options in the grocer’s freezer case into a fundamentally different product. Would further investments in research and development help give Beyond Meat an edge? Would Americans continue to embrace meat alternatives, or would the initial fanfare subside below investor expectations?
Hertz Global Holdings (A): Uses of Debt and Equity
Jean rosenthal, geert rouwenhorst, jacob thomas, allen xu.
Asset Management, Financial Regulation, Sourcing/Managing Funds
By 2019, Hertz CEO Kathyrn Marinello and CFO Jamere Jackson had managed to streamline the venerable car rental firm's operations. Their next steps were to consider ways to fine-tune Hertz's capital structure. Would it make sense for Marinello and Jackson to lead Hertz to issue more equity to re-balance the structure? One possibility was a stock rights offering, but an established company issuing equity was not generally well-received by investors. How well would the market respond to an attempt by Hertz management to increase shareholder equity?
Twining-Hadley Incorporated
Jaan elias, k geert rouwenhorst, jacob thomas.
Employee/HR, Investor/Finance, Metrics & Data, Sourcing/Managing Funds
Jessica Austin has been asked to compute THI's Weighted Average Cost of Capital, a key measure for making investments and deciding executive compensation. What should she consider in making her calculation?
Shake Shack IPO
Vero bourg-meyer, jaan elias, jake thomas and geert rouwenhorst.
Competitor/Strategy, Innovation & Design, Investor/Finance, Leadership & Teamwork, Sourcing/Managing Funds, Sustainability
Shake Shack's long lines of devoted fans made investors salivate when the company went public in 2015 and shares soared above expectations. Was the enthusiasm justified? Could the company maintain its edge in the long run?
Strategy for Norway's Pension Fund Global
Jean rosenthal, william n. goetzmann, olav sorenson, andrew ang, and jaan elias.
Asset Management, Investor/Finance, Sourcing/Managing Funds
Norway's Pension Fund Global was the largest sovereign wealth fund in the world. With questions in 2014 on policies, ethical investment, and other concerns, what was the appropriate investment strategy for the Fund?
Factor Investing for Retirement
Jean rosenthal, jaan elias and william goetzmann.
Asset Management, Investor/Finance
Should this investor look for a portfolio of factor funds to meet his goals for his 401(k) Retirement Plan?
Bank of Ireland
Jean w. rosenthal, eamonn walsh, matt spiegel, will goetzmann, david bach, damien p. mcloughlin, fernando fernandez, gayle allard, and jaan elias.
Asset Management, Financial Regulation, Investor/Finance, Leadership & Teamwork, Macroeconomics, State & Society
In August 2011, Wilbur Ross, an American investor specializing in distressed and bankrupt companies, purchased 35% of the stock of Bank of Ireland. Even for Ross, investing in an Irish bank seemed risky. Observers wondered if the investment made sense.
Commonfund ESG
Jaan elias, sarah friedman hersh, maggie chau, logan ashcraft, and pamela jao.
Asset Management, Investor/Finance, Metrics & Data, Social Enterprise
ESG (Environmental Social and Governance) investing had become an increasingly hot topic in the financial community. Could Commonfund offer its endowment clients some investment vehicle that would satisfy ESG concerns while producing sufficient returns?
Glory, Glory Man United!
Charles euvhner, jacob thomas, k. geert rouwenhorst, and jaan elias.
Competitor/Strategy, Employee/HR, Investor/Finance, Leadership & Teamwork, Sourcing/Managing Funds
Manchester United might be the greatest English sports dynasty of all time. But valuation poses unique challenges. How much should a team's success on the pitch count toward its net worth?
Walmart de México: Investing in Renewable Energy
Jean rosenthal, k. geert rouwenhorst, isabel studer, jaan elias, and juan carlos rivera.
Investor/Finance, Operations, State & Society, Sustainability
Walmart de México y Centroamérica contracted for power from EVM's wind farm, saving energy costs and improving sustainability. What should the company's next steps be to advance its goals?
Voltaire, Casanova, and 18th-Century Lotteries
Jean rosenthal and william n. goetzmann.
Business History, State & Society
Gambling has been a part of human activity since earliest recorded history, and governments have often attempted to turn that impulse to benefit the state. The development of lotteries in the 18th century helped to develop the study of probabilities and enabled the financial success of some of the leading figures of that era.
Alexander Hamilton and the Origin of American Finance
Andrea nagy smith, william goetzmann, and jeffrey levick.
Business History, Financial Regulation, Investor/Finance
Alexander Hamilton is said to have invented the future. At a time when the young United States of America was disorganized and bankrupt, Hamilton could see that the nation would become a powerful economy.
Kmart Bankruptcy
Jean rosenthal, heather tookes, henry s. miller, and jaan elias.
Asset Management, Financial Regulation, Investor/Finance
Less than 18 months after Kmart entered Chapter 11, the company emerged and its stocked soared. Why had the chain entered Chapter 11 in the first place and how had the bankruptcy process allowed the company to right itself?
Oil, ETFs, and Speculation
So alex roelof, k. geert rouwenhorst, and jaan elias.
Since the markets' origins, traders sought standardized wares to increase market liquidity. In the 1960s and later, they sought assets uncorrelated to traditional bonds and equities. By late 2004, commodity-based exchange-traded securities emerged.
Newhall Ranch Land Parcel
Acquired by a partnership of two closely intertwined homebuilders, Newhall Ranch was the last major tract of undeveloped land in Los Angeles County in 2003.
Brandeis and the Rose Museum
Arts Management, Asset Management, Investor/Finance, Social Enterprise, Sourcing/Managing Funds
The question of the role museums should play in university life became urgent for Brandeis in early 2009. Standard portfolios of investments had just taken a beating. Given that environment, should Brandeis sell art in order to save its other programs?
Taking EOP Private
Allison mitkowski, william goetzmann, and jaan elias.
Asset Management, Financial Regulation, Investor/Finance, Leadership & Teamwork
With 594 properties nationwide, EOP was the nation’s largest office landlord. Despite EOP's dominance of the REIT market, analysts had historically undervalued EOP. However, Blackstone saw something in EOP that the analysts didn’t, and in November, Blackstone offered to buy EOP for $48.50 per share. What did Blackstone and Vornado see that the market didn’t?
Subprime Lending Crisis
Jaan elias and william n. goetzmann.
Asset Management, Financial Regulation, Investor/Finance, State & Society
To understand the collapse of the subprime mortgage market, we look at a failing Mortgage Backed Security (MBS) and then drill down to look at a single loan that has gone bad.
William N. Goetzmann, Jean Rosenthal, and Jaan Elias
Asset Management, Business History, Customer/Marketing, Entrepreneurship, Innovation & Design, Investor/Finance, Sourcing/Managing Funds, State & Society
The financial engineering of London's Canary Wharf was as impressive as the structural engineering. However, Brexit and the rise of fintech represented new challenges. Would financial firms leave the U.K.? Would fintech firms seek new kinds of space? How should the Canary Wharf Group respond?
The Future of Malls: Was Decline Inevitable?
