Casing maths
If your revenue is $1M and costs are $800K, what’s your profit margin?
20%
What are the components of a profitability framework?
Revenue and costs
Your client is a boutique that is seeing falling margins. What framework would you use to approach their problem, and what would the components be?
Profitability framework
- revenues and costs
OR
- internal: revenue and costs
- external: market
What are the MBB firms?
McKinsey, Bain & BCG
A company invests $100,000 in new equipment that generates $25,000 in profit each year. How many years until the company recovers its investment?
Payback Period = $100,000 / $25,000 = 4 years
What framework is considered the 'bread and butter' of case interviews
Profitability framework
A bakery is considering partnering with a local grocery store. What framework would you use and what components would you consider?
M&A Framework
- Standalone value of the grocery store
- Synergies
- Risks
What is a typical test done informally by interviewers during behavioral interviews?
The airport test
A business sells a product for $40. The variable cost per unit is $10, and fixed costs are $90,000. How many units do they need to sell to break even?
Contribution margin = $40 - $10 = $30
Breakeven units = $90,000 / $30 = 3,000 units
The 4Ps Framework is often used in marketing and product strategy. What are the 4Ps?
Product, Price, Place, Promotion
A fast-food chain is considering franchising internationally. What framework would help evaluate the opportunity?
Market Entry
- market attractiveness
- company capabilities
- risks/other considerations
What is the popular acronym that explains how consulting frameworks should be structured
MECE - Mutually Exclusive Collectively Exhaustive
A product sells for $120. It has variable costs of $45 and fixed costs of $150,000 per year. What is the contribution margin per unit?
120-45=$75 per unit
What type of case do profitability cases typically transition to?
M&A
A company is experiencing declining profits. They know the issue is with revenues. How would you break down the reason for falling profits?
- declining revenues
- segment revenue into: price per unit & volume of units sold
OR
- segment revenue by geography, customer segment, channel, product type
What are the big 4 firms?
PWC, Deloitte, EY, KPMG
Estimate the annual revenue for dry cleaners in NYC. Assume a population of 8 million people, where 30% use dry cleaning, averaging 2 items/month. The cost is $5 per item.
8M × 30% = 2.4M users
2.4M × 2 = 4.8M items/month
4.8M × $5 = $24M/month
$24M × 12 = $288M annual revenue
What are the components of the combined market entry and product launch framework?
Market, profit potential, feasibility, risks
A private equity firm is considering acquiring a regional chain of fitness centers. They want to assess whether this is a good investment and how to grow it post-acquisition. What framework would you use to structure your analysis, and what components would you consider?
PE framework
- Fitness market attractiveness
- Value of the company
- Growth opportunities
- Financial/ exit opportunities
Which firm was originally part of Arthur Andersen?
Accenture