For anyone following along with the frameworks document, it seems that the break even point is incorrectly listed as 24 fields. The interviewee in the video gets the math right at 44 fields. 2,200,000 / 50,000 = 44
This was an INCREDIBLY helpful video! I'm having my first case interview soon and this really helped me understand what it would be like and the type of thinking I should adopt! Great job :)
Hi Anna! David here, hope I can help to explained why the interviewee only using VC while calculating BEP. Breakeven Point means that our investment towards the business have paid off by the profit we gain from that particular business. And the profit we get from doing a business is actually a gross profit (unit*(price - VC)). That way to calculate BEP we use this formula: Initial investment/(#Unit sold*(price-Var Cost)) Regarding your questions about Fix Cost, I think in some case there are annual fix cost (eg. renting the distribution channel/warehouse/etc.), to handle that we should ask the interviewer whether this 'variable cost' is total annual cost per year divided by total unit sold or just cost of good sold manufactured.. if it is just cost of good sold manufactured, the formula to calculate BEP must elaborate the fix cost in to the calculation so the calculation of BEP will be something like this: BEP = Investment/Annual Profit from the Business =Initial Investment/[(#UnitSold*(Price-VarCost)) - Annual Fix Cost) Hope this help!
i dont know if using 4 minutes to present the strcuture is too much that would amount to fishing, do you guys think he can neglect some of that? I feel like the parts about joint venture or equity financed are a little bit redundant at the beginning stage
Would it more thorough if we calculate market-sizing via the same method but the no. of schools, colleges is calculated via identitying the age group (via population estimate) that would be at school,college divided by the an estimate of no. of people that are enrolled at a school or college at one time (which maybe a number a person can relate to) OR in such a case with multiple objectives it would be going over?
yeah there are a number of problems with this case solution - first, PlayWorks will need to capture at least 20% of the existing college football market (Rev less costs = $3.7m profit available) a year for the first 3 years just to break even. Furthermore, I disagree with the recommendation at the end because the case specifically states that the initial investment of $2.2m upfront is in order to do the RESEARCH i.e. pilot run included. So I'd say the small pilot run isn't a feasible option.
Wait a minute... Did I miss something? The math doesn't make sense to me. If each sqr ft has a 40 cent contribution margin and the break-even gross profit we need is 2.2m USD, we need to sell 22m/4 = 5.5m sq footage of astroturf. It's mentioned that astroturf is priced at $1.5/sq foot for colleges. 5.5m * 1.5 > $8.2m USD. That's almost 50% of the entire football segment which is $16.7m in size. Capturing near 50% in just a few years sounds infeasible, esp. considering a CAGR of just 4%.
For anyone following along with the frameworks document, it seems that the break even point is incorrectly listed as 24 fields. The interviewee in the video gets the math right at 44 fields. 2,200,000 / 50,000 = 44
I have a case analysis interview in a week for my college entrance interview and damn this channel just changed my whole plan for preparation.
This was an INCREDIBLY helpful video! I'm having my first case interview soon and this really helped me understand what it would be like and the type of thinking I should adopt! Great job :)
How did it go?
Where would you recommend to get case study & interviews examples for Consulting (McKinsey BCG Bain style) kind regards,
It'd be greatly helpful for practice if the exhibitions are published on the video!
Hey Elaine! Thanks for posting. In 25:45 you say about VC so I understand that we do not take any measure on the fixed costs?
Hi Anna! David here, hope I can help to explained why the interviewee only using VC while calculating BEP.
Breakeven Point means that our investment towards the business have paid off by the profit we gain from that particular business. And the profit we get from doing a business is actually a gross profit (unit*(price - VC)). That way to calculate BEP we use this formula:
Initial investment/(#Unit sold*(price-Var Cost))
Regarding your questions about Fix Cost, I think in some case there are annual fix cost (eg. renting the distribution channel/warehouse/etc.), to handle that we should ask the interviewer whether this 'variable cost' is total annual cost per year divided by total unit sold or just cost of good sold manufactured.. if it is just cost of good sold manufactured, the formula to calculate BEP must elaborate the fix cost in to the calculation so the calculation of BEP will be something like this:
BEP = Investment/Annual Profit from the Business
=Initial Investment/[(#UnitSold*(Price-VarCost)) - Annual Fix Cost)
Hope this help!
i dont know if using 4 minutes to present the strcuture is too much that would amount to fishing, do you guys think he can neglect some of that? I feel like the parts about joint venture or equity financed are a little bit redundant at the beginning stage
Would it more thorough if we calculate market-sizing via the same method but the no. of schools, colleges is calculated via identitying the age group (via population estimate) that would be at school,college divided by the an estimate of no. of people that are enrolled at a school or college at one time (which maybe a number a person can relate to)
OR in such a case with multiple objectives it would be going over?
A very structured guy
yeah there are a number of problems with this case solution - first, PlayWorks will need to capture at least 20% of the existing college football market (Rev less costs = $3.7m profit available) a year for the first 3 years just to break even. Furthermore, I disagree with the recommendation at the end because the case specifically states that the initial investment of $2.2m upfront is in order to do the RESEARCH i.e. pilot run included. So I'd say the small pilot run isn't a feasible option.
Wait a minute... Did I miss something? The math doesn't make sense to me. If each sqr ft has a 40 cent contribution margin and the break-even gross profit we need is 2.2m USD, we need to sell 22m/4 = 5.5m sq footage of astroturf. It's mentioned that astroturf is priced at $1.5/sq foot for colleges. 5.5m * 1.5 > $8.2m USD. That's almost 50% of the entire football segment which is $16.7m in size. Capturing near 50% in just a few years sounds infeasible, esp. considering a CAGR of just 4%.
Thanks for pointing out, I was about to get crazy in night study session
Did so well navigating the case evej though it was difficult
A great example, thanks for the upload! :) Anyone knows by any chance which casebook is this case from? Or where could I find it in a written format?
when you post these, should we assume that these are great answers to each case? Thanks!
If you can present the case in a quicker way that would really help
Thanks for posting these!
No problem!
Really helpful video. Thank You!
I am interested to learn the calculation. Bit confused.
We've posted the frameworks in the link available in the info of this video. I believe the math is included.
this was a great case!
Could you puy ENG subtitles??
The break even calculation is a bit more complicated than necessary. I loved the overall plan at the beginning though
3 in structure is a little long
Why do you speak so damn fast when reading the case though?
Thank you! This is helpful
the calculation is a bit fuzzy but basically I got the same answer
Cant do the mental math without calc 😢
memalos1 that’s ok!!! I rarely do mental math. Use a piece of paper and practice going quickly/finding tricks to speed up your math