1. Identify critical performance gaps based on last financial statements.
2. identify the performance problems and issues.
3. design key solutions and strategies
4. integrate them into models.
5. Simulate models to arrive at accepted ROE goals.
6. Strategic maps
7. Cost volume profit model
8. Working capital strategies (trading)
9. Fixed capital strategies
10. Sources of capital
11. Cash flows and liquidity
12. ROE model and objective
13. Estimate the results
Monday, February 21, 2011
Step 1 Cost volume profit analysis determines the size of business needed
Determine the expected size of the business in term of costs volume and price of the product.
Profit planning could be estimated by adopting the same model.
The relationship between fixed and variable costs
Is the volume and price meet the requirement of the target market?
Can you convert fixed costs into variable?
Can some of these costs be outsourced?
This model could be simulated with changes in the variables such as price or costs or volume.
The formula: Fixed Costs/Contribution margin = units
or Fixed costs/Contribution margin ratio.= sales value.
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