Jean rosenthal, anna williams, brandon colon, robert park, william goetzmann, jessica helfand .
Business History, Customer/Marketing, Innovation & Design, Investor/Finance
Shopping malls became the "Main Street" of US suburbs beginning in the mid-20th century. But will they persist into the 21st?
Hirtle Callaghan & Co
James quinn, jaan elias, and adam blumenthal.
Asset Management, Investor/Finance, Leadership & Teamwork
In August 2019, Stephen Vaccaro, Yale MBA ‘03, became the director of private equity at Hirtle, Callaghan & Co., LLC (HC), a leading investment management firm associated with pioneering the outsourced chief investment office (OCIO) model for college endowments, foundations, and wealthy families. Vaccaro was tasked with spearheading efforts to grow HC’s private equity (PE) market value from $1 billion to a new target of roughly $3 billion in order to contribute to the effort of generating higher long-term returns for clients. Would investment committees overseeing endowments typically in the 10s or 100s of millions embrace this shift, and, more pointedly, was this the best move for client portfolios?
The Federal Reserve Response to 9-11
Jean rosenthal, william b. english, jaan elias.
Financial Regulation, Investor/Finance, Leadership & Teamwork, State & Society
The attacks on New York City and the Pentagon in Washington, DC, on September 11, 2001, shocked the nation and the world. The attacks crippled the nerve center of the U.S. financial system. Information flow among banks, traders in multiple markets, and regulators was interrupted. Under Roger Ferguson's leadership, the Federal Reserve made a series of decisions designed to provide confidence and increase liquidity in a severely damaged financial system. In hindsight, were these the best approaches? Were there other options that could have taken place?
Suwanee Lumber Company (B)
In early 2018, Blue Wolf Capital Management received an offer to sell both its mill in Arkansas (Caddo) and its mill in Florida (Suwanee) to Conifex, an upstart Canadian lumber company. Blue Wolf hadn’t planned to put both mills up for sale yet, but was the deal too good to pass up? Blue Wolf had invested nearly $36.5 million into rehabilitating the Suwanee and Caddo mills. However, neither was fully operational yet. Did the offer price fairly value the prospects of the mills? How should Blue Wolf consider the Conifex stock? Should Blue Wolf conduct a more extensive sales process rather than settle for this somewhat unexpected offer?
Occidental Petroleum's Acquisition of Anadarko
Jaan elias, piyush kabra, jacob thomas, k. geert rouwenhorst.
Asset Management, Competitor/Strategy, Investor/Finance, Sourcing/Managing Funds
In May of 2019, Vicki Hollub, the CEO of Occidental Petroleum (Oxy), pulled off a blockbuster. Bidding against Chevron, one of the world's largest oil firms, she had managed to buy Anadarko, another oil company that was roughly the size of Oxy. Hollub believed that the combination of the two firms brought the possibility for billions of dollars in synergies, more than offsetting the cost of the acquisition. Had Hollub hurt shareholder value with Oxy's ambitious deal, or had she bolstered a mid-size oil firm and made it a major player in the petroleum industry? Why didn't investors see the tremendous synergies in which Hollub fervently believed?
Hertz Global Holdings (B): Uses of Debt and Equity 2020
In 2019, Hertz held a successful rights offering and restructured some of its debt. CEO Kathyrn Marinello and CFO Jamere Jackson were moving the company toward what seemed to be sustainable profitability, having implemented major structural and financial reforms. Analysts predicted a rosy future. Travel, particularly corporate travel, was increasing as the economy grew. With all the creativity that the company had shown in its financial arrangements, did it have any options remaining, even while under the court-led reorganization?
Prodigy Finance
Vero bourg-meyer, javier gimeno, jaan elias, florian ederer.
Competitor/Strategy, Investor/Finance, Social Enterprise, State & Society, Sustainability
Having pioneered a successful financing model for student loans, Prodigy also was considering other financial services that could make use of the company’s risk model. What new products could Prodigy offer to support its student borrowers? What strategy should guide the company’s new product development? Or should the company stick to the educational loans it pioneered and knew best?
tronc: Valuing the Future of Newspapers
Jean rosenthal, heather e. tookes, and jaan elias.
Business History, Competitor/Strategy, Investor/Finance, Leadership & Teamwork
Gannet offered Tribune Publishing an all-cash buyout offer. Tribune then made a strategic pivot: new stock listing, new name "tronc," and a goal of posting 1,000 videos/day. Should the Tribune board take the buyout opportunity? What was the right price?
Role of Hedge Funds in Institutional Portfolios: Florida Retirement System
Jaan elias, william goetzmann and lloyd baskin.
Asset Management, Financial Regulation, Investor/Finance, Metrics & Data, State & Society
The Florida Retirement System, one of the country’s largest state pensions, had been slow to embrace hedge funds, but by 2015, they had 7% of their assets in the category. How should they manage their program?
Social Security 1935
Jean rosenthal, william n. goetzmann, and jaan elias.
Business History, Financial Regulation, Innovation & Design, Investor/Finance, State & Society
Frances Perkins, Franklin Roosevelt's Secretary of Labor, shaped the Social Security Act of 1935, changing America’s pension landscape. What might she have done differently?
Ant Financial: Flourishing Farmer Loans at MYbank
Jingyue xu, jean rosenthal, k. sudhir, hua song, xia zhang, yuanfang song, xiaoxi liu, and jaan elias.
Competitor/Strategy, Customer/Marketing, Entrepreneurship, Innovation & Design, Investor/Finance, Leadership & Teamwork, Operations, State & Society
In 2015 Ant Financial's MYbank (an offshoot of Jack Ma’s Alibaba company) created the Flourishing Farmer Loan program, an all-internet banking service for China's rural areas. Could MYbank use financial technology to create a program with competitive costs and risk management?
Low-Carbon Investing: Commonfund & GPSU
Jaan elias, william goetzmann, and k. geert rouwenhorst.
Asset Management, Ethics & Religion, Investor/Finance, Social Enterprise, State & Society, Sustainability
In August of 2014, the movement to divest fossil fuel investments from endowment portfolios was sweeping campuses across the United States, including Gifford Pinchot State University (GPSU). How should GPSU and its investment partner Commonfund react?
360 State Street: Real Options
Andrea nagy smith and mathew spiegel.
Asset Management, Investor/Finance, Metrics & Data, Sourcing/Managing Funds
360 State Street proved successful, but what could Bruce Becker construct on the 6,000-square-foot vacant lot at the southwest corner of the project? Under what set of circumstances and at what time would it be most advantageous to proceed? Or should he build anything at all?
Centerbridge
Jean rosenthal and olav sorensen.
When Jeffrey Aronson and Mark Gallogly founded Centerbridge, they hoped to grow the firm, but not to a point that it would lose its culture. Having added an office in London, could the firm add more locations and maintain its collegial character?
George Hudson and the 1840s Railway Mania
Andrea nagy smith, james chanos, and james spellman.
