Loved the case presentation by Tessa , it really stood out as one of the best case interviews I came across. Thanks a lot Rocketblocks for sharing these cases !
For anyone else getting confused by the math, there are some mistakes in the video! Hoping this clarifies things: First off, the easiest way to calculate this is to simply look at: on the revenue side, the new model gets 10% more load, or 15 more seats per flight at $250/ seat, which equates to $3,750 in extra revenue per flight. Additionally, the new model cuts $500 in costs. So, the new model increases profit by $4,250 per flight (not $4,500 per flight as shown in video at the 18-minute mark). There are 1,500 flights per day. So 1,500 flights per day * $4,250 per flight gets us to $6.36M in revenue per day. 500M/6.36M is about 78 days.
In the interviewers note at around 17:36 it says a roughly 15% increase, but the difference in load factor in 10%. Am I missing something or was this a typo?
Someone please explain how she got 100 days? I did the math and wouldnt it be: Daily revenue: 45,000,000 Daily expenses: 18,750,000 Daily profit: 26,250,000 Investment of 500,000,000 ÷ daily/profit of 26,250,000 = 19.047 days to pay it back
Essentially, she's saying that in about 100 days, the additional revenue of $5M from the new hub ($40M to $45M) could pay back the initial investment of $500M.
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Loved the case presentation by Tessa , it really stood out as one of the best case interviews I came across. Thanks a lot Rocketblocks for sharing these cases !
Glad you enjoyed it!
For anyone else getting confused by the math, there are some mistakes in the video! Hoping this clarifies things:
First off, the easiest way to calculate this is to simply look at: on the revenue side, the new model gets 10% more load, or 15 more seats per flight at $250/ seat, which equates to $3,750 in extra revenue per flight. Additionally, the new model cuts $500 in costs. So, the new model increases profit by $4,250 per flight (not $4,500 per flight as shown in video at the 18-minute mark).
There are 1,500 flights per day. So 1,500 flights per day * $4,250 per flight gets us to $6.36M in revenue per day. 500M/6.36M is about 78 days.
In the interviewers note at around 17:36 it says a roughly 15% increase, but the difference in load factor in 10%. Am I missing something or was this a typo?
(80-70)/70 is about 15… the percent change formula
Confused on the math. I’m getting 17,500 for the revenue of one flight per the Honolulu hub. 30k - 10k - 2.5k
This might help clarifying your calculation:
flights/day = 1500 - Seats = 150 - Occupancy = 80% - Price = 250$
80% of 150 is 120 seat
120 * 250 ---- ((120*20) + (120*5) ) * 10 = 30k per flight.
30k * 1.5k =45M per day
Why didn't she calculate the standalone value of the company that we are acquiring? Since we have not made the acquisition decision yet,
Someone please explain how she got 100 days? I did the math and wouldnt it be:
Daily revenue: 45,000,000
Daily expenses: 18,750,000
Daily profit: 26,250,000
Investment of 500,000,000 ÷ daily/profit of 26,250,000 = 19.047 days to pay it back
You have to divide by the additional profit
Essentially, she's saying that in about 100 days, the additional revenue of $5M from the new hub ($40M to $45M) could pay back the initial investment of $500M.
3 trips = you ain't getting shit!