New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Chapter 8: Financial Analysis

by: Sarah Oglesby

Chapter 8: Financial Analysis MGT 386-005

Sarah Oglesby
GPA 3.2

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Covers chapter 8 notes. Test Friday - study up people!
Foundations of Entrepreneurship
Dr. Jeffrey A. Martin
Class Notes
financial, Analyis, Entrepreneurship
25 ?




Popular in Foundations of Entrepreneurship

Popular in Business

This 3 page Class Notes was uploaded by Sarah Oglesby on Sunday October 9, 2016. The Class Notes belongs to MGT 386-005 at University of Alabama - Tuscaloosa taught by Dr. Jeffrey A. Martin in Summer 2015. Since its upload, it has received 31 views. For similar materials see Foundations of Entrepreneurship in Business at University of Alabama - Tuscaloosa.


Reviews for Chapter 8: Financial Analysis


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 10/09/16
MGT 386 TEST Friday, October 14 Chapter 8: Financial Analysis Importance of a Solid Financial Foundation • evaluation of a firm starts with the mission of the organization relative to the industry in which is competes • the firm should focus on the key aspects with which the firm hopes to build its competitive advantage • the firm’s outcomes should be measured at intervals relevant to the business I. Techniques for Measuring Performance • company analysis should start general and become more specific • the most important analysis to be made is related to the business’s ability to make significant profits A. Ratio Analysis - a tool for the entrepreneur to use to examine the overall health of the organization - ratios must be evaluated in comparison to similar organizations, an industry average, or previous performance 1. Liquidity Ratios: measure the short-term ability of the firm to meet its obligations, including debt or accounts payable 2. Activity Ratios: measure the efficiency with which you are handling the resources of the business, interpretation should be focused on relative change 3. Leverage Ratios: used to examine the relative level of indebtedness of the entrepreneurial business 4. Profitability Ratios: examine the performance of the firm and its ability to make economic rents over and above its costs B. Deviation Analysis - analysis of the differences between the predicted and the actual performance 1 MGT 386 TEST Friday, October 14 - typically tracks various performance measures from one time period to the next in the form of a chart - shows two additional metrics: actual change and percentage change - should be maintained frequently C. Sensitivity Analysis - a chart using current cash flow statement, or balance sheet to create a pro forma projection based on a dramatic increase in sales, a dramatic decrease in sales, or the complication of a major change in the business - allows the entrepreneur to look at how sensitive the business is to various factors - provides an opportunity to test out assumptions and view the potential impact of those assumptions prior to committing any new resources D. Short Surveys - and their use in business - non financial method of analysis that can provide contextual information about suppliers, customers, and employees that is not easily categorized and is subject to interpretation - provides an opportunity to evaluate the company’s performance on dimensions that may lead to financial success - surveys will contain some bias and must reflect a margin of error to be properly interpreted - data can be tabulated and examined with some fairly simple statistical techniques, such as percentages - cross tabulation allows for a more comprehensive interpretation in comparison to competitors and past performance II. Importance of Having a Measurement Focus • the understanding of key competitive advantages and the ability to develop measurements that ensure strategic goals are fulfilled • two parts of business: standard (competitive and industry) and unique • standard business only needs to be handled as well as the rest of the industry 2 MGT 386 TEST Friday, October 14 • unique areas of business must be used to differentiate from the competition in a successful and convincing way • there should be a focus on those areas that provide competitive advantage to the firm • concentrating analysis on those areas areas that are unique puts the founder’s focus on those areas that can create a differentiation for the business compared to those of the competitors *see pages 140-142 on the ratios covered in the ratio analysis portion of the chapter 3


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Amaris Trozzo George Washington University

"I made $350 in just two days after posting my first study guide."

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.