financial analyst case study example

47 case interview examples (from McKinsey, BCG, Bain, etc.)

One of the best ways to prepare for   case interviews  at firms like McKinsey, BCG, or Bain, is by studying case interview examples. 

There are a lot of free sample cases out there, but it's really hard to know where to start. So in this article, we have listed all the best free case examples available, in one place.

The below list of resources includes interactive case interview samples provided by consulting firms, video case interview demonstrations, case books, and materials developed by the team here at IGotAnOffer. Let's continue to the list.

• McKinsey examples
• BCG examples
• Bain examples
• Deloitte examples
• Other firms' examples
• Case books from consulting clubs
• Case interview preparation

Click here to practise 1-on-1 with MBB ex-interviewers

1. mckinsey case interview examples.

• Beautify case interview (McKinsey website)
• Diconsa case interview (McKinsey website)
• Electro-light case interview (McKinsey website)
• GlobaPharm case interview (McKinsey website)
• National Education case interview (McKinsey website)
• Talbot Trucks case interview (McKinsey website)
• Shops Corporation case interview (McKinsey website)
• Conservation Forever case interview (McKinsey website)
• McKinsey case interview guide (by IGotAnOffer)
• McKinsey live case interview extract (by IGotAnOffer) - See below

2. BCG case interview examples

• Foods Inc and GenCo case samples  (BCG website)
• Chateau Boomerang written case interview  (BCG website)
• BCG case interview guide (by IGotAnOffer)
• Written cases guide (by IGotAnOffer)
• BCG live case interview with notes (by IGotAnOffer)
• BCG mock case interview with ex-BCG associate director - Public sector case (by IGotAnOffer)
• BCG mock case interview: Revenue problem case (by IGotAnOffer) - See below

3. Bain case interview examples

• CoffeeCo practice case (Bain website)
• FashionCo practice case (Bain website)
• Associate Consultant mock interview video (Bain website)
• Consultant mock interview video (Bain website)
• Written case interview tips (Bain website)
• Bain case interview guide   (by IGotAnOffer)
• Bain case mock interview with ex-Bain manager (below)

4. Deloitte case interview examples

• Engagement Strategy practice case (Deloitte website)
• Recreation Unlimited practice case (Deloitte website)
• Strategic Vision practice case (Deloitte website)
• Retail Strategy practice case  (Deloitte website)
• Finance Strategy practice case  (Deloitte website)
• Talent Management practice case (Deloitte website)
• Enterprise Resource Management practice case (Deloitte website)
• Footloose written case  (by Deloitte)
• Deloitte case interview guide (by IGotAnOffer)

5. Accenture case interview examples

• Case interview workbook (by Accenture)
• Accenture case interview guide (by IGotAnOffer)

6. OC&C case interview examples

• Leisure Club case example (by OC&C)
• Imported Spirits case example (by OC&C)

7. Oliver Wyman case interview examples

• Wumbleworld case sample (Oliver Wyman website)
• Aqualine case sample (Oliver Wyman website)
• Oliver Wyman case interview guide (by IGotAnOffer)

8. A.T. Kearney case interview examples

• Promotion planning case question (A.T. Kearney website)
• Consulting case book and examples (by A.T. Kearney)
• AT Kearney case interview guide (by IGotAnOffer)

9. Strategy& / PWC case interview examples

• Presentation overview with sample questions (by Strategy& / PWC)
• Strategy& / PWC case interview guide (by IGotAnOffer)

10. L.E.K. Consulting case interview examples

• Case interview example video walkthrough   (L.E.K. website)
• Market sizing case example video walkthrough  (L.E.K. website)

11. Roland Berger case interview examples

• Transit oriented development case webinar part 1  (Roland Berger website)
• Transit oriented development case webinar part 2   (Roland Berger website)
• 3D printed hip implants case webinar part 1   (Roland Berger website)
• 3D printed hip implants case webinar part 2   (Roland Berger website)
• Roland Berger case interview guide   (by IGotAnOffer)

12. Capital One case interview examples

• Case interview example video walkthrough  (Capital One website)
• Capital One case interview guide (by IGotAnOffer)

13. Consulting clubs case interview examples

• Berkeley case book (2006)
• Columbia case book (2006)
• Darden case book (2012)
• Darden case book (2018)
• Duke case book (2010)
• Duke case book (2014)
• ESADE case book (2011)
• Goizueta case book (2006)
• Illinois case book (2015)
• LBS case book (2006)
• MIT case book (2001)
• Notre Dame case book (2017)
• Ross case book (2010)
• Wharton case book (2010)

Practice with experts

Using case interview examples is a key part of your interview preparation, but it isn’t enough.

At some point you’ll want to practise with friends or family who can give some useful feedback. However, if you really want the best possible preparation for your case interview, you'll also want to work with ex-consultants who have experience running interviews at McKinsey, Bain, BCG, etc.

If you know anyone who fits that description, fantastic! But for most of us, it's tough to find the right connections to make this happen. And it might also be difficult to practice multiple hours with that person unless you know them really well.

Here's the good news. We've already made the connections for you. We’ve created a coaching service where you can do mock case interviews 1-on-1 with ex-interviewers from MBB firms . Start scheduling sessions today!

The IGotAnOffer team

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Must-Have Financial Case Study Examples with Samples and Templates

Mayuri Gangwal

Case studies are valuable tools for understanding the real-world applications of financial concepts and strategies. They provide insights into practical scenarios, showcasing the decision-making processes and outcomes in various financial situations. Whether you are a student, professional, entrepreneur, having access to well-crafted financial case study templates can be immensely beneficial in developing a deeper understanding of financial principles and honing your analytical skills.

SlideTeam’s premium PPT templates help you grasp complex financial concepts like investment analysis, financial planning, risk management, etc. Each case study offers a unique scenario, presenting a problem or challenge that requires thoughtful analysis and strategic decision-making.

By using these content-ready slides, you can enhance your problem-solving abilities, learn from real-world success stories and mistakes, and gain valuable insights into the intricacies of financial decision-making. The included samples and templates are practical tools for structuring your case studies, enabling you to apply your knowledge and skills to different financial scenarios.

Whether preparing for exams, a professional seeking to broaden your financial expertise, or an entrepreneur looking to make informed business decisions, these financial case study examples, samples, and templates are indispensable resources to elevate your financial understanding and make well-informed decisions in your personal or professional life.

Financial Case Study Templates

Template 1: financial case study environment business solution problems.

Introducing our ready to use template designed to elevate your content and make you look like a presentation pro. With a wide range of PPT slides covering various topics, this deck encompasses all the core areas of your business needs.

The deck focuses on Financial Case Study Environment Business Solution Problems, offering professionally designed templates that combine suitable graphics and relevant content. With eight slides, thoughtfully crafted to enhance your message and captivate your audience.

Don't miss out on this opportunity to impress your audience with visually stunning slides and compelling content. Click the download button and access our pre-designed PPT presentation and take your presentations to the next level. We also have templates to propose a business case if you aim for a higher company turnover. 

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Template 2:  Case Study for Financial Management PowerPoint Template

Introducing our captivating case study template designed to provide an environment conducive to productive discussions and effective decision-making. This template is perfect for showcasing real-life examples and analyzing financial management scenarios visually engagingly.

With its three-stage process, this template simplifies complex concepts and guides your audience through the essential components of a comprehensive business case study. It enables you to present your findings, solutions, and recommendations.

Whether you are analyzing past financial performances, identifying challenges , or proposing solutions, this template provides a flexible framework for organizing and presenting your ideas. You can also elevate your financial management presentations with our marketing Case Study for Financial Management PowerPoint Template . Download it now and unlock a wealth of possibilities to engage your audience, foster integration, and showcase your expertise in financial management.

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Conclusion 

Financial case studies are invaluable tools for understanding real-world financial scenarios and developing practical solutions. By examining concrete examples, individuals and organizations can gain insights into financial challenges, apply analytical techniques, and make informed decisions. 

This article has highlighted the importance of collecting financial case study examples and accompanying samples and templates as valuable resources for learning and applying financial principles in various contexts. These resources can serve as guides for conducting comprehensive analyses, formulating recommendations, and ultimately achieving financial success.

FAQs on Financial Case Study

What is a case study in finance.

A case study in finance is an in-depth analysis of a specific financial situation, company, investment, or financial strategy. It involves examining real-world scenarios, often based on actual events, to understand and evaluate the financial implications, decision-making processes, and outcomes.

In finance, case studies are commonly used as a teaching and learning tool to assess and explore complex financial issues in academic and professional settings. They provide a practical approach to understanding financial theories, concepts, and practices by applying them to real-life situations.

A finance case study typically involves the following elements:

• Background: The case study begins by presenting relevant information about the company, industry, or financial situation under examination. This includes details about the organization's financial statements, market conditions, competitive landscape, and other pertinent background information.
• Problem or Challenge: The case study outlines the specific financial problem or challenge that needs to be addressed. This could be related to financial analysis, investment decisions, capital budgeting, risk management, financial restructuring, or any other financial aspect of the organization.
• Data Analysis: The case study analyzes financial data, such as income statements, balance sheets, cash flow statements, and key financial ratios. Various financial analysis tools and techniques, such as ratio analysis, discounted cash flow analysis, or valuation models, may be used to evaluate the situation.
• Alternatives and Solutions: Based on the analysis, different alternatives or solutions are identified to address the financial problem or challenge. These could include recommendations for financial strategies, investment decisions, capital allocation, cost reduction measures, or other relevant actions.
• Decision-Making and Implementation: The case study explores the decision-making process, considering risk, return, financial feasibility, and strategic considerations. It also discusses the potential implementation of the recommended solution and the expected outcomes.
• Lessons Learned: The case study concludes by discussing the lessons learned from the financial situation or decision-making process. This may involve reflections on successful strategies, potential pitfalls, and broader implications for financial management and decision-making in similar contexts.

How do you write a financial case study?

Writing a financial case study involves analyzing a real or hypothetical financial situation or problem and presenting a detailed examination of the facts, analysis, and potential solutions. Here is a step-by-step guide on how to write a financial case study:

• Identify the purpose and scope: Clearly define the purpose of the case study and the specific financial issue you want to address. Determine the scope of the study, including the period, entities involved, and relevant financial data.
• Gather information: Collect all relevant financial data and supporting documents related to the case. This may include financial statements, transaction records, market data, industry reports, and any other information necessary for the analysis.
• Describe the background: Provide an overview of the company or individual involved in the case study. Include relevant details such as the company's history, industry , size, key stakeholders, and any recent events or developments that may have a financial impact.
• State the problem or objective: Clearly define the financial problem or objective that needs to be addressed. Identify the key challenges or issues the company or individual faces and explain why they are essential.
• Conduct financial analysis: Analyze the financial data and apply appropriate financial analysis techniques to evaluate the situation. This may involve calculating financial ratios, conducting trend analysis, performing a discounted cash flow analysis, or any other relevant method to gain insights into the financial performance and position of the entity.
• Present findings: Summarize the results of the financial analysis clearly and concisely. Highlight key findings, trends, and any significant financial situation factors. Use graphs, charts, or tables to present data effectively.
• Discuss alternative solutions: Propose different options or strategies to address the financial problem or achieve the objective. Determine the advantages and drawbacks of each solution and provide supporting evidence or calculations to justify your recommendations.
• Make recommendations: Make clear and actionable recommendations based on analyzing and evaluating the alternative solutions. Support your recommendations with logical reasoning and explain how they can improve the financial situation or achieve the desired outcome.
• Provide a conclusion: Summarize the main points of the case study and restate the recommendations. Highlight any potential risks or challenges associated with implementing the proposed solutions.
• Include references and citations: If you have used external sources or references, provide proper citations to give credit to the authors and avoid duplicity or redundancy.
• Edit and proofread: Review the case study for clarity, coherence, and accuracy. Check for any grammatical or spelling errors. Ensure that the document is well-structured and easy to understand.