Business History, Financial Regulation, Investor/Finance, Metrics & Data
Railways were one of the original disruptive technologies: they transformed England from an island of slow, agricultural villages into a fast, urban, industrialized nation. George Hudson was the central figure in the mania for railroad shares in England. After the share value crashed, some analysts blamed Hudson, others pointed to irrational investors and still others maintained the crash was due to macroeconomic factors.
Demosthenes and Athenian Finance
Andrea nagy smith and william goetzmann.
Business History, Financial Regulation, Law & Contracts
Demosthenes' Oration 35, "Against Lacritus," contains the only surviving maritime loan contract from the fourth century B.C., proving that the ancient Greeks had devised a commercial code to link the economic lives of people from all over the Greek world. Athenians and non-Athenians alike came to the port of Piraeus to trade freely.
South Sea Bubble
Frank newman and william goetzmann.
Business History, Financial Regulation
The story of the South Sea Company and its seemingly absurd stock price levels always enters into conversations about modern valuation bubbles. Because of its modern application, discerning what was at the root of the world's first stock market crash merits considerable attention. What about the South Sea Company and the political, economic and social context in which it operated led to its stunning collapse?
Jean W. Rosenthal, Jaan Elias, William N. Goetzmann, Stanley Garstka, and Jacob Thomas
Asset Management, Healthcare, Investor/Finance, Sourcing/Managing Funds, State & Society
A centerpiece of the 2007 contract negotiations between the UAW and GM - and later with Chrysler and Ford - was establishing a Voluntary Employee Beneficiary Association (VEBA) to provide for retiree healthcare costs. The implications were substantial.
Northern Pulp: A Private Equity Firm Resurrects a Troubled Paper Company
Heather tookes, peter schott, francesco bova, jaan elias and andrea nagy smith.
Investor/Finance, Macroeconomics, State & Society, Sustainability
In 2008, the lumber industry was in a severe recession, yet Blue Wolf Capital Management was considering investment in a paper mill in Nova Scotia. How should they proceed?
Lahey Clinic: North Shore Expansion
Jaan elias, andrea r. nagy, jessica p. strauss, and william n. goetzmann.
Asset Management, Financial Regulation, Healthcare, Investor/Finance
In early 2007 the Lahey Clinic in Massachusetts believed that expansion of its North Shore facility was not only a smart strategy but also a business necessity. The two years of turmoil in the Massachusetts health care market prompted observers to question Lahey's 2007 decisions. Did the expansion strategy still make sense?
Carry Trade ETF
K. geert rouwenhorst, jean w. rosenthal, and jaan elias.
Innovation & Design, Investor/Finance, Macroeconomics, Sourcing/Managing Funds
In 2006 Deutsche Bank (DB) brought a new product to market – an exchange traded fund (ETF) based on the carry trade, a strategy of buying and selling currency futures. The offering received the William F. Sharpe Indexing Achievement Award for “Most Innovative Index Fund or ETF” at the 2006 Sharpe Awards. These awards are presented annually by IndexUniverse.com and Information Management Network for innovative advances in the indexing industry. The carry trade ETF shared the award with another DB/PowerShares offering, a Commodity Index Tracking Fund. Jim Wiandt, publisher of IndexUniverse.com, said, "These innovators are shaping the course of the index industry, creating new tools and providing new insights for the benefit of all investors." What was it that made this financial innovation successful?
William Goetzmann and Jaan Elias
Asset Management, Business History
Hawara is the site of the massive pyramid of Amenemhat III, a XII Dynasty [Middle Kingdom, 1204 – 1604 B.C.E.] pharaoh. The Hawara Labyrinth and Pyramid Complex present a wealth of information about the Middle Kingdom. Among its treasures are papyri covering property rights and transfers of ownership.
Financial Statements Examples – Amazon Case Study
An in-depth look at Amazon's financial statements
What are Financial Statements?
Financial statements are the records of a company’s financial condition and activities during a period of time. Financial statements show the financial performance and strength of a company . The three core financial statements are the income statement , balance sheet , and cash flow statement . These three statements are linked together to create the three statement financial model . Analyzing financial statements can help an analyst assess the profitability and liquidity of a company. Financial statements are complex. It is best to become familiar with them by looking at financial statements examples.
In this article, we will take a look at some financial statement examples from Amazon.com, Inc. for a more in-depth look at the accounts and line items presented on financial statements.
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#1 Financial Statements Example – Cash Flow Statement
The first of our financial statements examples is the cash flow statement. The cash flow statement shows the changes in a company’s cash position during a fiscal period. The cash flow statement uses the net income figure from the income statement and adjusts it for non-cash expenses. This is done to find the change in cash from the beginning of the period to the end of the period.
Most companies begin their financial statements with the income statement. However, Amazon (NASDAQ: AMZN) begins their financial statements section in their annual 10-K report with their cash flow statement.
The cash flow statement begins with the net income and adjusts it for non-cash expenses, changes to balance sheet accounts, and other usages and receipts of cash. The adjustments are grouped under operating activities , investing activities , and financing activities .
The following are explanations for the line items listed in Amazon’s cash flow statement. Please note that certain items such as “Other operating expenses, net” are often defined differently by different companies:
Operating Activities:
Depreciation of property and equipment (…) : a non-cash expense representing the deterioration of an asset (e.g. factory equipment).
Stock-based compensation : a non-cash expense as a company awards stock options or other stock-based forms of compensation to employees as part of their compensation and wage agreements.
Other operating expense, net: a non-cash expense primarily relating to the amortization of Amazon’s intangible assets .
Other expense (income), net: a non-cash expense relating to foreign currency and equity warrant valuations.
Deferred income taxes : temporary differences between book tax and actual income tax. The amount of tax the company pays may be different from what it shows on its financial statements.
Changes in operating assets and liabilities : non-cash changes in operating assets or liabilities. For example, an increase in accounts receivable is a sale or a source of income where no actual cash was received, thus resulting in a deduction. Conversely, an increase in accounts payable is a purchase or expense where no actual cash was used, resulting in an addition to net cash.
Investing Activities:
Purchases of property and equipment (…): purchases of plants, property, and equipment are usages of cash. A deduction from net cash.
Proceeds from property and equipment incentives: this line is added for additional detail on Amazon’s property and equipment purchases. Incentives received from property and equipment vendors are recorded as a reduction in Amazon’s costs and thus a reduction in cash usage.
Acquisitions , net of cash acquired, and other: cash used towards acquisitions of other companies, net of cash acquired as a result of the acquisition. A deduction from net cash.
Sales and maturities of marketable securities : the sale or proceeds obtained from holding marketable securities (short-term financial instruments that mature within a year) to maturity. An addition to net cash.
Purchases of marketable securities: the purchase of marketable securities. A deduction from net cash.
Financing Activities:
Proceeds from long-term debt and other: cash obtained from raising capital by issuing long-term debt. An addition to net cash.
Repayments of long-term debt and other: cash used to repay long-term debt obligations. A deduction from net cash.
Principal repayments of capital lease obligations: cash used to repay the principal amount of capital lease obligations. A deduction from net cash.
