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Finance

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by

Yusuke Nakanishi

on 9 August 2014

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Transcript of Finance

Introductory
Finance

What is finance?

The science of the management of money and other assets. (by dictionary)
System of business
Investor
Project
Investment
Money
Profit
Part of profit
Why do we need
to learn finance?

Money is
blood of company.
3 reasons
You have to persuade investor.
Money is global language in business
Let's Start.
What is the goal of company?
Company
Make profit.
What should a company do to make profit?
2 ways
Increase sales.
Reduce costs.
Profit
Sales
Number
Price
Cost
Variable cost
Fixed cost

×

Estimation of sales
5 steps
1. Define the condition.
2. Set how to approach.
3. Make model.
4. Calculation.
5. Check the validity.
Sample question
How much is the sales of
Rokkodai cafeteria?
Sales means daily sales of weekdays.
Sales = Average spending per customer
×
Number of customer
i) Daytime (11:00~18:00)
-700 yen per ramen
-1/4 person order side menu (200 yen)

700+200/4 = 750 yen
Number of customer (daytime)
50(seat)×(30%+70%+5%×5)×2(turnover)=125(person)

Sales of daytime
750(yen)×125(person)=93,750 yen
-Average yearly sales of Ippudo is 90million yen.
-Average daily sales per ramen shop
90(million yen) / 365(day) = 246,575 ≈ 250,000 yen
Number of customer
=Capacity × Operating rate
× Turnover rate × Shop hours
ii) Night time (18:00~24:00)
-1/5 person order alcohol (500 yen)

750(Average spending of daytime) + 500/5
= 850 yen
Average spending per customer:
Number of customer
Number of customer (night time)
50(seat)×(40%×3+60%×3)×2(turnover)=300(person)

Sales of night time
850(yen)×300(person)=255,000 yen
Total daily sales of ramen shop per day
93,750 + 255,000 = 348,750 ≈ 350,000 yen
My estimation is 350,000 yen
The reason of the difference
- There are more people in Sannomiya than average.
- Over estimation of operating rate, turnover rate etc.
Let's practice.
To be continued
Cost = Variable cost + Fixed cost
Variable costs are costs that change in proportion to the good or service that a business produces.
Fixed costs are business expenses that are not dependent on the level of goods or services produced by the business.
Breakeven point
Which industry has higher fixed cost?
Steel industry has high fixed cost.
Travel industry has low fixed cost.
Let's practice.
Which strategy should Kobe paint take?
Answer of the question
Profit
Sales
Number
Price
Cost
Variable cost
Fixed cost

×

Final practice
Give any suggestion to make Takoyaki stand profitable.
Goal
What 's the difference?
H&M increase sales
by increasing number.
Burberry increase sales
by increasing the price.
Sales mean daily sales in weekdays.
Customer is only student.
Number of customer
= (0.3+2*0.9+4*0.1+2*0.3)*450
= 1395
Total sales
= 1395*350 = 488,250 yen
Assume average spending per customer is 350 yen.
The average sales of cafeteria is 470,000 yen
It's close to the estimation (488, 950 yen).
Sales
=Average spending per customer * Number of customer
Number of customer
=Capacity * Operating rate * Turnover rate * Shop hours
How much is the sales of a Ramen shop in Sannomiya?
Tony Lovers, Rainbow : Arika, John

Tequila, Stickeys, Team A : Shigo, Haki, Yusuke

FNP, Stred Bull : Hiroki, Takuya
Industries which have high fixed cost
Industries which have low fixed cost
Comprehension check of cost structure.
Fixed cost doesn't change depend on the number of sales.
Variable cost changes depend on the number of sales.
Make decision based on number.
Kobe paint should reduce the price.
Did you read the case?
How to make Takoyaki stand profitable?
Guideline of using excel file
①. Stickeys Tony Lovers
Ko kun, Haki

②. Stred Bull Team A Rainbow Hiroki Takuya Yusuke

③. Tequila FNP Arika, John
Sample answer
1.Check the goal
2. Analyze the current situation
3. Create idea
4. Estimate the profit
4steps
Make Takoyaki stand profitable.
Is it possible to increase sales or reduce the cost?
Who is customer?
-Number of customer is same.
Students (univ, high school), neighbor,
parents etc.
Why do they buy snacks at the festival?
Good quality, Price
Just hungry, friends
Having fun
Concept
Takoykai
×
Maid cafe
Effects
Attract more male customer.

Add more value by good service.
Differentiation & Cost cut
Two kind of Takoyaki,
-Normal (Octopus, fish shaving)
-Kimch & cheese


Same quality, less cost
-Variable cost is reduced.
-Fixed cost is increased.
-Price is increased by 50 yen.
Full transcript