What is finance study?

Finance study refers to the field of knowledge and an academic discipline that focuses on managing, creating, and allocating financial resources. It involves studying various aspects of financial systems, instruments, markets, and institutions. Finance encompasses the theory and practice of managing money, investments, and financial decision-making.

The study of finance covers a wide range of topics, including:

• Corporate Finance: This area focuses on financial decisions and strategies within corporations. It includes capital budgeting, investment analysis, financial planning, risk management, and corporate valuation.
• Investments: This field examines allocating money to different financial assets including, stocks, mutual funds, real estate, and other derivatives. It involves analyzing risk and return, portfolio management, asset pricing models, and investment strategies.
• Financial Institutions and Markets: This area explores the functioning of financial institutions (such as banks, insurance companies, and investment firms) and financial markets (such as stock markets, bond markets, and foreign exchange markets). It involves studying the role of these institutions and markets in facilitating the flow of funds, managing risks, and pricing financial assets.
• International Finance: This branch focuses on financial transactions and relationships between countries and across borders. It covers foreign exchange rates, international investment, multinational corporations, and global financial markets.
• Personal Finance: This area focuses on individual or household financial management. It involves budgeting, saving, investing, retirement planning, taxation, and managing personal debt.

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Financial Analyst Interview Case Study

Don't miss, where to watch the meghan markle oprah interview, when are medical school interviews, how to prepare for java coding interview, questions for an exit interview, cyber security engineer interview questions, how to watch oprah’s interview with harry and meghan, react js programming interview questions, how to prepare for a recruiter position interview, let your experience speak for itself.

Although it is an interview, the case interview is not intended to be a time to discuss your resume. Regardless of your prior experience with the subject of your case, focus on using the unique insights you have and applying them to the problem, rather than discussing your work experience at length.

Nina summarized the difference by saying, Dont use the case to highlight your resume, but do draw in your experience as a human. You will have an opportunity to discuss previous work experience in other types of interviewslike our Behavioral or Job Fit interviews. You can still demonstrate skills from your previous experience through your practical work on the case. General life experience and common sense can be immensely helpful in case interviews as well.

What Would You Say Is Your Greatest Strength That Could Benefit Your Career As A Financial Analyst

Example:”I believe that discipline is my greatest strength that I could apply to a financial analyst position. For example, when I am reviewing company financial records and documentation, I focus on that task alone until I complete it. I am able to avoid procrastination and other time-wasting activities because I am geared toward accomplishing the end goal.”

Related: 39 Strengths and Weaknesses To Discuss in a Job Interview

What Processes Do You Use To Create Financial Analysis Reports

Reporting is generally a big part of a financial analysts job, and the reporting required will depend on the role. If youre interviewing for a sales organization, for instance, you might be creating monthly, quarterly, or annual sales reports. In your answer, theyll be looking for technical skills as well as collaboration skills, communication, organization, follow-through, and time management.

Don’t Miss: Good Interview Questions To Ask Production Workers

What Do You Think Is The Best Metric For Analyzing A Company’s Stock

This question tests a candidate’s risk assessment knowledge. An excellent candidate would explain their strategy for measuring a stock’s performance. What to look for in an answer:

• Knowledge of the best metrics for analyzing stock
• Understanding of risk assessment strategies
• Critical-thinking skills

“The price-earnings to growth ratio is a good metric for analyzing a company’s stock performance. If the value is greater than one, the stock is overvalued. Otherwise, it’s undervalued or fairly priced. In my experience, the PEG metric gives more insight into a company’s financial health. It considers the projected earnings growth.”

The Amazon Fldp Interview

This interview consists of four face-to-face interviews, each is 45 minutes, and usually, there are no breaks in between . The interview questions are primarily behavioral and focus on .

Since these are Amazon’s core principles and you’ve applied for a leadership development program, they will expect you to base your answers on them .

Additionally, the interviewers will dive deep into your answers and analyze every detail you provide. Therefore, try to stay very consistent with your answers.

Many candidates mention that one particular interviewer was different from the others. This interviewer is there for a reason, and they are called Amazon Bar Raisers .

The Amazon Bar Raisers are skilled evaluators that are not part of the hiring department. Their central role is to provide authentic and reliable opinions on whether you should get hired or not. For that, they use several tactics designed to throw you off and test your leadership skills and resilience.

The best way to handle them is by maintaining your composure, keeping your answers and explanations tight, and sticking to Amazon’s leadership principles.

Also Check: What Is An Exit Interview For A Job

Imagine You Found Inconsistencies In A Company’s Financial Reports How Would You Handle The Situation

This question helps you understand how a financial analyst would respond to an ethical dilemma or potential issue. What to look for in an answer:

• Desire to follow and enforce ethical business practises
• Honesty and moral values

“At my last job, I was analyzing a startup’s financial records. I found that the cash inflow didn’t quite add up to the company’s cash outflow. There was no explanation for the imbalance from the records I had. I first double-checked before notifying my finance manager of the situation. She later contacted the business owner. I pay keen attention to details and always act ethically when dealing with customers, employers, or my colleagues.”

Technical Questions For Pe

The topics here are similar to the ones in IB interviews: Accounting, equity value and enterprise value , valuation/DCF, merger models, and LBO models.

If youre in banking, you should know these topics like the back of your hand.

And if youre not in banking, you need to learn these topics ASAP because firms will not be forgiving.

There are a few differences compared with banking interviews:

• Technical questions tend to be framed in the context of your deal experience instead of asking generic questions about WACC, they might ask how you calculated it in one specific deal.
• More critical thinking is required. Instead of asking you to walk through the financial statements when Depreciation changes, they might describe companies with different business models and ask how the financial statements and valuation would differ.
• They focus more on LBO models, quick IRR math , and your ability to judge deals quickly.

Most interviewers use technical questions to weed out candidates , so poor technical knowledge will hurt your chances, but exceptional knowledge wont necessarily get you an offer.

Recommended Reading: How To Sight An Interview

How Would The Income Statement Change If A Company’s Debts Increased

An interviewer asks this question to assess how prepared you are for a financial analyst position and whether you have the correct expertise to perform well. Your answer should directly address how company debt affects an income statement.

Example:”If a company’s debts increased, this would decrease the net income listed in a company’s income statement.”

Related: Math Interview Questions

If You Could Only Choose One Profitability Model To Forecast Your Projects Which Would It Be And Why

This is another question that interviewers use to gauge your knowledge of industry terminology. When you give your answer, specify a model and explain your reasoning for choosing it.

Example:”I would usually choosea profitability model that reflected the type of business I was forecasting, but if I had to choose one for all of my projects, I would use the financial model because a company’s finances are constantly fluctuating.”

Related: What Is the Difference Between Profitability and Profit?

Recommended Reading: What Questions To Ask A Ux Designer In An Interview

Private Equity Interviews : How To Win Offers

If you’re new here, please click here to get my FREE 57-page investment banking recruiting guide – plus, get weekly updates so that you can break into investment banking . Thanks for visiting!

Private equity interviews can be challenging, but for most candidates, winning interviews is much tougher than succeeding in those interviews.

You do not need to be a math genius or a gifted speaker you just need to understand the recruiting process and basic arithmetic.

Still, there is more to PE interviews than 2 + 2 = 4, so lets take a detailed look at the process:

How Many Food Stores Do You Think There Are In Singapore

This is another guess or market-sizing question. Answering this question may necessitate you answering questions to get statistical information, which you can then use to estimate a number that most answers the question. To answer this type of question, you can ask clarifying queries, create a structured process for deriving the answer, estimate with round numbers and ground your estimations with existing facts.

Recommended Reading: How To Succeed In An Interview

What Are The Most Common Financial Modeling Interview Questions

In this Financial Modeling Interview guide, weve compiled a list of the most common and frequently asked financial modeling interview questions. This guide is perfect for anyone interviewing for a financial analyst job or any other role requiring knowledge in the field as it helps you prepare for the most critical questions relating to financial modeling concepts and application.

Alongside with this comprehensive guide to financial modeling interview questions , you may also be interested in exploring The Analyst Trifecta CFIs guide on how to be a great financial analyst.

Fp& a Interview Questions With Answers:

Walk me through the three financial statements.

The balance sheet shows a companys assets, liabilities, and shareholders equity, and is a snapshot in time. The income statement outlines the companys revenues and expenses over a period of time . The cash flow statement shows the cash flows from operating, investing, and financing activities over a period of time. The three financial statements all fit together to show a picture of the companys financial health.

How does an inventory write-down affect the three statements?

This can be one of the more challenging FP& A interview questions. Here is the answer: On the balance sheet, the asset account of inventory is reduced by the amount of the write-down, and so is shareholders equity. The income statement is hit with an expense in either COGS or a separate line item for the amount of the write-down, reducing net income. On the cash flow statement, the write-down is added back to Cash from Operations, as its a non-cash expense, but must not be double-counted in the changes of non-cash working capital.

How do you record PP& E and why is this important?

There are essentially four areas to consider when accounting for PP& E on the balance sheet: initial purchase, depreciation, additions , and dispositions. In addition to these four, you may also have to consider revaluation. For many businesses, PP& E is the main capital asset that generates revenue, profitability, and cash flow.

What does it take to be a great FP& A analyst?

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Validate Corporate Structure And Business Model

Always remember to validate the corporate structure and business model of the financial institution in your financial services case interview. You dont want to end up confusing a commercial bank with an investment bank!

As a candidate, youre not expected to know everything. Therefore, ask as many questions as possible to understand what youre really dealing with. For instance, you could say, Hey, Im not familiar with the corporate structure and the business model of a pension fund, could you please explain that to me so I can start to understand the drivers of value for the business a bit better.

What Employers Are Looking For

Microsoft Excel is a comprehensive tool that allows businesses to record, track, and analyze data essential for measuring company performance, maximizing return on investment, and defining goals when used to its fullest potential. A new employee who can comfortably navigate Excel is prepared to immediately contribute by producing meaningful, data-driven spreadsheets, reports, and graphs to best serve company needs.

Assessing a job candidates Microsoft Excel proficiency is an important step in making the right hire. The Beginners Microsoft Excel skills test is helpful in learning if a job candidate understands how to manipulate the many functions, tools, and formulas of Excel to present extensive information, identify key trends, or calculate financial and numerical data.

Microsoft Excel assessment test helps predict a job candidates ability to:

• Enter sales figures and properly apply formulas to generate sales totals by date, representative, product or region.
• Conditionally format cells with the goal of highlighting specific dates, values, or ranges.
• Create bar graphs and pie charts from large datasets to illustrate critical company data, performance metrics, and outlook.