Principal repayments of finance lease obligations: cash used to repay the principal amount of finance lease obligations. A deduction from net cash.
Foreign currency effect on cash and cash equivalents : the effect of foreign exchange rates on cash held in foreign currencies.
Supplemental Cash Flow Information:
Cash paid for interest on long-term debt: cash usages to pay accumulated interest from long-term debt.
Cash paid for interest on capital and finance lease obligations: cash usages to pay accumulated interest from capital and finance lease obligations.
Cash paid for income taxes , net of refunds: cash usages to pay income taxes.
Property and equipment acquired under capital leases: the value of property and equipment acquired under new capital leases in the fiscal period.
Property and equipment acquired under build-to-suit leases: the value of property and equipment acquired under new build-to-suit leases in the fiscal period.
#2 Financial Statements Example – Income Statement
The next statement in our financial statements examples is the income statement. The income statement is the first place for an analyst to look at if they want to assess a company’s profitability .
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The income statement provides a look at a company’s financial performance throughout a certain period, usually a fiscal quarter or year. This period is usually denoted at the top of the statement, as can be seen above. The income statement contains information regarding sales , costs of sales , operating expenses, and other expenses.
The following are explanations for the line items listed in Amazon’s income statement:
Operating Income (EBIT):
Net product sales: revenue derived from Amazon’s product sales such as Amazon’s first-party retail sales and proprietary products (e.g., Amazon Echo)
Net services sales: revenue generated from the sale of Amazon’s services. This includes proceeds from Amazon Web Services (AWS) , subscription services, etc.
Cost of sales: costs directly associated with the sale of Amazon products and services. For example, the cost of raw materials used to manufacture Amazon products is a cost of sales.
Fulfillment: expenses relating to Amazon’s fulfillment process. Amazon’s fulfillment process includes storing, picking, packing, shipping, and handling customer service for products.
Marketing : expenses pertaining to advertising and marketing for Amazon and its products and services. Marketing expense is often grouped with selling, general, and administrative expenses (SG&A) but Amazon has chosen to break it out as its own line item.
Technology and content: costs relating to operating Amazon’s AWS segment.
General and administrative : operating expenses that are not directly related to producing Amazon’s products or services. These expenses are sometimes referred to as non-manufacturing costs or overhead costs. These include rent, insurance, managerial salaries, utilities, and other similar expenses.
Other operating expenses, net: expenses primarily relating to the amortization of Amazon’s intangible assets.
Operating income : the income left over after all operating expenses (expenses directly related to the operation of the business) are deducted. Also known as EBIT .
Net Income:
Interest income: income generated by Amazon from investing excess cash. Amazon typically invests excess cash in investment-grade , short to intermediate-term fixed income securities , and AAA-rated money market funds.
Interest expense : expenses relating to accumulated interest from capital and finance lease obligations and long-term debt.
Other income (expense), net: income or expenses relating to foreign currency and equity warrant valuations.
Income before income taxes : Amazon’s income after operating and non-operating expenses have been deducted.
Provision for income taxes: the expense relating to the amount of income tax Amazon must pay within the fiscal year .
Equity-method investment activity, net of tax: proportionate losses or earnings from companies where Amazon owns a minority stake .
Net income: the amount of income left over after Amazon has paid off all its expenses.
Earnings per Share (EPS):
Basic earnings per share : earnings per share calculated using the basic number of shares outstanding.
Diluted earnings per share: earnings per share calculated using the diluted number of shares outstanding.
Weighted-average shares used in the computation of earnings per share: a weighted average number of shares to account for new stock issuances throughout the year. The way the calculation works is by taking the weighted average number of shares outstanding during the fiscal period covered.
For example, a company has 100 shares outstanding at the beginning of the year. At the end of the first quarter, the company issues another 50 shares, bringing the total number of shares outstanding to 150. The calculation for the weighted average number of shares would look like below:
100*0.25 + 150*0.75 = 131.25
Basic: the number of shares outstanding in the market at the date of the financial statement.
Diluted : the number of shares outstanding if all convertible securities (e.g. convertible preferred stock, convertible bonds ) are exercised.
#3 Financial Statements Example – Balance Sheet
The last statement we will look at with our financial statements examples is the balance sheet. The balance sheet shows the company’s assets , liabilities , and stockholders’ equity at a specific point in time.
Learn how a world-class financial analyst uses these three financial statements with CFI’s Financial Modeling & Valuation Analyst (FMVA)® Certification Program !
Unlike the income statement and the cash flow statement, which display financial information for the company during a fiscal period, the balance sheet is a snapshot of the company’s finances at a specific point in time. It can be seen above in the line regarding the date.
Compared to the Cash Flow Statement and Statement of Income, it states ‘December 31, 2017’ as opposed to ‘Year Ended December 31, 2017’. By displaying snapshots from different periods, the balance sheet shows changes in the accounts of a company.
The following are explanations for the line items listed in Amazon’s balance sheet:
Cash and cash equivalents : cash or highly liquid assets and short-term commitments that can be quickly converted into cash.
Marketable securities: short-term financial instruments that mature within a year.
Inventories : goods currently held in stock for sale, in-process goods, and materials to be used in the production of goods or services.
Accounts receivable , net and other: credit sales of a business that have not yet been fully paid by customers.
Goodwill : the difference between the price paid in an acquisition of a company and the fair market value of the target company’s net assets.
Other assets: Amazon’s acquired intangible assets, net of amortization. This includes items such as video, music content, and long-term deferred tax assets.
Liabilities:
Accounts payable : short-term liabilities incurred when Amazon purchases goods from suppliers on credit.
Accrued expenses and other: liabilities primarily related to Amazon’s unredeemed gift cards, leases and asset retirement obligations, current debt, acquired digital media content, etc.
Unearned revenue : revenue generated when payment is received for goods or services that have not yet been delivered or fulfilled. Unearned revenue is a result of revenue recognition principles outlined by U.S. GAAP and IFRS .
Long-term debt: the amount of outstanding debt a company holds that has a maturity of 12 months or longer.
Other long-term liabilities: Amazon’s other long-term liabilities, which include long-term capital and finance lease obligations, construction liabilities, tax contingencies, long-term deferred tax liabilities, etc. (Note 6 of Amazon’s 2017 annual report).
Stockholders’ Equity:
Preferred stock : stock issued by a corporation that represents ownership in the corporation. Preferred stockholders have a priority claim on the company’s assets and earnings over common stockholders. Preferred stockholders are prioritized with regards to dividends but do not have any voting rights in the corporation.
Common stock : stock issued by a corporation that represents ownership in the corporation. Common stockholders can participate in corporate decisions through voting.
Treasury stock , at cost: also known as reacquired stock, treasury stock represents outstanding shares that have been repurchased from the stockholder by the company.
Additional paid-in capital : the value of share capital above its stated par value in the above line item for common stock ($0.01 in the case of Amazon). In Amazon’s case, the value of its issued share capital is $17,186 million more than the par value of its common stock, which is worth $5 million.
Accumulated other comprehensive loss: accounts for foreign currency translation adjustments and unrealized gains and losses on available-for-sale/marketable securities.
