Exam 1 Study Guide Chapter 1: What is Strategy and why is it important? What is Competitive Advantage? Competitive advantage. It is a superior performance relative to other competitors in the same industry or the industry average. Sustainable - competitive advantage. When a company is able to outperform its competitors or the industry average over a prolonged period of time. Competitive disadvantage Underperformance relative to other competitors in the same industry or the industry average.
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RELATIVE VALUATION Introduction 2 The majority of equity research reports are based on multiples Most analysts use relative valuation because it is safer It is a short term strategy Forward multiples are better then historical ones because the price is related to expected cash flow Relative valuations usually means that you need to: 1. 2. 3. Come up with comparable companies Standardize by dividing by something common to all stocks Compare based on certain
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consider your “opportunity costs” or what you are giving up when you choose one option over another. For example, what is the cost of going to college? The answer is NOT just the tuition. It is also the money you would have made if you would have been working instead of going to class. Understanding the pros and cons of each alternative is the basis for making a strong decision. One caveat: Sometimes marketers and other salespeople will try to take advantage of you by giving you a false
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a product or job is sum total of the variable cost targets fixed for each element of cost (material, labor, power, consumables etc.) required to be incurred for producing that product or job estimated on zero-base principles, plus the fixed cost targeted on the same principles, so that the total cost plus the estimated margin of profit is not more than the price the product is capable of fetching in the market. Zero base principle is the variable cost incurred for producing zero units of the product
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traditional types of exchange rate risk faced by firms, namely transaction, translation and economic risks, presents the VaR approach as the currently predominant method of measuring a firm’s exchange rate risk exposure, and examines the main advantages and disadvantages of various exchange rate risk management strategies, including tactical vs. strategical and passive vs. active hedging. In addition, it outlines a set of widely-accepted best practices in managing currency risk and presents some of the
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planned exit strategy. The company doesn’t focus only a certain industry or country, and promises to provide both management and consulting services to its companies. TeamSystem S.p.A is an Italian based Software Company that does tax, payroll and accounting services. The company was founded in 1979, and its industry is broken and often under a regulatory change. TeamSystem controls 14% of the market with 28,000 clients and have high customer retention rate. (T-2nd most). Private equity investments
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place and time. • Reduce storage and inventory holding cost and improve customer service. MRP system typically requires certain data records which the MRP programs checks and update. The chart below shows the information required to perform MRP and some of the output. Customer order record exactly what each customer has ordered, how many they ordered and when they required delivery. Forecast demand using historical data to predict future trends, cycle and seasonality is always
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price discrimination because the firm saves on handling large orders (Salvatore, 2012, p. 492). Large orders can be shipped at a lesser price compared to smaller orders, saving on shipping cost. There are many companies that reduce the price of the product if the company buys in bulk. In addition, larger orders cost less than smaller orders when dealing with production. For example, if a manufacturing wanted to make only 5 items the time spent on making that smaller order would take just as much time
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sections which are mainly why having financial reporting is not enough, going beyond historical financial reporting, qualitative characteristics of prospective financial information, uncertainties underpinning prospective financial information, other recommendation and conclusion. Why financial reporting is not enough The “Framework for the Preparation and Presentation of Financial Statements’ the International Accounting Standards Board (IASB) stated that the purpose of financial statements is to provide
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In the domestic case, accounting is an information service that provides financial information about a domestic entity to domestic users of that information. International accounting is distinctive in that the entity being reported on is either a multinational company with operations and transactions that transcend national boundaries or involves an entity with reporting obligations to readers who are located outside the reporting entity’s country of domicile. 2. Advantage: Some might argue that
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