Recommended Reading: How To Reject Applicant After Interview

Complexity Levels Of Excel Employment Assessment Tests

Microsoft Excel harbor very basic calculations to very advanced data processing and analysis that requires in-depth knowledge of every tools of Excel. Depending on the position candidate is applying for you are likely to face a pre-employment Excel test with varying level of difficulty. Microsoft Excel Employment Assessment tests can be categorized into at least three levels of difficulty:

How Would You Describe Your Ability To Work With Others

Financial analysts often need to work with portfolio managers, financial managers, and accountants. This question evaluates whether a candidate is a team player. Their answer would give you insights into which team or groups to place a financial analyst. What to look for in an answer:

• Teamwork and collabouration skills
• Strong interpersonal and communication skills
• Motivated to reach a shared goal for clients and your organisation

“I work well with other finance and accounting professionals to reach a shared goal. In my last job, my manager grouped me with two senior and four junior financial analysts. Our goal was to analyse investment opportunities for a top bank in Ontario. Working with experienced professionals helped develop my analytical skills. I also improved my leadership skills by working with junior financial analysts.”

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Putting It All Together

Ultimately, learning that you get to come in for a financial analyst interview is always exciting. While youre probably going to be at least a teeny bit nervous, that doesnt mean you cant shine.

Just use the tips above and spend time reviewing the financial analyst interview questions. That way, you can create engaging, thorough, and relevant answers that will help you stand out in the eyes of the hiring manager. After all, you are an exceptional candidate. Now, all you have to do is show it.

And as always, good luck!

Ideas On Incentives For Agents

• Provide commission to agents of 0.15% on each insurance/loan product.
• Non-financial
• Organize monthly or quarterly leagues with leaderboards to recognize top performers, e.g., highest transaction value, highest growth, highest customer acquisition, etc.
• Leverage social media to build an agent community via Facebook or WhatsApp groups. These groups can create engagement and serve as an efficient mode of communication, allowing the bank to solicit agent referrals and publish leaderboards.
• Introduce friendly competitions like Best shop-front display to increase the visibility of Go-for-Growth Banks products.
• Test if affiliation with the Banks brand in the country is a motivator for agents.

You could classify high performers as agents with transaction volume and transaction value in the top 10%. Agents potential information can also be collected to have a more nuanced segmentation for tracking and governance purposes.

Don’t Miss: How To Prepare For Analyst Interview

Tips For Performing Well At Investment Banking Case Studies

While working on the investment banking case studies.

• Make a concrete decision and base your recommendations on logical reasons.
• Use a structured approach to tackle the problem.
• Focus on the most important issues prevalent in the case.
• Understand the case and questions carefully before interpreting and think twice before finalizing the problems decision.
• Do not panic if the solution to the case is not obvious.
• For modeling case studies, format the excel and PowerPoint professionally.
• Prepare the type of questions you may be asked during your presentation.
• Assess all the relevant factors and possible problems, but keep in mind your resources.
• The solutions you provide should be realistic and be aware of the implications of the organizations under study.
• Have strong logical reasons behind every statement you make and cater to the cases critical issues at the beginning.
• Having specific knowledge regarding the industry under study is unnecessary, but it would be an added advantage.
• When preparing, focus on reading deal news and practice as many scenarios as possible.

While presenting your Investment Banking Case study

While answering the questions, what qualities do capital one case interviews assess.

Capital One case interviews assess four main qualities:

Logical, structured thinking : Capital One looks for candidates that are organized and methodical problem solvers.

• Can you structure complex problems in a clear, simple way?
• Can you use logic and reason to make appropriate conclusions?

Quantitative skills : Capital One looks for candidates that have strong analytical skills to solve complex business problems and make important business decisions

• Can you read and interpret data well?
• Can you perform math computations smoothly and accurately?
• Can you conduct the right analyses to draw the right conclusions?

Communication skills : Capital One looks for candidates that can communicate in a clear, concise, and persuasive way.

• Can you communicate in a clear and concise way?
• Are you articulate and persuasive in what you are saying?

Business judgment : Capital One looks for candidates with strong business instincts that help them make the right decisions and develop the right recommendations.

• Do you have a basic understanding of fundamental business concepts?
• Do your conclusions and recommendations make sense from a business perspective?

Read Also: How To Prepare For A Phone Job Interview

How To Answer Financial Analyst Interview Questions

Alright, before we talk about the interview questions and examples, lets take a step back. Knowing how to answer is at least as important as seeing samples, if not more so. By having a winning strategy by your side, you can handle the unexpected, and that can make a world of difference.

So, what do you need to do?

Well, step one in a winning strategy is always the same its research. Usually, hiring managers have a perfect candidate in mind before they meet a single applicant. If you can figure out who that person is and what they bring to the table, you can showcase the skills and traits you have that align with it.

Certain skills and traits are going to be givens. You need to have an analytical mindset , math skills , and an understanding of micro and macroeconomics , for example. However, that isnt going to be all the hiring manager is looking for. If you want to get the full picture, you need to do some digging.

Start by reviewing the financial analyst job description . There, youll find a list of all of the must-have skills, traits, and other credentials. If a capability is listed there, theres a good chance youll face financial analyst interview questions about it.

But you also want to go further. If you take a trip to the company website, you can find its mission and values statements. Those provide you with a ton of insights about the organizations goals, priorities, and even its culture.

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Financial Statements Examples – Amazon Case Study

Financial Statements are informational records detailing a company’s business activities over a period.

Austin has been working with Ernst & Young for over four years, starting as a senior consultant before being promoted to a manager. At EY, he focuses on strategy, process and operations improvement, and business transformation consulting services focused on health provider, payer, and public health organizations. Austin specializes in the health industry but supports clients across multiple industries.

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• What Are Financial Statements?

Amazon’s Balance Sheet

Amazon’s income statement, amazon’s cash flow statement, usage of financial statements, amazon case study faqs, what are financial statements.

Investors need financial statements to gain a full understanding of how a company operates in relation to competitors. In the case of Amazon , profitability metrics used to analyze most businesses cannot be used to compare the company to businesses in the same sector.

Amazon remains low in profitability continuously to reinvest in growing operations and new business opportunities. Instead, investors can point to the metrics signified in Amazon’s cash flow statement to demonstrate growth in revenue generation over the long term.

There are three main types of financial statements, all of which provide a current or potential investor with a different viewpoint of a company’s financials. These include the following below. 

Balance Sheet

The balance sheet represents a company’s total assets, liabilities, and shareholder ’s equity at a certain time. 

Assets are all items owned by a company with tangible or intangible value, while liabilities are all debts a company must repay in the future.

Shareholders' equity is simply calculated by subtracting total assets from total liabilities. This represents the book value of a business.

Income Statement

The income statement represents a company’s total generated income minus expenses over a specified range of time. This can be 3 months in a quarterly report or a year in an annual report . 

Revenue includes the total money a company makes over a set time. 

This includes operating revenue from business activities and non-operating revenue, such as interest from a company bank account.

Expenses include the total amount of money spent by a company over time. These can be grouped into two separate categories, Primary expenses occur from generating revenue, and secondary expenses appear from debt financing and selling off held assets.

Cash Flow Statement

The cash flow statement represents a company’s total cash inflows and outflows over a specified time range, similar to the income statement. Cash in a business can come from operating, investing, or financing activities. 

Operating activities are events in which the business produces or spends money to sell its products or services. This would be income from the sales of goods or services or interest payments and expenses such as wages and rent payments for company facilities.

Investing activities include selling or purchasing assets, which can include investing in business equipment or purchasing short-term securities. Financing activities include the payment of loans and the issuance of dividends or stock repurchases.

Key Takeaways

• Financial statements have information relevant for investors to understand the operations and profitability of a business over a specified time.
• Fundamental analysis typically focuses on the main three financial statements: the balance sheet, income statement, and cash flow statement.
• Although analyzing business financials can provide an unaltered outlook into the operations of a business, the numbers don’t always demonstrate the full story, and investors should always conduct thorough due diligence beyond pure statistics.
• Investors must ensure all of a company's financial statements are analyzed before forming a thesis, as inconsistencies in one sheet may be caused by an unusual one-time expense or dictated by a global measure out of the company’s control (ex., COVID-19).

Now that we have a general understanding of the financial statements, we can begin to take a look at Amazon’s most recent quarterly filing. 

Company filings can be found by using EDGAR (database of regulatory filings for investors by the SEC) or from Amazon’s investor relations website.

Before we begin analyzing this sheet, it is important to take note of the statement just below the title, indicating that the data is being displayed in millions. 

This can throw off newcomers, who may be very confused upon seeing Amazon’s revenue is $53,888. Amazon’s quarterly revenue is indeed $53.8 billion as calculated in millions.

When looking at Amazon’s assets, it is important to note the difference between current and total assets. Current assets are categorized separately due to the expectation that they can be converted to cash within the fiscal year.

Current assets can be used in the current ratio to analyze Amazon’s ability to pay off its short-term obligations. The current ratio formula is:

Current Ratio = Current Assets / Current Liabilities

Amazon’s current ratio sits at 0.92, which is below the e-commerce industry average of 2.09 as of March 2023 (Source: Macrotrends ).

This could mean that Amazon is potentially overvalued compared to competitors, but this is only one metric and should ultimately be all of an investment decision, especially considering the capital-intensive nature of Amazon’s business model.

It is also important to understand all of the vocabulary used to detail items in Amazon’s balance sheet. Some of the major items’ definitions can be found below:

Assets are classified as follows.

• Cash and cash equivalents: Assets of high liquidity, such as certificates of deposit or treasury bonds.
• Marketable securities: Liquid securities can be sold in the public market, such as stock in another company or corporate bonds.
• Accounts receivable (A/R): Money owed to the company that has not been received yet, such as from items previously bought on credit.
• Inventories: Unsold finished or unfinished products from a company that has yet to be sold.
• Property and equipment (PP&E): Assets owned by a company that is used for business activities. It may include factory assets or other types of real estate.
• Operating leases: Assets rented by a business for operational purposes. Calculated as the net present value on the balance sheet.
• Goodwill: Calculates intangible assets that cannot be sold or directly measured, such as customer reputation and loyalty.

Liabilities are of the following types.

• Accounts payable (A/P): Obligations accrued through business activities that must be paid off shortly.
• Accrued expenses: Current liabilities for a business that must be paid in the next 12 months.
• Unearned revenue: This represents revenue earned by a business that has not yet received. Prevents profits from being overstated for a specific period.
• Long-term debt: Debts in which payments are required over 12 months.
• Lease liabilities: Payment obligations of a lease taken out by a company.
• Stockholders’ equity: Net worth of a business/asset value to shareholders.
• Retained earnings: Net profit remaining for a company after all liabilities are paid.

Amazon’s next statement in its quarterly filing is the income statement. The income statement is useful for comparing a company’s growth over time and matching it up against competitors in the same or different sectors.

An essential factor to note when looking at a company’s income statement is whether its revenue and net income are consistently growing year over year. Investors should also be aware of Wall Street expectations, as they can heavily influence the business’s share price.