Retained earnings : the portion of a company’s profits that is held for reinvestment back into the business, as opposed to being distributed as dividends to stockholders.
As you can see with the above financial statements examples, financial statements are complex and closely linked. There are many accounts in financial statements that can be used to represent amounts regarding different business activities. Many of these accounts are typically labeled “other” type accounts, such as “Other operating expenses, net”. In our financial statements examples, we examined how these accounts functioned for Amazon.
Additional Resources
Now that you have become more proficient in reading the financial statements examples, round out your skills with some of our other resources. Corporate Finance Institute has resources that will help you expand your knowledge and advance your career! Check out the links below:
- Financial Modeling & Valuation Analyst (FMVA)® Certification Program
- Financial Analysis Fundamentals
- Three Financial Statements Summary
- Free CFI Accounting eBook
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Case Study for Financial Research and Analysis
The client is a global asset management firm that uses a proprietary investment strategy to manage investment portfolios spread across 45 countries. It employs a result-driven methodology by deploying a highly effective equity allocation model to make funds perform better than the market average. It manages portfolios by investing in highly diversified and liquidated funds to consistently provide better value to its clients.
Situation - Business Need
In keeping with its business strategies and equity allocation methodologies, the client's requirement was focused on deriving knowledge necessary to exploit key market indicators and indices from across 45 nations after accounting for financial regulations and policies prevalent in those countries. It relied on regular updates on monetary and fiscal policy changes to frame its investment policies.
The client decided to engage our services for research and analysis of financial data in conformance with pre-defined formats, as well as to derive economic report summaries in a phased manner.
The challenges that the business situation presented were:
- Employing highly qualified personnel to conduct research and analysis of financial data
- Providing country-wise summaries of economic conditions and its repercussions after deriving and collating data from the Internet
- Presenting summarized information on a 12-point standard format as per client specifications - standards included financial compliance, corporate governance, money laundering, class action lawsuits, financial regulatory mechanisms, and adoption of IFRS
- Providing updates to existing reports in conformance with norms set by the client
- Researching and collating relevant information and presenting it in an understandable summary format
- Facilitating a multi-lingual research solution to support the non-English speaking nations
- Using Microsoft Word as the output format for economic report summaries
- Reporting on major events that affect global markets in accordance with criteria provided by the client
Solution - The Flatworld Solutions Approach
The Flatworld Solutions' approach comprised of the following components:
- Extracting reports in pre-defined templates provided by the client
- Employing the services of a committed team, which included 3 analysts and a senior analyst
- The team had necessary qualifications in Business and Economics, which enabled them to comprehend the nuances of the project and ensure its successful completion
- Earmarking adequate resources to cater to any contingency requirement during the course of the project
- Using discretion while assigning countries and standards to the team members to ensure the right person was assigned to the right job
- Providing updates after careful analysis and research on public domains and authoritative sites, and making use of 'track changes' tool to facilitate reviews. Analysts added updates to the standards template after thoroughly researching relevant public domains for compliance standard updates and extracting useful information from relevant sources
- Deploying the latest security software to ensure top of the line security to client data
- Level 1: QC layer involves a self-check by analysts/ senior analyst to comply with the Standard Operating Procedure and Process Check List
- Level 2: QC layer involves Quality check by the Senior Analyst/ Team Leader for completeness, accuracy and appropriateness of language
- Level 3: Final QC involves a 'Client Eye Check' by the Project Manager, which includes checking whether the output delivered matches the requirements from the client's perspective
Products and Service used
Flatworld Solutions followed a very strict procedure for conducting research, especially when working on the fiscal and monetary policies prevalent in different countries. The analysts were instructed to use only sources that are authoritative, for instance, the Official IMF site and other country-specific government sites.
The duration of the assignment was 3 months. Flatworld Solutions formed a team consisting of a senior analyst and 3 analysts to work full-time. A plan was formulated to attend to any contingency and make sure there were no disruptions during the course of the project.
- The client was able to capitalize on the competency of a high-quality staff
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- A coordinator, who ensured quality compliance, was the only personnel the client employed
- The client was able to direct its resources to focus on core issues
- Rigorous data security measures deployed by us helped alleviate any safety concern
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- Investment Banking Case Studies
Investment banking case studies are a ritual followed by almost every bulge bracket Investment Bank (IB) hiring process. Is it a tough nut to crack? The answer is yes, but only if you have not prepared well. I am not here to frighten you, but let us clarify that preparing for case studies is as important as personal interviews. Not clearing this round could endanger your dream of getting into an investment bank.
But you have nothing to worry about. With this article on investment banking case studies, we shall see what they are and how they are used to judge IB aspirants like you. Also, you will find out how to prepare and answer case studies confidently and get your dream job. There, I already see you beaming with that bright smile, rejoicing your entry into investment banking Investment Banking Investment banking is a specialized banking stream that facilitates the business entities, government and other organizations in generating capital through debts and equity, reorganization, mergers and acquisition, etc. read more .
The case studies can be seen when you interview for Senior Analyst or Associate-level positions at an investment bank. Also, they are common when you appear for lateral interviews, i.e., while moving to another investment bank.
Pre-judging your inhibitions regarding investment banking case studies, I have listed a few investment banking questions Investment Banking Questions The purpose of this Investment Banking Interview Questions and Answers is simply to help you learn about the investment banking interview topics. read more below. Hopefully, my answers will help you learn about this exciting round at the IB assessment center.
Table of contents
Why investment banking case studies, what are the types of investment banking case studies, decision-making case study example:, modeling case study example, how to prepare for investment banking case studies.
- While working on the Investment Banking Case Studies
While presenting your Investment Banking Case study
While answering the questions, investment banking case study – situation:, what you have to do:, the solution to the investment banking case study, presentation of investment banking case study, recommended articles.
You are free to use this image on your website, templates, etc., Please provide us with an attribution link How to Provide Attribution? Article Link to be Hyperlinked For eg: Source: Investment Banking Case Studies (wallstreetmojo.com)
What are investment banking case studies?
I am sure you must have solved case studies, particularly if you have been to a business school. The case studies at investment banks are similar, wherein you would be given a business situation to analyze and provide detailed recommendations.
You would be given all the required information and enough time to study general case studies. It would typically be a business problem that asks for your opinion. Your job is to: –
- Make necessary assumptions
- Analyze the given situation, which could usually be a client’s business
- Advise solution on the present problem with supportive reasons
While the case study round would happen most of the time on the day of your interview, some recruiters also provide the material beforehand for the candidates to prepare well at home. You are then expected to discuss the case study during your interview.
A typical case study would have the following features: –
- It would be a hypothetical situation, although it could resemble an existing condition of a corporation.
- It attempts to recreate its strategic decisions and its advisors.
- Financial information may or may not be provided depending on the relevance of the analysis that needs to be done.
- Your suggestions must be your or your allotted team’s original work.
