Business Quantitative
business quantitative
The Role of Financial Modelling in business model analysis
The need to run the business model numbers
When a new business model is being considered, proponents must first undertake a qualitative review – i.e. determine whether the story underpinning the model makes sense. There needs to be a logic behind the adoption of the model and a compelling case that it will be supported by its intended target audience.
Upon completion of the qualitative review, it is essential that a comprehensive quantitative review is then undertaken. Our experience is that far too many business owners and managers ignore this vital stage of business model assessment. Unfortunately, many believe the hard work is done once they have established a credible story about how they will make money from their proposed business or project.
For each possible business model, there is a unique set of variables – both technical and financial – which will impact upon the performance of the business. It is not enough to test movements in one key variable at a time. When testing new business models, it is imperative that any combination of key variables can be tested simultaneously and rapidly in order to assess the likely impact upon financial performance. This can only be achieved through the use of a customised, integrated model which has been designed for this purpose.
Financial projection models
A crucial first step in designing an appropriate financial model for this purpose is the identification of all key drivers underpinning, and variables likely to impact upon, the financial performance of the proposed new business, business unit or project. This process is also crucial when an expansion, a merger or an acquisition is being contemplated. Comprehensive, sophisticated and customised financial projection models should then be designed and constructed to incorporate these drivers and variables in order to project likely financial performance across a selected period, usually five years, and to assess financial feasibility.
If done properly, these financial feasibility assessment models can become valuable management tools which can be run repeatedly in order to project financial performance by month and year in all anticipated operating circumstances. Of particular importance, cashflow patterns can be mapped and analysed to identify likely maximum cash requirements under all scenarios contemplated, thereby allowing debt and/or equity financing requirements to be planned on a timely basis.
All businesses differ in the scope and range of variables likely to impact upon financial performance. Comprehensive, well-designed and well-constructed financial models should be able to easily and repeatedly test for the effects of changes in all variables likely to impact upon the financial performance of the business, project or investee entity. Importantly, they should also be able to test all relevant permutations and combinations of relevant variable sets, and to estimate the effects of both upside and downside departures from the anticipated scenario.
About the Author
Greg O’Connor is Managing Director of Wingarra BMI – www.wingarrabmi.com – a specialist business consultancy which works with clients to road-test alternative business models, and to optimise those found to be most profitable. Its specialty is in identifying and mapping all variables likely to impact upon the financial performance of a new project or business or business unit, and in designing and constructing robust and customised technical/financial models which allow all combinations of these variables to be fully tested.
I just want to work with numbers in business, which degree will help me do this?
I can get a B.A. in Mathematics or a B.A. in Economics, or a B.S. in Quantitative Economics. All I want to do is work with solving business problems through math. Which of these degrees best fits my preferences?
It depends on what the actual logistics and classes of the degrees are. Why don’t you look at the classes and see which one has the most that interest you. I think a B.S. in Quantitative Economics sounds the best for working with numbers in business with a B.A in Mathematics next and then a B.A in Economics because Economics is not only working with numbers. There is also accounting and finance that you could look at.
Really, it is up to you and which classes you like the most. You could always be undecided and take some of the classes to decide which way you want to go.
|
|
The Official Guide to the GRE revised General Test $18.92 ‘Test prep for all test dates on or after August 1, 2011′–Front cover… |
|
|
The Official Guide for GMAT Verbal Review, 2nd Edition $7.59 Product Description The only official verbal review for the GMAT from the creators of the test. Anyone preparing for the Graduate Management Admission Test® (GMAT) knows it’s important to study with the experts. With The Official GMAT Verbal Review, 2nd Edition, you’ll get questions, answers, and explanations straight from the source. The only official verbal review for the GMAT Exam, this bo… |
|
|
New GRE 2011-2012: Strategies, Practice, and Review (Kaplan GRE) $10.65 NEW FOR AUGUST 2011 TEST CHANGE! The Graduate Record Exam (GRE) is taken by college graduates looking to gain entrance to graduate school in business, the arts, sciences, and humanities. With an increasing number of graduate and business school applicants and an increasing number of GRE test-takersânow a complete test overhaul by the test-makerâa high GRE score is critical to setti… |
|
|
Quantitative Methods for Business $171.99 No Synopsis Available |
|
|
Quantitative Business Modeling, by Meredith $25.39 This book is in Used condition |
|
|
Foundations In Quantitative Business Techniques $109.13 This book is in Used condition |
|
|
Quantitative Analysis for Business $26.7 This book is in New – Excellent condition |
|
|
Quantitative methods for business decisions $3.75 This book is in Used condition |
|
|
Quantitative Methods for Business and Economics $29.8 This book is in New – Excellent condition |
|
|
Quantitative Methods for Business Management $188.56 This book is in Used condition |
|
|
Quantitative Business Analysis Casebook $53.23 This book is in Used condition |
|
|
Quantitative Approaches in Business Studies $87.5 This book is in New – Excellent condition |
|
|
Quantitative Methods for Business With Infotrac $40 No Synopsis Available |
|
|
PowerPoint- Quantitative Methods for Business $33.47 No Synopsis Available |
|
|
Qsb+: Quantitative Systems for Business $22.18 No Synopsis Available |
|
|
Quantitative Decision Making for Business $50.7 No Synopsis Available |
|
|
Examview-Quantitative Methods For Business $66.94 No Synopsis Available |