Many important ratios are used when analyzing a company’s income statement. Some of the most notable ones include:

• EV/EBITDA = (Market Capitalization + Debt - Cash) / (Revenue - Cost of Goods Sold - Operating Expenses)
• Gross Margin =  (Revenue - Cost of Goods Sold) / Revenue
• Operating Margin = Operating Income / Revenue
• Net Margin = Net Income / Revenue
• Return on Equity (ROE) = Net Income / Average Shareholder Equity (End Value + Beginning Value / 2)
• Earnings Per Share = Net Income / Shares Outstanding

Let’s use these ratios to conduct a comparables analysis between Amazon and eBay, a company at a much lower valuation relative to the e-commerce giant.  Here are their ratios side-by-side, as of Amazon’s Q1 2023 and eBay’s Q1 2023 filings:

* = EV/EBITDA ratios sourced from finbox.com , March 2023 trailing twelve months (TTM)

Looking at these statistics on paper, it is clear to see that Amazon seems overvalued compared to eBay due to lower margins, negative earnings per share, and an EV/EBITDA multiple over three times as high as the business. 

However, pure stats on an income statement cannot fully justify purchasing one company or another. The statement merely shows what a company is doing without a corporate spin.

One thing to note that is unique about Amazon’s business model is how the company invests huge amounts of capital into R&D and technology to expand its operations continuously.

Their numbers don’t account for the massive cash flows and growth opportunities that the business takes advantage of.

When conducting fundamental analysis, an investor must consider all aspects of a business beyond the financial statements, including comparing business models to competitors and setting benchmarks encompassing the overall sector.

Amazon’s cash flow statement is where the company begins to shine compared to its competitors in the online commerce sector. The company has consistently increased cash flow from operating activities and constantly returns value to shareholders in the form of capital appreciation.

It is notable for focusing on what the company is doing inside of its cash flow statements to get a better picture of why its income or stock price is trending a certain way. 

For example, an explosive drop in net income in an otherwise stable company could be due to mismanagement or hampered growth but is most likely due to M&A activity charged in a quarter that may be skewing the numbers. The cash flow statement clears this up.

Compared to 2022, Amazon has increased its annual cash from operating activities by over 38% from the previous year based on a 12-month rolling basis.

This increase has also resulted in an 11.7% increase in investment expenditures, which should allow Amazon to continue growing faster than similar companies.

In comparison, according to eBay’s most recent 10-K filing , the company generated an 82% growth in operating cash flow (OCF), however, this stat can be very misleading due to the company’s lack of investment in processes such as R&D and SG&A.

In 2022, the company reported $92M in investing activities, representing only 26% of operating cash flows. Amazon reported over $37.6B in investing activities representing approximately 88% of its OCF.

The income statement can misrepresent how well a company is doing, as while eBay has a higher net income, Amazon strategically reinvests its cash flows into R&D and other expenses to produce more over time continuously. 

What makes the cash flow statement so essential to fundamental analysis is the fact that it is tough to manipulate its numbers through financial engineering or clever accounting. 

The statement purely shows precisely where all of the money a company makes is being used. Many investors use the cash flow statement to tell the true financial health of a business, as profits can often not be indicative of a growth company's value.

The stock price of a company can easily be swayed by sentiment or the market cycle , and the income statement can be skewed through large one-time transactions or large amounts of financed revenue. The amount of money in the possession of a company is very hard to adjust.

Amazon currently has much better growth prospects than eBay and thus sells at a higher premium in the open market , but you wouldn’t understand why unless you took in the full picture of the company.

Everything You Need To Master Valuation Modeling

To Help You Thrive in the Most Prestigious Jobs on Wall Street.

Financial statements are excellent tools to learn more about a business in terms of an overall market or sector of operation. Using financial statements to determine the current value of a business is essential for understanding a company’s stock price.

Along with the ratios mentioned, analysts often form their methodologies over time to focus on companies that are strong in specific financial circumstances. 

Tools such as stock screeners can sort millions of companies by certain factors. For instance, some investors may seek defensive companies with consistent dividend growth over long periods, while others may seek growth companies with the most innovative new technology.

Investors should keep all of this information in mind, as well as pay attention to the reports of analysts with varied performance outlooks. It is essential to seek out the opinions of multiple sources before establishing an opinion on a business.

Looking at reports from analysts specializing in the industry can also ensure that your expectations are reasonable compared to industry experts. 

If your thesis results in Amazon growing its revenues by 20% a year while analysts across the country are only expecting growth in the range of 5-7%, it could be a sign that you may have overlooked a key factor in your due diligence .

The overall goal of using financial statements is to fully understand the company you are investing in to justify a position. Although your views may slightly differ from experts, quality due diligence can result in somewhat varied outcomes based on an investor’s outlook for the future.

Using EBITDA instead of net income strips away the capital structure and taxation of a business to analyze the pure earnings potential of a business. This is more practical for investors to see the general trajectory of a company’s income over time.

For example, companies may decide on completing a merger or acquiring another company. This will require a company to report its current and acquired assets on its balance sheet .

Over time, these assets must be recorded as expenses through the use of depreciation, which is the process of deducting from gross revenue to account for the decreasing value of company plant assets. 

If these assets increase in value over time, this could decrease revenues over time not due to company performance but because of increased prices for equipment outside of the company’s control. 

Without looking at EBITDA, company financials may paint a completely different picture with the use of net income that may or may not be justified at all.

ROE is an important metric to distinguish how good a company is at generating profits with investor capital compared to its share price and competitors. It is yet another indicator used to analyze the trajectory of a business over time. 

Using ROE can also demonstrate how much financing a company requires to generate its revenue and if investors are really getting a great return for the amount of money shareholders contribute. 

A startup that has recently gone public on the stock exchange may have a very low to negative ROE compared to an established company. Still, the startup may have the margins and growth to justify its valuation . 

Much like every financial ratio, ROE doesn’t demonstrate the entire story of a business, and the full picture of a business must be considered to decide on an equity investment.

To proliferate and take market share from competitors , Amazon undercuts prices on many products to decrease competition and remain the top player in the industry.

Amazon, like many other companies recently since the pandemic, has also faced significant increases in operating expenses , thus lowering operating and net margins in the short term. Once Amazon begins to slow expansion, these margins are expected to rise.

Amazon’s net income is very low for many of the same reasons. The company is profitable yet is constantly reinvesting into new businesses and products to further grow cash flows for future expenditures.

Amazon investors are not focused on income but rather on its ability to continuously grow in the long term. Growth companies like Amazon do not issue dividends because they believe that the money is better reinvested in business operations.

Everything You Need To Master Financial Statement Modeling

To Help you Thrive in the Most Prestigious Jobs on Wall Street.

Researched and Authored by Tanner Hertz | LinkedIn

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Introduction: Ratio analysis is a powerful tool in financial analysis, providing insights into a company's performance. This guide will explore the applicati

Finance Health

Ratio Analysis

Invest Decision

Real Life Case

Invest Strategy

Business Metric

Finance Data

Exploring Ratio Analysis Through Real-Life Case Studies

Dec 4, 2023 6:54 AM - Parth Sanghvi

Image credit: Austin Distel

Introduction:.

Ratio analysis is a powerful tool in financial analysis, providing insights into a company's performance. This guide will explore the application of ratio analysis through diverse case studies, showcasing its significance and practical implications in decision-making.

Understanding Ratio Analysis:

Ratio analysis involves the examination of various financial ratios to evaluate a company's financial health, performance, and operational efficiency. Key ratios include liquidity, profitability, solvency, and efficiency ratios.

Importance of Case Studies in Ratio Analysis:

Real-life case studies offer practical demonstrations of how ratio analysis influences decision-making and provides actionable insights for investors, analysts, and businesses.

Case Study Examples:

Liquidity Ratio Impact on Small Business:

• Analyzing the current ratio and quick ratio of a small business to assess its ability to meet short-term obligations during a cash crunch.

Profitability Ratios in Tech Companies:

• Comparing net profit margin and ROE among tech giants to identify profitability leaders in the industry.

Solvency Ratio Impact in the Retail Sector:

• Analyzing debt-to-equity ratios in the retail sector during economic downturns to evaluate resilience and risk management strategies.

Efficiency Ratios and Manufacturing Operations:

• Assessing inventory turnover ratios and receivables turnover ratios in manufacturing firms to streamline operational efficiency.

Valuation Ratios in Investment Decisions:

• Using P/E ratios and P/B ratios to make informed investment decisions in different sectors based on market sentiment.

Lessons Learned from Case Studies:

Holistic Evaluation: How combining multiple ratios provides a comprehensive view of a company's performance.

Industry Benchmarking: The significance of benchmarking ratios against industry averages for accurate comparative analysis.

Impact on Decision-making: How ratio analysis influences investment, strategic, and operational decisions.

Leveraging Insights from Ratio Analysis:

Continuous Monitoring: Regularly reviewing ratios to detect trends and identify areas needing improvement.

Predictive Analysis: Using historical data from ratios to forecast future performance and trends.

Conclusion:

Ratio analysis case studies provide actionable insights and practical applications for businesses and investors. Learning from these real-life examples empowers stakeholders to make informed decisions based on a thorough understanding of financial ratios.

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Engine No. 1, a small hedge fund on a mission to confront climate change, managed to do the impossible: Get dissident members on ExxonMobil's board. But lasting social impact has proved more elusive. Case studies by Mark Kramer, Shawn Cole, and Vikram Gandhi look at the complexities of shareholder activism.

• 07 Feb 2023

Supervisor of Sandwiches? More Companies Inflate Titles to Avoid Extra Pay

What does an assistant manager of bingo actually manage? Increasingly, companies are falsely classifying hourly workers as managers to avoid paying an estimated $4 billion a year in overtime, says research by Lauren Cohen.

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What Is Financial Analysis?

Understanding financial analysis, corporate financial analysis, investment financial analysis, types of financial analysis, horizontal vs. vertical analysis.

• Example of Financial Analysis
• Financial Analysis FAQs

The Bottom Line

• Corporate Finance
• Financial statements: Balance, income, cash flow, and equity

Financial Analysis: Definition, Importance, Types, and Examples

Financial analysis is the process of evaluating businesses, projects, budgets, and other finance-related transactions to determine their performance and suitability. Typically, financial analysis is used to analyze whether an entity is stable, solvent , liquid , or profitable enough to warrant a monetary investment.

Key Takeaways

• If conducted internally, financial analysis can help fund managers make future business decisions or review historical trends for past successes.
• If conducted externally, financial analysis can help investors choose the best possible investment opportunities.
• Fundamental analysis and technical analysis are the two main types of financial analysis.
• Fundamental analysis uses ratios and financial statement data to determine the intrinsic value of a security.
• Technical analysis assumes a security's value is already determined by its price, and it focuses instead on trends in value over time.

Investopedia / Nez Riaz

Financial analysis is used to evaluate economic trends, set financial policy, build long-term plans for business activity, and identify projects or companies for investment. This is done through the synthesis of financial numbers and data. A financial analyst will thoroughly examine a company's financial statements —the income statement , balance sheet , and cash flow statement . Financial analysis can be conducted in both corporate finance and investment finance settings.

One of the most common ways to analyze financial data is to calculate ratios from the data in the financial statements to compare against those of other companies or against the company's own historical performance.

For example, return on assets (ROA) is a common ratio used to determine how efficient a company is at using its assets and as a measure of profitability. This ratio could be calculated for several companies in the same industry and compared to one another as part of a larger analysis.

There is no single best financial analytic ratio or calculation. Most often, analysts use a combination of data to arrive at their conclusion.