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- The answer is simple. The bankers want to judge a candidate in real-world situations. They want to test the three most important skills required in a banker, analytical, communication, and people skills. Due to these reasons, the case study weighs much more than the other ways of judging candidates in the investment banking recruitment process.
- The investment banking job requirements differ from those of general finance jobs. Hence, the bankers want to use non-traditional candidates to identify the IB potential.
- Case studies give banking recruiters an indicator of how you would perform on the job . Hence, considered a better measure to judge candidates.
- You do not have to worry if your answer is correct or not. Instead, the interviewers are eyeing the candidate’s thought process and analytical skills to find a solution to the given problem creatively.
- Investment banking case studies are designed in such a manner that it enables the candidates to think on their own and brainstorm.
- One of the primary skills required in candidates for such jobs is solving problems. Therefore, recruiters want a basic insight into tackling challenging situations and apply their intelligence, education, and work experience to handle them successfully.
- Case studies appraise how you process information and react to new and surprising situations.
- Many times, the case studies are to be solved with a group. Hence, the interviewer here tests how you work within a team .
Broadly, you can expect two types of case studies at the IB assessment center: the decision-making case studies and financial modeling Financial Modeling Financial modeling refers to the use of excel-based models to reflect a company's projected financial performance. Such models represent the financial situation by taking into account risks and future assumptions, which are critical for making significant decisions in the future, such as raising capital or valuing a business, and interpreting their impact. read more case studies.
Decision-making Investment Banking Case Studies
- They are more commonly asked as compared to the modeling-type case study. In this case study, you must make decisions for your client and advise them in certain situations.
- The client case studies could be based on finding sources through which one should raise capital, whether they should undertake the proposed merger Merger Merger refers to a strategic process whereby two or more companies mutually form a new single legal venture. For example, in 2015, ketchup maker H.J. Heinz Co and Kraft Foods Group Inc merged their business to become Kraft Heinz Company, a leading global food and beverage firm. read more , and why.
- You should expect these questions to be made available on the spot. It means that the case study is given to you in your interview. Therefore, you must solve and present the case within the given time frame.
- For this entire process, you would be given around 45-60 minutes for preparation and a 10 minutes presentation followed by a round of questions and answers.
- On-the-spot case studies would not involve a deep analysis of the case as the time required to do the same is not sufficient and would be more about presentation and teamwork skills put to the test.
One of your clients is a global corporation that manufactures and distributes a wide range of perfumes. They are contemplating ways to expand their business. There are two ways to either introduce a new range of fragrances with the current distribution channels or start a completely new company with different stores.
You are supposed to find out which would be a better solution for the business. To solve this, you need to compare the returns of the investments and decide on the solution with supportive reasons.
Modeling Investment Banking Case Studies
- These are the take-home case studies where you must do financial modeling and simple valuation. So, it is more like a modeling test than a case study.
- The case study would perform FCFF valuation on a company or prepare a simple merger or leveraged buyout Leveraged Buyout LBO (Leveraged Buyout) analysis helps in determining the maximum value that a financial buyer could pay for the target company and the amount of debt that needs to be raised along with financial considerations like the present and future free cash flows of the target company, equity investors required hurdle rates and interest rates, financing structure and banking agreements that lenders require. read more model.
- You would be expected to analyze the corporations’ valuation multiples and decide whether they are undervalued or overvalued.
- Here, you are given a few days to complete your analysis. Then, you need to showcase your recommendations to the bankers on the interview day over a 30–45-minutes presentation.
- Compared to the client case studies, the analysis would be much more profound as you would be given enough time to work on.
A pharmaceutical company has decided to make an acquisition . It has identified the company and has approached you to advise how much they should pay. In addition, you are provided with the necessary financial information Necessary Financial Information Financial Information refers to the summarized data of monetary transactions that is helpful to investors in understanding company’s profitability, their assets, and growth prospects. Financial Data about individuals like past Months Bank Statement, Tax return receipts helps banks to understand customer’s credit quality, repayment capacity etc. read more , metrics and multiples, and the buyer and seller company overview.
To solve this, first, you need to find out if the acquisition is possible. Then, how would the deal structure and synergies be if the buyer has sources to finance the deal? After this, you need to use multiple valuation metrics to decide the price range of the agreement.
- Make sure you read business news often and focus on discussing how and what business transactions are concerned.
- Learn about various valuation techniques, their calculation, and how they are interpreted.
- Especially for modeling and valuation-based case studies, you must be prepared to format it consistently using PowerPoint and Excel.
- Yes, that is all you need to do. Read and solve as many case studies as possible so that you get the knack for understanding business scenarios and solving them.
- You may not find real case study questions that banks use for interviews. But since you have to practice, try asking a friend or colleague you know who has been through such case study rounds for the kind of questions they received.
- If even that is possible, create your case study . Yes, you could do that by taking up a company, building up a hypothetical situation, and asking yourself questions like whether they should merge with ABC Co.? What kind of capital structure should the company have?
- Check the company’s website to see if sample case studies are available for reference.
To practice more on case studies and tests at the assessment center, check out
- https://casequestions.com/
- https://www.caseinterview.com/
Tips for Performing Well at Investment Banking Case Studies
While working on the investment banking case studies.
- Make a concrete decision and base your recommendations on logical reasons.
- Use a structured approach to tackle the problem.
- Focus on the most important issues prevalent in the case.
- Understand the case and questions carefully before interpreting and think twice before finalizing the problem’s decision.
- Do not panic if the solution to the case is not obvious.
- For modeling case studies, format the Excel and PowerPoint professionally.
- Prepare the type of questions you may be asked during your presentation.
- Assess all the relevant factors and possible problems, but keep in mind your resources.
- The solutions you provide should be realistic and be aware of the implications of the organizations under study.
- Have strong logical reasons behind every statement you make and cater to the case’s critical issues at the beginning.
- Having specific knowledge regarding the industry under study is unnecessary, but it would be an added advantage.
- When preparing, focus on reading deal news and practice as many scenarios as possible.
- Practice public speaking.
- Speak slowly and clearly.
- The presentation needs to be structured logically.
- While working in groups, interact with everyone. The interviewer usually eyes leadership skills and teamwork.
- Do not just try to show your ability to talk finance and business knowledge in an applied sense.
- Remember not to exceed the time limit allotted to present the slides.
- Rehearse well before so that it goes through smoothly.
- If it is a group presentation, ensure everyone gets the chance to speak and express their views. The assessors would mark your behavior while working in a team.
- Do not hurry to provide the answer. Instead, always organize your thoughts and then answer.
- Be attentive throughout the process.
- Expect the interviewer to ask additional questions to test how to deal with the unexpected.
- Be creative and think “out of the box” to get the banker’s attention towards you.
- The next important step is collecting your thoughts and bringing them across the main points. Do not beat around the bush, as you will have limited time. Hence, be precise as you speak.
- There is nothing right and wrong, but arguments (which surely happen if there are group discussions) strongly mention why you did not opt for those possibilities.
