BCG

Task 2

Data analysis - Foundations

Learn more about some financial terms before conducting analyses.

Here is the background information on your task

BCG experts from other case teams think that the handset leasing business model has potential and should be explored further. The Principal, Elisse, wants you to assess the potential impact of the handset leasing business on the client’s financials by looking at the impact it has had in other markets.

Before doing some data analysis, Elisse has asked the Consultant Romi to provide you with some background knowledge on financial terms you may need going forward.

Here is your task

Please have a look at the exercise below. You need to match the terms to their correct definition, and please note there Is only one match per term. Do this in Ms word and save document as task 2

Resources to help you with the task

What do the following terms mean? choose the answer below, that best match up the terms with their description!

  • The percentage of a market accounted for by a specific entity.
 
  • Shows the relationship between the market value of a company or its equity and some fundamental financial metric (e.g., earnings). The point of a ____ is to show the price you are paying for some stream of earnings, revenue, or cash flow (or other financial metric).
 
  • The revenue generated from a company’s primary business activities. For example, a retailer produces revenue through merchandise sales, and a physician derives revenue from the medical services he/she provides.
 
  • A measure of a company’s operating profit as a percentage of its revenue. Knowing the ____ ____ allows for a comparison of one company’s real performance to others in its industry
 
  • An expense a business incurs through its normal business operations. Often abbreviated as OPEX, operating expenses include rent, equipment, inventory costs, marketing, payroll, insurance, step costs, and funds allocated for research and development
 
  • The result of subtracting (i) the interests accrued by the Financial Debt during the relevant calculation period, minus (ii) the interests accrued by provisions made during the calculation period.
 
  • The process of comparing companies based on similar metrics to determine their enterprise value. A company’s valuation ratio determines whether it is overvalued or undervalued. If the ratio is high, then it is overvalued. If it is low, then the company is undervalued.
 
  • A measure used primarily by consumer communications, digital media, and networking companies, defined as the total revenue divided by the number of subscribers.
 
  • The amount of money that is left after you subtract your total business expenses from your total revenue. In other words, it is a calculation that includes almost all financial transactions in your business
 
  • The increase or decrease in the size of a market for a product or service over time. It is typically measured as the percentage change in total sales in an industry or product category
 
  • An accounting measure calculated using a company’s earnings, before interest expenses, taxes, depreciation, and amortization are subtracted, as a proxy for a company’s current operating profitability.
 
  • A calculation made internally by a company to show what it believes is a more accurate reflection of how much money it generates. The number focuses on regular accounting cycle events and often excludes one-time charges or infrequent occurrences.
 
  • Refers to the reduction in the cost of the tangible fixed assets over its lifespan which is proportionate to the use of the asset in that specific year.
 
  • Refers to the reduction in the cost of the intangible assets over its lifespan

Answers

  • Operating revenue
  • EBITDA
  • Depreciation
  • Underlying profit
  • Net Finance Expense
  • Amortisation
  • EBITDA Margins
  • Operating expense
  • Key comparable
  • ARPU
  • Valuation ratios
  • Market Share
  • Growth
  • Net profit