In corporate finance, the analysis is conducted internally by the accounting department and shared with management in order to improve business decision making. This type of internal analysis may include ratios such as net present value (NPV) and internal rate of return (IRR) to find projects worth executing.

Many companies extend credit to their customers. As a result, the cash receipt from sales may be delayed for a period of time. For companies with large receivable balances, it is useful to track days sales outstanding (DSO), which helps the company identify the length of time it takes to turn a credit sale into cash. The average collection period is an important aspect of a company's overall cash conversion cycle .

A key area of corporate financial analysis involves extrapolating a company's past performance, such as net earnings or profit margin , into an estimate of the company's future performance. This type of historical trend analysis is beneficial to identify seasonal trends.

For example, retailers may see a drastic upswing in sales in the few months leading up to Christmas. This allows the business to forecast budgets and make decisions, such as necessary minimum inventory levels, based on past trends.

In investment finance, an analyst external to the company conducts an analysis for investment purposes. Analysts can either conduct a top-down or bottom-up investment approach. A top-down approach first looks for macroeconomic opportunities, such as high-performing sectors, and then drills down to find the best companies within that sector. From this point, they further analyze the stocks of specific companies to choose potentially successful ones as investments by looking last at a particular company's  fundamentals .

A bottom-up approach, on the other hand, looks at a specific company and conducts a similar ratio analysis to the ones used in corporate financial analysis, looking at past performance and expected future performance as investment indicators. Bottom-up investing forces investors to consider  microeconomic  factors first and foremost. These factors include a company's overall financial health, analysis of financial statements, the products and services offered, supply and demand, and other individual indicators of corporate performance over time.

Financial analysis is only useful as a comparative tool. Calculating a single instance of data is usually worthless; comparing that data against prior periods, other general ledger accounts, or competitor financial information yields useful information.

There are two types of financial analysis: fundamental analysis and technical analysis .

Fundamental Analysis

Fundamental analysis uses ratios gathered from data within the financial statements, such as a company's earnings per share (EPS), in order to determine the business's value. Using ratio analysis in addition to a thorough review of economic and financial situations surrounding the company, the analyst is able to arrive at an intrinsic value for the security. The end goal is to arrive at a number that an investor can compare with a security's current price in order to see whether the security is undervalued or overvalued.

Technical Analysis

Technical analysis uses statistical trends gathered from trading activity, such as moving averages (MA). Essentially, technical analysis assumes that a security’s price already reflects all publicly available information and instead focuses on the  statistical analysis of price movements . Technical analysis attempts to understand the market sentiment behind price trends by looking for patterns and trends rather than analyzing a security’s fundamental attributes.

When reviewing a company's financial statements, two common types of financial analysis are horizontal analysis and vertical analysis . Both use the same set of data, though each analytical approach is different.

Horizontal analysis entails selecting several years of comparable financial data. One year is selected as the baseline, often the oldest. Then, each account for each subsequent year is compared to this baseline, creating a percentage that easily identifies which accounts are growing (hopefully revenue) and which accounts are shrinking (hopefully expenses).

Vertical analysis entails choosing a specific line item benchmark, then seeing how every other component on a financial statement compares to that benchmark. Most often, net sales is used as the benchmark. A company would then compare cost of goods sold, gross profit, operating profit, or net income as a percentage to this benchmark. Companies can then track how the percent changes over time.

Examples of Financial Analysis

In the nine-month period ending Sept. 30, 2022, Amazon.com reported a net loss of $3 billion. This was a substantial decline from one year ago where the company reported net income of over $19 billion.

Financial analysis shows some interesting facets of the company's earnings per share (shown above. On one hand, the company's EPS through the first three quarters was -$0.29; compared to the prior year, Amazon earned $1.88 per share. This dramatic difference was not present looking only at the third quarter of 2022 compared to 2021. Though EPS did decline from one year to the next, the company's EPS for each third quarter was comparable ($0.31 per share vs. $0.28 per share).

Analysts can also use the information above to perform corporate financial analysis. For example, consider Amazon's operating profit margins below.

• 2022: $9,511 / $364,779 = 2.6%
• 2021: $21,419 / $332,410 = 6.4%

From Q3 2021 to Q3 2022, the company experienced a decline in operating margin, allowing for financial analysis to reveal that the company simply earns less operating income for every dollar of sales.

Why Is Financial Analysis Useful?

The financial analysis aims to analyze whether an entity is stable , liquid, solvent, or profitable enough to warrant a monetary investment. It is used to evaluate economic trends, set financial policies, build long-term plans for business activity, and identify projects or companies for investment.

How Is Financial Analysis Done?

Financial analysis can be conducted in both corporate finance and investment finance settings. A financial analyst will thoroughly examine a company's financial statements—the income statement, balance sheet, and cash flow statement.

One of the most common ways to analyze financial data is to calculate ratios from the data in the financial statements to compare against those of other companies or against the company's own historical performance. A key area of corporate financial analysis involves extrapolating a company's past performance, such as net earnings or profit margin, into an estimate of the company's future performance.

What Techniques Are Used in Conducting Financial Analysis?

Analysts can use vertical analysis to compare each component of a financial statement as a percentage of a baseline (such as each component as a percentage of total sales). Alternatively, analysts can perform horizontal analysis by comparing one baseline year's financial results to other years.

Many financial analysis techniques involve analyzing growth rates including regression analysis, year-over-year growth, top-down analysis such as market share percentage, or bottom-up analysis such as revenue driver analysis .

Last, financial analysis often entails the use of financial metrics and ratios. These techniques include quotients relating to the liquidity, solvency, profitability, or efficiency (turnover of resources) of a company.

What Is Fundamental Analysis?

Fundamental analysis uses ratios gathered from data within the financial statements, such as a company's earnings per share (EPS), in order to determine the business's value. Using ratio analysis in addition to a thorough review of economic and financial situations surrounding the company, the analyst is able to arrive at an intrinsic value for the security. The end goal is to arrive at a number that an investor can compare with a security's current price in order to see whether the security is undervalued or overvalued.

What Is Technical Analysis?

Technical analysis uses statistical trends gathered from market activity, such as moving averages (MA). Essentially, technical analysis assumes that a security’s price already reflects all publicly available information and instead focuses on the statistical analysis of price movements. Technical analysis attempts to understand the market sentiment behind price trends by looking for patterns and trends rather than analyzing a security’s fundamental attributes.

Financial analysis is a cornerstone of making smarter, more strategic decisions based on the underlying financial data of a company. Whether corporate, investment, or technical analysis, analysts use data to explore trends, understand growth, seek areas of risk, and support decision-making. Financial analysis may include investigating financial statement changes, calculating financial ratios, or exploring operating variances.

Amazon. " Amazon.com Announces Third Quarter Results ."

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Finance Case Studies

Featured finance case studies:.

Canary Wharf: Financing and Placemaking

Fondaco dei Tedeschi: A New Luxury Shopping Destination for Venice

Nathan Cummings Foundation: Mission-Driven Investing

The Decline of Malls

Expand the sections below to read more about each case study:, nathan cummings foundation, ellie campion, dwayne edwards, brad wayman, anna williams, william goetzmann, and jean rosenthal.

Asset Management, Investor/Finance, Leadership & Teamwork, Social Enterprise, Sourcing/Managing Funds

The Nathan Cummings Foundation Investment Committee and Board of Trustees had studied the decision to go “all in” on a mission-related investment approach. The Board voted 100% to support this new direction and new goals for financial investments, but many questions remained. How could NCF operationalize and integrate this new strategy? What changes would it need to make to support the investment strategies' long-term success? How could NCF measure and track its progress and success with this new strategy?

William Goetzmann, Jean Rosenthal, Jaan Elias, Edoardo Pasinato, Lukas Cejnar, Ellie Campion

Business History, Competitor/Strategy, Customer/Marketing, Innovation & Design, Investor/Finance, Sourcing/Managing Funds, State & Society

The renovation of the Fondaco dei Tedeschi in Venice represented a grand experiment. Should an ancient building in the midst of a world heritage site be transformed into a modern mall for luxury goods? How best to achieve the transformation and make it economically sustainable? Would tourists walk to the mall? And would they buy or just look? What could each stakeholder learn from their experiences with the Fondaco dei Tedeschi?

Gardner Denver

James quinn, adam blumenthal, and jaan elias.

Asset Management, Employee/HR, Investor/Finance, Leadership & Teamwork

As KKR, a private equity firm, prepared to take Gardner-Denver, one of its portfolio companies, public in mid-2017, a discussion arose on the Gardner-Denver board about the implications of granting approximately $110 million in equity to its global employee base as part of its innovative "broad-based employee ownership program." Was the generous equity package that Pete Stavros proposed be allotted to 6,100 employees the wisest move and the right timing for Gardner Denver and its new shareholders?

Home Health Care

Jean rosenthal, jaan elias, adam blumenthal, and jeremy kogler.

Asset Management, Competitor/Strategy, Healthcare, Investor/Finance

Blue Wolf Capital Partners was making major investments in the home health care sector. The private equity fund had purchased two U.S. regional companies in the space. The plan was to merge the two organizations, creating opportunities for shared expertise and synergies in reducing management costs. Two years later, the management team was considering adding a third company. Projected revenues for the combined organization would top $1 billion annually. What was the likelihood that this opportunity would succeed?

Suwanee Lumber Company

Jaan elias, adam blumenthal, james shovlin, and heather e. tookes.

Asset Management, Investor/Finance, Sustainability

In 2016, Blue Wolf, a private equity firm headquartered in New York City, confronted a number of options when it came to its lumber business. They could put their holdings in the Suwanee Lumber Company (SLC), a sawmill they had purchased in 2013, up for sale. Or they could continue to hold onto SLC and run it as a standalone business. Or they could double down on the lumber business by buying an idle mill in Arkansas to run along with SLC.

Alternative Meat Industry: How Should Beyond Meat be Valued?

Nikki springer, leon van wyk, jacob thomas, k. geert rouwenhorst and jaan elias.

Competitor/Strategy, Customer/Marketing, Investor/Finance, Sourcing/Managing Funds, Sustainability

In 2009, when experienced entrepreneur Ethan Brown decided to build a better veggie burger, he set his sights on an exceptional goal – create a plant-based McDonald’s equally beloved by the American appetite. To do this, he knew he needed to transform the idea of plant-based meat alternatives from the sleepy few veggie burger options in the grocer’s freezer case into a fundamentally different product. Would further investments in research and development help give Beyond Meat an edge? Would Americans continue to embrace meat alternatives, or would the initial fanfare subside below investor expectations?

Hertz Global Holdings (A): Uses of Debt and Equity

Jean rosenthal, geert rouwenhorst, jacob thomas, allen xu.

Asset Management, Financial Regulation, Sourcing/Managing Funds

By 2019, Hertz CEO Kathyrn Marinello and CFO Jamere Jackson had managed to streamline the venerable car rental firm's operations. Their next steps were to consider ways to fine-tune Hertz's capital structure. Would it make sense for Marinello and Jackson to lead Hertz to issue more equity to re-balance the structure? One possibility was a stock rights offering, but an established company issuing equity was not generally well-received by investors. How well would the market respond to an attempt by Hertz management to increase shareholder equity?

Twining-Hadley Incorporated

Jaan elias, k geert rouwenhorst, jacob thomas.