Investment Banking Case Study- Sample
You must be wondering how we apply all this in a case study. Let us understand investment banking case studies through an example discussed below: –
Simons Ltd., a software company, wants to maximize its shareholder value. It has three options to look forward to selling the company, i.e., making small acquisitions or growing organically. Argus Ltd. requests advice from your bank on the right course of action.
- They would provide an overview of the business, its competitors, probable acquisition candidates, financial statements, and future projections to review the company.
- Read through the provided information and understand the industry.
- Try to gauge the worth of the company compared to its peers Company Compared To Its Peers Comparable comps are nothing but identifying relative valuations like an expert to find the firm's fair value. The comparable comp process starts with identifying the comparable companies, then selecting the right valuation tools, and finally preparing a table that can provide easy inferences about the fair valuation of the industry and the company. read more .
- Conduct a valuation analysis using DCF Using DCF Discounted cash flow analysis is a method of analyzing the present value of a company, investment, or cash flow by adjusting future cash flows to the time value of money. This analysis assesses the present fair value of assets, projects, or companies by taking into account many factors such as inflation, risk, and cost of capital, as well as analyzing the company's future performance. read more and relative valuation techniques.
- Compare the three options with the valuation and the impact of acquisitions.
- Prepare a presentation giving our recommendation on the best method to maximize the shareholder value Shareholder Value Shareholder's value is the value that company shareholders receive as dividends and stock price appreciation due to better decision-making by the management that ultimately results in a company's growth in sales and profit. read more in this situation.
The answer to this case study is somewhat subjective. You could take a stand and support it with reasons. However, here, we assume to sell the company for understanding purposes. Let us now see how you could sell as the suggested option.
We recommend selling because of the following reasons: –
- The industry is growing slowly (less than 5% a year).
- The companies are overvalued.
- The acquisitions would not increase the revenue or profit significantly.
- Please keep it straightforward with the reasons for your recommendation to sell.
- A brief overview of the industry, its growth characteristic, and its position.
- How would the company grow organically in the next 5-10 years?
- Briefly explain the acquisition candidates and opportunities with them.
- Justify why both the organ growth options and the acquisitions do not work out.
- Explain the DCF analysis you performed and show how selling is the best feasible option.
Since investment banking case studies are an important element in the interview process, messing it up will mean missing the offer. So instead, consider investment banking case studies as an opportunity to showcase your skills and talent to investment bankers. Those minutes could change your career, so make them count and give your best.
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Financial Analysis And Forecasting Harvard Case Solution & Analysis
Home >> Finance Case Studies Analysis >> Financial Analysis And Forecasting
INTRODUCTION
In early October 2002, when the interest rates were low, housing market was strong, unemployment was increasing, and customer confidence was uncertain, thus, the economic growth was very slow. The Retail Building – Supply Industry sustains to be going resilient. The industry was so strong that it was anticipated that the industry size will grow from $175 billion to $194 billion in five years.
This industry is called a consolidated industry because it is divided into three retail layouts, namely, hardware stores, lumberyards, larger format home centers, covering the share of 15%, 34%, and 51% of sales respectively. There are two market leaders dominating in this consolidated industry namely Home Depot and Lowe’s holding market share of 29% and 10.8% respectively.
Both market leaders have a well reputed strong brand name. They have earned their customers satisfaction and customer’s loyalty over the time period by providing its customers with best quality and exceptional customer care services.
Currently, both are making their back breaking efforts to rally their financial reports by enhancing up their top and bottom lines. They are making different strategies to compete more strongly by capturing more market share; they are penetrating into new markets, bringing innovations, offering excellent customer care services in order to attract more customers towards themselves. Not only they are offering traditional home centers, but also they are offering one-stop design shops and decorating shops as well as online stores.
Both the companies are also competing with each other by making heavy acquisitions. Home Depot, keeping in view of becoming the prevalent flooring supplier to domestic construction market, recently acquired three leading flooring enterprises. On the other hand, Lowe’s had made a billion transaction in acquiring a 38 store, warehouse-format chain Eagle Hardware.
Currently, Lowe is performing more efficiently than Home Depot, its growth rate is expected to increase in future as depicted in its forecast, which is attracting potential shareholders in the market towards Lowe’s. The new CEO of Home Depot is making new strategies in order to enhance overall efficiency and cost effectiveness by setting ongoing systems on inventory as well as working on their customer services in order to make them better.
PROBLEM STATEMENT
Carrie Galeotafiore, financial analyst at value line publishing has been analyzing the financial performance of Lowe’s and Home Depot. She has to present the 3 rd quarterly report in which she also has to present the five years forecasted financial statements of Lowe’s and Home Depot separately. She has forecasted the financial performance of Home Depot and she is now looking forward to forecast the financial performance of Lowe’s
She is keen to know that currently which company is at the better position, which company will be the market trailblazer in future and as to what assumptions did she take to forecast the financial information of both key-players.
FINANCIAL RATIOS ANALYSES
In exhibit 1 the financial ratios of Home Depot have been calculated which shows that the return on capital was high in 1999 which is 17.3%, whereas due to decrease in profitability currently it has a ratio of 15.20%. On the other hand, return on equity is decreasing continuously and currently it is 16.8%.
On the other hand, gross profit margin and net profit margin of Home Depot are increasing as compared to previous years, which show that the company is making more profits as compared to previous years. It also indicates that the company is able to control its costs more efficiently than previous years.
Moreover, the total growth rate of the company is diminishing. Exhibit 1 shows that the total growth rate of the company in years 1998, 1999, 2000, and 2001 is 25.1%, 27.2%, 19.0%, and 17.10%. This is an alarming sign to the company which shows that if the company does not take any major preventive steps, then the company might lose its competitiveness because the growth rate is continuously declining which needs to be controlled.
Financial Analysis And Forecasting Case Solution
In exhibit 2, the financial ratios of Lowe’s have been calculated, which depicts the historic trends of the financial performance. Shareholders are attracted towards the company because the return on capital and equity are increasing and currently the return rate on capital and on equity are 10.4% and 15.3% respectively.
The company seems profitable because the gross profit margin and the net profit margin of the company are increasing robustly. On the other hand, the operating expense ratio is decreasing as compared to last 2 years, which shows that the company has good system of cost controlling and maintaining their operations cost effective..............
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- High Frequency Trading(1): Empirical Assessment
- Mutual Fund Fees: Transparency and Worth
- Are Museums Right to Refuse Sackler Money?
- Greenwashing: The Dow Jones Sustainability Indices Case
- Is Warren Buffett an Ethical Investor?
