I had different questions at the beginning. But maybe it is too early to ask that? 1. Do we have experience with a sports bar? Do we have the knowhow and financials (costs) to open one. So feasibility. 2. Why a bar? Are we considering alternatives? 3. Markwt attractiveness. What is the size, growth and profititability of this industry. What’s the competitive landscape in the location.
Yep, we've got that functionality available on RocketBlocks: www.rocketblocks.me (there is a free trial where you can check it out. It's called Case Mode)
so basically the formaula has cost of investment not the investment itself. I don't want to go through whole case again to find out if he ever menioned a upfront cost.
Gross Margin= [Revenue−Cost of Goods Sold (COGS)]/Revenue = 1 − COGS/Revenue So, when the gross margin is 12% then the COGS is 88% of the revenue. Hope it helps.
The upfront investment is 500K and the annual profit was calculated about 100K. So if you divide the upfront investment to the annual profit the time to break even is 5 years.
The ROI is correct: Profit/ Investment multiply by 100 multiple by 5/100. The 100 is actually the percentage so that's why we will only write 100 and secondly, its 5 years so we will multiply by 5 and divide it by 100. 100 is kinda of lifetime. Its similar technique in identifying number of people aged less than 5 in India so it would be 5/ 70 multiple by 1.4B. The 70 is lifetime of the people
How is this a bad investment?Why is the 5 year ROI important? Considering a 100k annual profit, doesn’t this investment have an annual ROE of 20%? This seems a good investment. Can someone help me?
The annual profit is 100K, investment cost is 500k, & we had 3 questions- profitable, payback & ROI. Investment is profitable but we have ignored some important costs as mentioned by interviewer & interviewee, payback is less than 5 years which makes it good investment but ROI shows that investment is danger as ROI= Profit/ Investment multiply by 100 multiple by 5/100. The 100 is actually the percentage (ROI always comes in percentage) so that's why we will only write 100 and secondly, its 5 years so we will multiply by 5 and divide it by 100. 100 is kinda of lifetime. Its similar technique in identifying number of people aged less than 5 in India so it would be 5/ 70 multiple by 1.4B. The 70 is lifetime of the people
I had different questions at the beginning. But maybe it is too early to ask that?
1. Do we have experience with a sports bar? Do we have the knowhow and financials (costs) to open one. So feasibility.
2. Why a bar? Are we considering alternatives?
3. Markwt attractiveness. What is the size, growth and profititability of this industry. What’s the competitive landscape in the location.
Great case, she killed it! Wahoowa
bravo on the case. Is there a way I could practice on the case without someone, basically just by myself?
Yep, we've got that functionality available on RocketBlocks: www.rocketblocks.me (there is a free trial where you can check it out. It's called Case Mode)
If the payback period is 5 years, why is the 5-year ROI not 0%? since there is no profit or loss at the 5 year mark due to the breakeven situation.
so basically the formaula has cost of investment not the investment itself. I don't want to go through whole case again to find out if he ever menioned a upfront cost.
how do you calculate the COGS... can anyone share? I dont understand how she got 88 for food @rocketblocks
Gross Margin= [Revenue−Cost of Goods Sold (COGS)]/Revenue = 1 − COGS/Revenue
So, when the gross margin is 12% then the COGS is 88% of the revenue.
Hope it helps.
@@masoudboroumandi thank you so much. How about the break even part? i coudnt get that part right
The upfront investment is 500K and the annual profit was calculated about 100K.
So if you divide the upfront investment to the annual profit the time to break even is 5 years.
This was very well done. Thank you
The interviewer's note has already mentioned the ROI calculation error.
the roi is wrong - annual profit (500K) *5 year period - Upfront cost (500K) / upfront cost = 0
The ROI is correct: Profit/ Investment multiply by 100 multiple by 5/100. The 100 is actually the percentage so that's why we will only write 100 and secondly, its 5 years so we will multiply by 5 and divide it by 100. 100 is kinda of lifetime. Its similar technique in identifying number of people aged less than 5 in India so it would be 5/ 70 multiple by 1.4B. The 70 is lifetime of the people
How is this a bad investment?Why is the 5 year ROI important? Considering a 100k annual profit, doesn’t this investment have an annual ROE of 20%? This seems a good investment. Can someone help me?
The annual profit is 100K, investment cost is 500k, & we had 3 questions- profitable, payback & ROI. Investment is profitable but we have ignored some important costs as mentioned by interviewer & interviewee, payback is less than 5 years which makes it good investment but ROI shows that investment is danger as ROI= Profit/ Investment multiply by 100 multiple by 5/100. The 100 is actually the percentage (ROI always comes in percentage) so that's why we will only write 100 and secondly, its 5 years so we will multiply by 5 and divide it by 100. 100 is kinda of lifetime. Its similar technique in identifying number of people aged less than 5 in India so it would be 5/ 70 multiple by 1.4B. The 70 is lifetime of the people