Employee/HR, Investor/Finance, Metrics & Data, Sourcing/Managing Funds

Jessica Austin has been asked to compute THI's Weighted Average Cost of Capital, a key measure for making investments and deciding executive compensation. What should she consider in making her calculation?

Shake Shack IPO

Vero bourg-meyer, jaan elias, jake thomas and geert rouwenhorst.

Competitor/Strategy, Innovation & Design, Investor/Finance, Leadership & Teamwork, Sourcing/Managing Funds, Sustainability

Shake Shack's long lines of devoted fans made investors salivate when the company went public in 2015 and shares soared above expectations. Was the enthusiasm justified? Could the company maintain its edge in the long run?

Strategy for Norway's Pension Fund Global

Jean rosenthal, william n. goetzmann, olav sorenson, andrew ang, and jaan elias.

Asset Management, Investor/Finance, Sourcing/Managing Funds

Norway's Pension Fund Global was the largest sovereign wealth fund in the world. With questions in 2014 on policies, ethical investment, and other concerns, what was the appropriate investment strategy for the Fund?

Factor Investing for Retirement

Jean rosenthal, jaan elias and william goetzmann.

Asset Management, Investor/Finance

Should this investor look for a portfolio of factor funds to meet his goals for his 401(k) Retirement Plan?

Bank of Ireland

Jean w. rosenthal, eamonn walsh, matt spiegel, will goetzmann, david bach, damien p. mcloughlin, fernando fernandez, gayle allard, and jaan elias.

Asset Management, Financial Regulation, Investor/Finance, Leadership & Teamwork, Macroeconomics, State & Society

In August 2011, Wilbur Ross, an American investor specializing in distressed and bankrupt companies, purchased 35% of the stock of Bank of Ireland. Even for Ross, investing in an Irish bank seemed risky. Observers wondered if the investment made sense.

Commonfund ESG

Jaan elias, sarah friedman hersh, maggie chau, logan ashcraft, and pamela jao.

Asset Management, Investor/Finance, Metrics & Data, Social Enterprise

ESG (Environmental Social and Governance) investing had become an increasingly hot topic in the financial community. Could Commonfund offer its endowment clients some investment vehicle that would satisfy ESG concerns while producing sufficient returns?

Glory, Glory Man United!

Charles euvhner, jacob thomas, k. geert rouwenhorst, and jaan elias.

Competitor/Strategy, Employee/HR, Investor/Finance, Leadership & Teamwork, Sourcing/Managing Funds

Manchester United might be the greatest English sports dynasty of all time. But valuation poses unique challenges. How much should a team's success on the pitch count toward its net worth?

Walmart de México: Investing in Renewable Energy

Jean rosenthal, k. geert rouwenhorst, isabel studer, jaan elias, and juan carlos rivera.

Investor/Finance, Operations, State & Society, Sustainability

Walmart de México y Centroamérica contracted for power from EVM's wind farm, saving energy costs and improving sustainability. What should the company's next steps be to advance its goals?

Voltaire, Casanova, and 18th-Century Lotteries

Jean rosenthal and william n. goetzmann.

Business History, State & Society

Gambling has been a part of human activity since earliest recorded history, and governments have often attempted to turn that impulse to benefit the state.  The development of lotteries in the 18th century helped to develop the study of probabilities and enabled the financial success of some of the leading figures of that era.

Alexander Hamilton and the Origin of American Finance

Andrea nagy smith, william goetzmann, and jeffrey levick.

Business History, Financial Regulation, Investor/Finance

Alexander Hamilton is said to have invented the future. At a time when the young United States of America was disorganized and bankrupt, Hamilton could see that the nation would become a powerful economy.

Kmart Bankruptcy

Jean rosenthal, heather tookes, henry s. miller, and jaan elias.

Asset Management, Financial Regulation, Investor/Finance

Less than 18 months after Kmart entered Chapter 11, the company emerged and its stocked soared. Why had the chain entered Chapter 11 in the first place and how had the bankruptcy process allowed the company to right itself?

Oil, ETFs, and Speculation

So alex roelof, k. geert rouwenhorst, and jaan elias.

Since the markets' origins, traders sought standardized wares to increase market liquidity. In the 1960s and later, they sought assets uncorrelated to traditional bonds and equities. By late 2004, commodity-based exchange-traded securities emerged.

Newhall Ranch Land Parcel

Acquired by a partnership of two closely intertwined homebuilders, Newhall Ranch was the last major tract of undeveloped land in Los Angeles County in 2003.

Brandeis and the Rose Museum

Arts Management, Asset Management, Investor/Finance, Social Enterprise, Sourcing/Managing Funds

The question of the role museums should play in university life became urgent for Brandeis in early 2009. Standard portfolios of investments had just taken a beating. Given that environment, should Brandeis sell art in order to save its other programs?

Taking EOP Private

Allison mitkowski, william goetzmann, and jaan elias.

Asset Management, Financial Regulation, Investor/Finance, Leadership & Teamwork

With 594 properties nationwide, EOP was the nation’s largest office landlord.  Despite EOP's dominance of the REIT market, analysts had historically undervalued EOP. However, Blackstone saw something in EOP that the analysts didn’t, and in November, Blackstone offered to buy EOP for $48.50 per share. What did Blackstone and Vornado see that the market didn’t?

Subprime Lending Crisis

Jaan elias and william n. goetzmann.

Asset Management, Financial Regulation, Investor/Finance, State & Society

To understand the collapse of the subprime mortgage market, we look at a failing Mortgage Backed Security (MBS) and then drill down to look at a single loan that has gone bad.

William N. Goetzmann, Jean Rosenthal, and Jaan Elias

Asset Management, Business History, Customer/Marketing, Entrepreneurship, Innovation & Design, Investor/Finance, Sourcing/Managing Funds, State & Society

The financial engineering of London's Canary Wharf was as impressive as the structural engineering. However, Brexit and the rise of fintech represented new challenges. Would financial firms leave the U.K.? Would fintech firms seek new kinds of space? How should the Canary Wharf Group respond?

The Future of Malls: Was Decline Inevitable?

Jean rosenthal, anna williams, brandon colon, robert park, william goetzmann, jessica helfand  .

Business History, Customer/Marketing, Innovation & Design, Investor/Finance

Shopping malls became the "Main Street" of US suburbs beginning in the mid-20th century. But will they persist into the 21st?

Hirtle Callaghan & Co

James quinn, jaan elias, and adam blumenthal.

Asset Management, Investor/Finance, Leadership & Teamwork

In August 2019, Stephen Vaccaro, Yale MBA ‘03, became the director of private equity at Hirtle, Callaghan & Co., LLC (HC), a leading investment management firm associated with pioneering the outsourced chief investment office (OCIO) model for college endowments, foundations, and wealthy families. Vaccaro was tasked with spearheading efforts to grow HC’s private equity (PE) market value from $1 billion to a new target of roughly $3 billion in order to contribute to the effort of generating higher long-term returns for clients. Would investment committees overseeing endowments typically in the 10s or 100s of millions embrace this shift, and, more pointedly, was this the best move for client portfolios?

The Federal Reserve Response to 9-11

Jean rosenthal, william b. english, jaan elias.

Financial Regulation, Investor/Finance, Leadership & Teamwork, State & Society

The attacks on New York City and the Pentagon in Washington, DC, on September 11, 2001, shocked the nation and the world. The attacks crippled the nerve center of the U.S. financial system. Information flow among banks, traders in multiple markets, and regulators was interrupted. Under Roger Ferguson's leadership, the Federal Reserve made a series of decisions designed to provide confidence and increase liquidity in a severely damaged financial system. In hindsight, were these the best approaches? Were there other options that could have taken place?

Suwanee Lumber Company (B)

In early 2018, Blue Wolf Capital Management received an offer to sell both its mill in Arkansas (Caddo) and its mill in Florida (Suwanee) to Conifex, an upstart Canadian lumber company. Blue Wolf hadn’t planned to put both mills up for sale yet, but was the deal too good to pass up? Blue Wolf had invested nearly $36.5 million into rehabilitating the Suwanee and Caddo mills. However, neither was fully operational yet. Did the offer price fairly value the prospects of the mills? How should Blue Wolf consider the Conifex stock? Should Blue Wolf conduct a more extensive sales process rather than settle for this somewhat unexpected offer?

Occidental Petroleum's Acquisition of Anadarko

Jaan elias, piyush kabra, jacob thomas, k. geert rouwenhorst.

Asset Management, Competitor/Strategy, Investor/Finance, Sourcing/Managing Funds

In May of 2019, Vicki Hollub, the CEO of Occidental Petroleum (Oxy), pulled off a blockbuster. Bidding against Chevron, one of the world's largest oil firms, she had managed to buy Anadarko, another oil company that was roughly the size of Oxy. Hollub believed that the combination of the two firms brought the possibility for billions of dollars in synergies, more than offsetting the cost of the acquisition. Had Hollub hurt shareholder value with Oxy's ambitious deal, or had she bolstered a mid-size oil firm and made it a major player in the petroleum industry? Why didn't investors see the tremendous synergies in which Hollub fervently believed?

Hertz Global Holdings (B): Uses of Debt and Equity 2020

In 2019, Hertz held a successful rights offering and restructured some of its debt. CEO Kathyrn Marinello and CFO Jamere Jackson were moving the company toward what seemed to be sustainable profitability, having implemented major structural and financial reforms. Analysts predicted a rosy future. Travel, particularly corporate travel, was increasing as the economy grew. With all the creativity that the company had shown in its financial arrangements, did it have any options remaining, even while under the court-led reorganization?

Prodigy Finance

Vero bourg-meyer, javier gimeno, jaan elias, florian ederer.

Competitor/Strategy, Investor/Finance, Social Enterprise, State & Society, Sustainability

Having pioneered a successful financing model for student loans, Prodigy also was considering other financial services that could make use of the company’s risk model. What new products could Prodigy offer to support its student borrowers? What strategy should guide the company’s new product development? Or should the company stick to the educational loans it pioneered and knew best?

tronc: Valuing the Future of Newspapers

Jean rosenthal, heather e. tookes, and jaan elias.

Business History, Competitor/Strategy, Investor/Finance, Leadership & Teamwork

Gannet offered Tribune Publishing an all-cash buyout offer. Tribune then made a strategic pivot: new stock listing, new name "tronc," and a goal of posting 1,000 videos/day. Should the Tribune board take the buyout opportunity? What was the right price?

Role of Hedge Funds in Institutional Portfolios: Florida Retirement System

Jaan elias, william goetzmann and lloyd baskin.

Asset Management, Financial Regulation, Investor/Finance, Metrics & Data, State & Society

The Florida Retirement System, one of the country’s largest state pensions, had been slow to embrace hedge funds, but by 2015, they had 7% of their assets in the category. How should they manage their program?

Social Security 1935

Jean rosenthal, william n. goetzmann, and jaan elias.

Business History, Financial Regulation, Innovation & Design, Investor/Finance, State & Society

Frances Perkins, Franklin Roosevelt's Secretary of Labor, shaped the Social Security Act of 1935, changing America’s pension landscape. What might she have done differently?

Ant Financial: Flourishing Farmer Loans at MYbank

Jingyue xu, jean rosenthal, k. sudhir, hua song, xia zhang, yuanfang song, xiaoxi liu, and jaan elias.