- The Case of Danske Bank and Money Laundering
- Banking Structure Shapes Banking Ethics
- Fintech Payday Lending: The Case of Wonga
- Hikvision and Dahua: The Case for Divestment
- CliFin: Asset Management and Climate Change
- Peer to Peer Lending: Lending Club
- CliFin: Climate Finance to Avoid Climategeddon
- Big Data and Impact Investing
- The Case of Vijay Mallya and Kingfisher Airlines
- Ethics of College Football Funding: The Case of the University of Kansas
- Islamic Financing: Malaysian Sukuk
- Technology and Unemployment
- India’s DEMONetization: An Ethics Analysis
- Conflicts of Interest: Wilbur Ross
- ANZ, Deutsche Bank, Citi: Criminal Cartel Case
- Financial Ethics in Catholic Social Justice
- Ethics Assessment: International Financial Institutions
- ESG and Government Regulation
- Payday Lending: An Ethics Evaluation
- Commonwealth Bank of Australia Money Laundering Case
- Morgan Stanley Code of Ethics: 2008 vs. 2018
- Ethical Investing: Norway’s Sovereign Wealth Fund
- A Sweet Deal? The Ethics of Sugar Taxes
- Universal Basic Income: More Empirical Studies
- Ethics Assessment: Consumer Financial Protection Bureau
- Fairness Assessment: Australian Housing Tax Subsidies
- Och-Ziff’s African Bribery
- Globalization, Wealth Inequality…then Protectionism
- Flooding the Swamp: The Case of Michael Catanzaro
- CETA: Free Trade for the Common Good
- Impact Investing: Big Society Capital
- Battle for the Soul of Bitcoin
- Wealth Inequality Workshop: A Video Documentary
- Philosophical Foundations of Impact Investing
- Mylan’s EpiPen Pricing Scandal
- Bitcoin: To Regulate or Not To Regulate?
- Argentina vs. the Hedge Funds: the 2014 Argentina Bond Default
- Crash Interventions: Shanghai Stock Market Case
- Case Study: Banca Monte dei Paschi di Siena
- Case Study: Iceland’s Banking Crisis
- Impact Investments: Good Profits?
- When Businessmen Rule The State
- Case Study: Deutsche Bank Money Laundering Scheme
- Ethics Analysis: The Panama Papers
- Wells Fargo Fake Accounts Scandal
- Ethics Analysis: Foreign Bribery Part 2: Trump Financial Ethics Watch Series
- Ethics Analysis: Trump’s Conflicts of Interest Part 1: Trump Financial Ethics Watch Series
- Ethics of US Student Loan Debt
- Pharmaceutical Industry Ethics
- The Valeant Pharmaceuticals Case
- Trade Adjustment Assistance and Game Theory
- Universal Basic Income: Empirical Studies
- Ethics of Universal Basic Income
- The Ethics of Tax Breaks on Bank Fines
- The Transparency Task Force
- 2008 Financial Crisis
- Review: The Big Short
- Ethics of Socially Responsible Funds
- Mitigating TBTF: The Australian Four Pillars Policy
- The Ethics of China’s Land Expropriation Rules and Reforms
- Necessity and The Minimum Wage
- Financing America’s Public Schools Ethically
- The Alchemy of the G-30 Report on Banking Conduct and Culture
- Has Bank Culture Changed to Ensure Ethical Behavior?
- More on the Ethics of Bitcoin
- Ferguson: A Financial Ethics Explanation
- Tax Systems: A Brief Ethical Discourse
- The Case of Goldman Sachs and 1MDB
- The Ethics of Bitcoin
- Ethical Issues of the Puerto Rico Debt Crisis
- Forex Scandal: The Ethics of Exchange Rate Manipulation
- Codes of Ethics for Financial Institutions
- Income Inequality Series
- Insider Trading Cases
- Taxation Cases
- India Series
- Asian Cases
- Global Financial Leaders Insist on the Necessity of Financial Ethics
- JPMorgan: Code of Ethics and Revisions Since the 2008 Financial Crisis
- Goldman Sachs: Code of Ethics Post 2008
- Trans-Pacific Partnership: Common Good or Corporate Good?
- China and Corruption: The Case of GlaxoSmithKline
- Ethics and Trickle Down Economics: A Case Study of Kansas
- Community Banking: The Case of The Bank of Prairie Village
- Greek Debt Crisis: The EU Should Learn from UAE
- The Ethics of Executive Compensation: A Matter of Duty
- The Ethics of Swiss National Bank’s Currency Intervention
- Credit Default Swaps: An Update
- Profit and Ethics in Short Selling: The Case of Muddy Waters
- The Fall of Anglo Irish Bank
- Corporate Fraud in India: Case Studies of Sahara and Saradha
- Corporate Disasters in India: Bhopal, Uphaar and AMRI Hospital
- Hong Kong: Economic Freedom Belies Crony Capitalism
- An Ethical Analysis of the 2014 FIFA World Cup in Brazil
- Cross Border Securities Enforcement: The Case of Tiger Asia Management, LLC
- The Effectiveness and Ethics of Economic Sanctions
- The Vatican Bank: Conforming to Caritas in Veritate?
- Policy and Poverty: US, UK and China
- Cheung Kong and the Apex Horizon Hotel
- Chinese Investments in Africa: The Ethics of Transparency
- The Bangladeshi Factory Collapse: A Case for Intervention and Policy Change
- The LIBOR Scandal and Reform Agenda: Can We Trust These Rates Again?
- What Should We Charge the Poor: Ethics in Microfinance
- Shining a Light on Dark Pools
- The EU Financial Transaction Tax Debate
- HSBC Money Laundering Case: “Too Big to Fail” does not mean “Too Big to Jail”
- Quantitative Easing and Income Inequality
- Bank of America’s Takeover of Merrill Lynch
- Insider Trading in Japan: The Nomura Case
- Private Equity Funds: Christian Ethics and Leveraged Buyout Funding
- The FSA vs. David Einhorn: A Case of Regulatory Overreach?
- Nationalization: Argentina vs. Spain, The YPF Repsol Case
- Jon Corzine and MF Global
- Dimon and the Whale
- The Ethics of Taxation Trilogy: Part I – An Ethical Analysis of Inheritance Tax
- The Ethics of Taxation Trilogy: Part II – The Buffett Rule: The Ethics of a Millionaire’s Tax
- The Ethics of Taxation Trilogy: Part III – Carried Interest and Taxing Private Equity
- Taiwan’s Asset Management Corporations
- Insider Trading: What Would Rawls Do?
- The Dearth of Ethics and the Death of Lehman Brothers
- Financing, Ethics, and the Brazilian Olympics
- Islamic Finance
- Taiwan’s Credit Card Crisis
- The Accumulation of Greek Debt
- Goldman Sachs and the ABACUS deal
- High Frequency Trading
- Hedge Funds
- Disclosure: The Bernie Madoff Case
- Mark Cuban and Insider Trading
- IndyMac and the Office of Thrift Supervision
- Lehman Brothers and Repo Accounting
- Municipal Reinvestment Case
- Raj Rajaratnam and Insider Trading
- Name First Last
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When you’re performing research as part of your job or for a school assignment, you’ll probably come across case studies that help you to learn more about the topic at hand. But what is a case study and why are they helpful? Read on to lear...
Case studies are important because they help make something being discussed more realistic for both teachers and learners. Case studies help students to see that what they have learned is not purely theoretical but instead can serve to crea...
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Become an Excel Pro & Financial Analyst with 9 case studies. Learn to carry out advanced financial modeling and analysis using top techniques in Excel.
Well researched and analyzed financial ethics case studies of current and past real cases with financial ethics implications.