Competitor/Strategy, Customer/Marketing, Entrepreneurship, Innovation & Design, Investor/Finance, Leadership & Teamwork, Operations, State & Society

In 2015 Ant Financial's MYbank (an offshoot of Jack Ma’s Alibaba company) created the Flourishing Farmer Loan program, an all-internet banking service for China's rural areas. Could MYbank use financial technology to create a program with competitive costs and risk management?

Low-Carbon Investing: Commonfund & GPSU

Jaan elias, william goetzmann, and k. geert rouwenhorst.

Asset Management, Ethics & Religion, Investor/Finance, Social Enterprise, State & Society, Sustainability

In August of 2014, the movement to divest fossil fuel investments from endowment portfolios was sweeping campuses across the United States, including Gifford Pinchot State University (GPSU). How should GPSU and its investment partner Commonfund react?

360 State Street: Real Options

Andrea nagy smith and mathew spiegel.

Asset Management, Investor/Finance, Metrics & Data, Sourcing/Managing Funds

360 State Street proved successful, but what could Bruce Becker construct on the 6,000-square-foot vacant lot at the southwest corner of the project? Under what set of circumstances and at what time would it be most advantageous to proceed? Or should he build anything at all?

Centerbridge

Jean rosenthal and olav sorensen.

When Jeffrey Aronson and Mark Gallogly founded Centerbridge, they hoped to grow the firm, but not to a point that it would lose its culture. Having added an office in London, could the firm add more locations and maintain its collegial character?

George Hudson and the 1840s Railway Mania

Andrea nagy smith, james chanos, and james spellman.

Business History, Financial Regulation, Investor/Finance, Metrics & Data

Railways were one of the original disruptive technologies: they transformed England from an island of slow, agricultural villages into a fast, urban, industrialized nation.  George Hudson was the central figure in the mania for railroad shares in England. After the share value crashed, some analysts blamed Hudson, others pointed to irrational investors and still others maintained the crash was due to macroeconomic factors.

Demosthenes and Athenian Finance

Andrea nagy smith and william goetzmann.

Business History, Financial Regulation, Law & Contracts

Demosthenes' Oration 35, "Against Lacritus," contains the only surviving maritime loan contract from the fourth century B.C., proving that the ancient Greeks had devised a commercial code to link the economic lives of people from all over the Greek world.   Athenians and non-Athenians alike came to the port of Piraeus to trade freely.

South Sea Bubble

Frank newman and william goetzmann.

Business History, Financial Regulation

The story of the South Sea Company and its seemingly absurd stock price levels always enters into conversations about modern valuation bubbles.  Because of its modern application, discerning what was at the root of the world's first stock market crash merits considerable attention. What about the South Sea Company and the political, economic and social context in which it operated led to its stunning collapse?

Jean W. Rosenthal, Jaan Elias, William N. Goetzmann, Stanley Garstka, and Jacob Thomas

Asset Management, Healthcare, Investor/Finance, Sourcing/Managing Funds, State & Society

A centerpiece of the 2007 contract negotiations between the UAW and GM - and later with Chrysler and Ford - was establishing a Voluntary Employee Beneficiary Association (VEBA) to provide for retiree healthcare costs. The implications were substantial.

Northern Pulp: A Private Equity Firm Resurrects a Troubled Paper Company

Heather tookes, peter schott, francesco bova, jaan elias and andrea nagy smith.

Investor/Finance, Macroeconomics, State & Society, Sustainability

In 2008, the lumber industry was in a severe recession, yet Blue Wolf Capital Management was considering investment in a paper mill in Nova Scotia. How should they proceed?

Lahey Clinic: North Shore Expansion

Jaan elias, andrea r. nagy, jessica p. strauss, and william n. goetzmann.

Asset Management, Financial Regulation, Healthcare, Investor/Finance

In early 2007 the Lahey Clinic in Massachusetts believed that expansion of its North Shore facility was not only a smart strategy but also a business necessity.  The two years of turmoil in the Massachusetts health care market prompted observers to question Lahey's 2007 decisions. Did the expansion strategy still make sense?

Carry Trade ETF

K. geert rouwenhorst, jean w. rosenthal, and jaan elias.

Innovation & Design, Investor/Finance, Macroeconomics, Sourcing/Managing Funds

In 2006 Deutsche Bank (DB) brought a new product to market – an exchange traded fund (ETF) based on the carry trade, a strategy of buying and selling currency futures. The offering received the William F. Sharpe Indexing Achievement Award for “Most Innovative Index Fund or ETF” at the 2006 Sharpe Awards. These awards are presented annually by IndexUniverse.com and Information Management Network for innovative advances in the indexing industry. The carry trade ETF shared the award with another DB/PowerShares offering, a Commodity Index Tracking Fund. Jim Wiandt, publisher of IndexUniverse.com, said, "These innovators are shaping the course of the index industry, creating new tools and providing new insights for the benefit of all investors." What was it that made this financial innovation successful?

William Goetzmann and Jaan Elias

Asset Management, Business History

Hawara is the site of the massive pyramid of Amenemhat III, a XII Dynasty [Middle Kingdom, 1204 – 1604 B.C.E.] pharaoh.  The Hawara Labyrinth and Pyramid Complex present a wealth of information about the Middle Kingdom.  Among its treasures are papyri covering property rights and transfers of ownership.

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Top 10 FinTech Case Studies [A Detailed Exploration] [2024]

In the dynamic realm of financial technology—often abbreviated as FinTech—groundbreaking innovations have revolutionized how we interact with money, democratizing access to myriad financial services. No longer confined to traditional banking and financial institutions, today’s consumers can easily invest, transact, and manage their finances at their fingertips. Through a deep dive into the top five FinTech case studies, this article seeks to illuminate the transformative power of financial technology. From trailblazing start-ups to industry disruptors, we will unravel how these companies have reshaped the financial landscape, offering invaluable lessons for consumers and future FinTech leaders.

Top 10 FinTech case studies [A Detailed Exploration] [2024]

Case study 1: square – democratizing payment processing.

Launched in 2009 by Twitter co-founder Jack Dorsey, Square sought to fill a gaping hole in the financial services market—accessible payment processing for small businesses. In an industry overshadowed by high costs and complexity, Square introduced a game-changing point-of-sale (POS) system, using a tiny card reader that could be plugged into a smartphone.

Key Challenges

1. High Costs: The financial burden of traditional payment systems made it difficult for small businesses to participate, affecting their growth and market reach.

2. Complexity: Legacy systems were cumbersome, requiring hefty upfront investments in specialized hardware and software, with a steep learning curve for users.

3. Limited Accessibility: Many small businesses had to resort to cash-only operations, losing potential customers who preferred card payments.

Related: Important FinTech KPIs Explained

Strategies Implemented

1. User-Friendly Hardware: Square’s portable card reader was revolutionary. Easy to use and set up, it integrated seamlessly with smartphones.

2. Transparent Pricing: A flat-rate fee structure eliminates hidden costs, making budgeting more predictable for businesses.

3. Integrated Business Solutions: Square went beyond payment processing to offer additional services such as inventory management, analytics, and loans.

Results Achieved

1. Market Penetration: As of 2023, Square boasted over 4 million sellers using its platform, solidifying its market position.

2. Revenue Growth: Square achieved significant financial gains, reporting $4.68 billion in revenue in Q2 2021—a 143% year-over-year increase.

3. Product Diversification: Expanding its ecosystem, Square now offers an array of services from payroll to cryptocurrency trading through its Cash App.

Key Learnings

1. Simplicity is Key: Square’s user-centric design proved that simplifying complex processes can open new markets and encourage adoption.

2. Holistic Ecosystems: Offering integrated services can foster customer loyalty and increase lifetime value.

3. Transparency Builds Trust: A clear, straightforward fee structure can differentiate a FinTech solution in a market known for its opaqueness.

4. Accessibility: Providing easy-to-use and affordable services can empower smaller businesses, contributing to broader economic inclusion.

Related: Benefits of Green FinTech for Businesses

Case Study 2: Robinhood – Democratizing Investment

Founded in 2013, Robinhood burst onto the financial scene with a disruptive promise—commission-free trading. Unlike traditional brokerage firms that charged a fee for every trade, Robinhood allowed users to buy and sell stocks at no direct cost. The platform’s user-friendly interface and sleek design made it particularly appealing to millennials and Gen Z, demographics often underrepresented in the investment world.

1. High Commissions: Traditional brokerages often had fee structures that discouraged individuals, especially younger investors, from participating in the stock market.

2. Complex User Interfaces: Many existing trading platforms featured clunky, complicated interfaces that were intimidating for novice investors.

3. Limited Access: Entry-level investors often felt the investment landscape was an exclusive club beyond their financial and technical reach.

1. Commission-Free Trading: Robinhood’s flagship offering eliminated the financial barriers that commissions presented, inviting a new cohort of individual investors into the market.

2. User-Friendly Design: A sleek, intuitive interface made stock trading less intimidating, broadening the platform’s appeal.

3. Educational Resources: Robinhood provides educational content to help novice investors understand market dynamics, equipping them for more informed trading.

1. Market Disruption: Robinhood’s model has pressured traditional brokerage firms to rethink their fee structures, with several following suit by offering commission-free trades.

2. User Growth: As of 2023, Robinhood has amassed over 23.2 million users, a testament to its market penetration.

3. Public Scrutiny: Despite its success, Robinhood has not been without controversy, especially regarding its revenue model and lack of transparency. These issues have sparked widespread debate about ethical practices in fintech.

1. User-Centricity Drives Adoption: Robinhood’s easy-to-use platform illustrates that reducing friction encourages higher user engagement and diversifies the investor base.

2. Transparency is Crucial: The controversies surrounding Robinhood serve as a cautionary tale about the importance of transparent business practices in building and maintaining consumer trust.

3. Disruption Spurs Industry Change: Robinhood’s entry forced a reevaluation of longstanding industry norms, underscoring the influence a disruptive FinTech company can wield.

Related: How to Get an Internship in the FinTech Sector?

Case Study 3: Stripe – Simplifying Online Payments

Founded in 2010 by Irish entrepreneurs Patrick and John Collison, Stripe set out to solve a significant problem—simplifying online payments. During that time, businesses looking to accept payments online had to navigate a complex labyrinth of banking relationships, security protocols, and regulatory compliance. Stripe introduced a straightforward solution—APIs that allow businesses to handle online payments, subscriptions, and various other financial transactions with ease.

1. Complex Setup: Traditional online payment methods often require cumbersome integration and extensive documentation.

2. Security Concerns: Handling financial transactions online raised issues about data safety and compliance with financial regulations.

3. Limited Flexibility: Most pre-existing payment solutions were not adaptable to specific business needs, particularly for start-ups and SMEs.

1. Simple APIs: Stripe’s suite of APIs allowed businesses to integrate payment gateways effortlessly, removing barriers to entry for online commerce.

2. Enhanced Security: Stripe implemented robust security measures, including tokenization and SSL encryption, to protect transaction data.

3. Customization: Stripe’s modular design gave businesses the freedom to tailor the payment experience according to their specific needs.

1. Broad Adoption: Stripe’s intuitive and secure payment solutions have attracted a diverse client base, from start-ups to Fortune 500 companies.

2. Global Reach: As of 2023, Stripe operates in over 46 countries, testifying its global appeal and functionality.

3. Financial Milestone: Stripe’s valuation skyrocketed to $50 billion in 2023, making it one of the most valuable FinTech companies globally.

1. Ease of Use: Stripe’s success proves that a user-friendly, straightforward approach can go a long way in attracting a wide range of customers.

2. Security is Paramount: Handling financial data requires stringent security measures, and Stripe’s focus on secure transactions sets an industry standard.

3. Scalability and Flexibility: Providing a modular, customizable solution allows businesses to scale and adapt, increasing customer satisfaction and retention.

Related: FinTech Skills to Add in Your Resume

Case Study 4: Coinbase – Mainstreaming Cryptocurrency

Founded in 2012, Coinbase set out to make cryptocurrency trading as simple and accessible as using an email account. At the time, the world of cryptocurrency was a wild west of complicated interfaces, murky regulations, and high-risk investments. Coinbase aimed to change this by offering a straightforward, user-friendly platform to buy, sell, and manage digital currencies like Bitcoin, Ethereum, and many others.

1. User Complexity: Before Coinbase, cryptocurrency trading required high technical know-how, making it inaccessible to the average person.

2. Security Risks: The lack of centralized governance in the crypto world led to various security concerns, including hacking and fraud.

3. Regulatory Uncertainty: The absence of clear regulations concerning cryptocurrency created a hesitant environment for both users and investors.

1. User-Friendly Interface: Coinbase developed a sleek, easy-to-use platform with a beginner-friendly approach, which allowed users to start trading with just a few clicks.

2. Enhanced Security: The platform incorporated advanced security features such as two-factor authentication (2FA) and cold storage for digital assets to mitigate risks.

3. Educational Content: Coinbase offers guides, tutorials, and other educational resources to help demystify the complex world of cryptocurrency.

1. Mass Adoption: As of 2023, Coinbase had over 150 million verified users, contributing significantly to mainstreaming cryptocurrencies.

2. Initial Public Offering (IPO): Coinbase went public in April 2021 with a valuation of around $86 billion, highlighting its commercial success.

3. Regulatory Challenges: While Coinbase has succeeded in democratizing crypto trading, it continues to face scrutiny and regulatory hurdles, emphasizing the sector’s evolving nature.

1. Accessibility Drives Adoption: Coinbase’s user-friendly design has played a pivotal role in driving mass adoption of cryptocurrencies, illustrating the importance of making complex technologies accessible to everyday users.

2. Security is a Selling Point: In an ecosystem rife with security concerns, robust safety measures can set a platform apart and attract a broader user base.

3. Regulatory Adaptability: The ongoing regulatory challenges highlight the need for adaptability and proactive governance in the fast-evolving cryptocurrency market.

Related: Top FinTech Interview Questions and Answers

Case Study 5: Revolut – All-In-One Financial Platform

Founded in 2015, Revolut started as a foreign currency exchange service, primarily focusing on eliminating outrageous foreign exchange fees. With the broader vision of becoming a financial super-app, Revolut swiftly expanded its services to include digital banking, stock trading, cryptocurrency exchange, and other financial services. This rapid evolution aimed to provide users with an all-encompassing financial solution on a single platform.

1. Fragmented Services: Before Revolut, consumers had to use multiple platforms for various financial needs, leading to a fragmented user experience.

2. High Costs: Traditional financial services, particularly foreign exchange and cross-border payments, often have hefty fees.

3. Slow Adaptation: Conventional banking systems were slow to integrate new financial technologies, leaving a gap in the market for more agile solutions.

1. Unified Platform: Revolut combined various financial services into a single app, offering users a seamless experience and a one-stop solution for their financial needs.

2. Competitive Pricing: By leveraging FinTech efficiencies, Revolut offered competitive rates for services like currency exchange and stock trading.

3. Rapid Innovation: The platform continually rolled out new features, staying ahead of consumer demand and forcing traditional institutions to catch up.

1. User Growth: As of 2023, Revolut has amassed over 30 million retail customers, solidifying its reputation as a financial super-app.

2. Revenue Increase: In 2021, Revolut’s revenues climbed to approximately $765 million, indicating its business model’s viability.

3. Industry Influence: Revolut’s multi-functional capabilities have forced traditional financial institutions to reconsider their offerings, pushing the industry toward integrated, user-friendly solutions.

1. User-Centric Design: Revolut’s success stems from its focus on solving real-world consumer problems with an easy-to-use, integrated platform.

2. Agility Wins: In the fast-paced world of fintech, the ability to innovate and adapt quickly to market needs can be a significant differentiator.

3. Competitive Pricing is Crucial: Financial services have always been a cost-sensitive sector. Offering competitive pricing can draw users away from traditional platforms.

Related: Surprising FinTech Facts and Statistics

Case Study  6 : Chime – Revolutionizing Personal Banking

Essential term: digital banking.

Digital banking represents the digitization of all traditional banking activities, where financial services are delivered predominantly through the internet. This innovation caters to a growing demographic of tech-savvy users seeking efficient and accessible banking solutions.

Founded in 2013, Chime entered the financial market with a bold mission: to redefine personal banking through simplicity, transparency, and customer-centricity. At a time when traditional banks were mired in fee-heavy structures and complex service models, Chime introduced a revolutionary no-fee model complemented by a streamlined digital experience, challenging the status quo of personal banking.

1. Fee-Heavy Structure: Traditional banks heavily relied on various fees, including overdraft and maintenance charges, alienating a significant portion of potential customers, particularly those seeking straightforward banking solutions.

2. Complexity and Inaccessibility: Conventional banking systems were often marred by cumbersome procedures and lacked user-friendly interfaces, making them less appealing, especially to younger, more tech-savvy generations.

3. Customer Service: The traditional banking sector frequently struggled with providing proactive and responsive customer service, creating a gap in customer satisfaction and engagement.

1. No-Fee Model: By eliminating common banking fees such as overdraft fees, Chime positioned itself as a customer-friendly alternative, significantly attracting customers frustrated with traditional banking penalties.

2. User-Friendly App: Chime’s app was designed with user experience at its core, offering an intuitive and accessible platform for everyday banking operations, thereby enhancing overall customer experience.

3. Automatic Savings Tools: Chime innovated with features like automatic savings round-up and early paycheck access, designed to empower customers in their financial management.

1. Expansive Customer Base: Chime successfully captured a broad market segment, particularly resonating with millennials and Gen Z, evidenced by its rapid accumulation of millions of users.

2. Catalyst for Innovation: The company’s growth trajectory and model pressured traditional banks to reassess and innovate their fee structures and service offerings.

3. Valuation Surge: Reflecting its market impact and success, Chime’s valuation experienced a substantial increase, marking its significance in the banking sector.

1. Customer-Centric Approach: Chime’s journey underscores the importance of addressing customer pain points, such as fee structures, and offering a seamless digital banking experience, which can be instrumental in rapid user base growth.

2. Innovation in Features: The introduction of genuinely helpful financial management tools can significantly differentiate a FinTech company in a competitive market.

3. Disruptive Influence: Chime’s success story illustrates how a digital-first approach can disrupt and challenge traditional banking models, paving the way for new, innovative banking experiences.

Related: Is FinTech Overhyped?

Case Study  7 : LendingClub – Pioneering Peer-to-Peer Lending

Essential term: peer-to-peer (p2p) lending.

Peer-to-Peer (P2P) lending is a method of debt financing that enables individuals to borrow and lend money without using an official financial institution as an intermediary. This model directly connects borrowers and lenders through online platforms.

LendingClub, founded in 2006, emerged as a trailblazer in the lending industry by introducing a novel P2P lending model. This innovative approach offered a substantial departure from the traditional credit system, typically dominated by banks and credit unions, aiming to democratize access to credit.

1. High-Interest Rates: Traditional loans were often synonymous with high-interest rates, rendering them inaccessible or financially burdensome for many borrowers.

2. Limited Access to Credit: Conventional lending mechanisms frequently sidelined individuals with lower credit scores, creating a significant barrier to credit access.

3. Intermediary Costs: The traditional lending process involves numerous intermediaries, leading to additional costs and inefficiencies for borrowers and lenders.

1. Direct Platform: LendingClub’s platform revolutionized lending by directly connecting borrowers with investors, reducing the overall cost of obtaining loans.

2. Risk Assessment Tools: The company employed advanced algorithms for assessing the risk profiles of borrowers, which broadened the spectrum of loan accessibility to include individuals with diverse credit histories.

3. Streamlined Process: LendingClub’s online platform streamlined the loan application and disbursement processes, enhancing transparency and efficiency.

1. Expanded Credit Access: LendingClub significantly widened the avenue for credit, particularly benefiting those with less-than-perfect credit scores.

2. Influencing the Market: The P2P lending model introduced by LendingClub prompted traditional lenders to reconsider their rates and processes in favor of more streamlined, borrower-friendly approaches.

3. Navigating Regulatory Hurdles: The journey of LendingClub highlighted the intricate regulatory challenges of financial innovation, underscoring the importance of adaptive compliance strategies.

1. Efficiency of Direct Connections: Eliminating intermediaries in the lending process can lead to substantial cost reductions and process efficiency improvements.

2. Broadening Credit Accessibility: FinTech can play a pivotal role in democratizing access to financial services by implementing innovative risk assessment methodologies.

3. Importance of Regulatory Compliance: Sustainable innovation in the FinTech sector necessitates a keen awareness and adaptability to the evolving regulatory landscape.

Related: Who is a FinTech CTO?

Case Study  8 : Brex – Reinventing Business Credit for Startups

Essential term: corporate credit cards.

Corporate credit cards are specialized financial tools designed for business use. They offer features like higher credit limits, rewards tailored to business spending, and, often, additional tools for expense management.

Launched in 2017, Brex emerged with a bold vision to transform how startups access and manage credit. In a financial landscape where traditional corporate credit cards posed steep requirements and were often misaligned with the unique needs of burgeoning startups, Brex introduced an innovative solution. Their model focused on the company’s cash balance and spending patterns rather than relying on personal credit histories.

1. Inaccessibility for Startups: Traditional credit systems, with their reliance on extensive credit history, were largely inaccessible to new startups, which typically lacked this background.

2. Rigid Structures: Conventional corporate credit cards were not designed to accommodate rapidly evolving startups’ fluid and dynamic financial needs.

3. Personal Guarantee Requirement: A common stipulation in business credit involves personal guarantees, posing a significant risk for startup founders.

1. No Personal Guarantee: Brex innovated by offering credit cards without needing a personal guarantee, basing creditworthiness on business metrics.

2. Tailored Financial Solutions: Understanding the unique ecosystem of startups, Brex designed its services to be flexible and in tune with their evolving needs.

3. Technology-Driven Approach: Utilizing advanced algorithms and data analytics, Brex could assess the creditworthiness of startups in a more nuanced and comprehensive manner.

1. Breaking Barriers: Brex made corporate credit more accessible to startups, removing traditional barriers.

2. Market Disruption: By tailoring its product, Brex pressures traditional financial institutions to innovate and rethink its credit card offerings.

3. Rapid Growth: Brex’s unique approach led to rapid adoption within the startup community, significantly growing its customer base and market presence.

1. Adapting to Market Needs: Brex’s success underscores the importance of understanding and adapting to the specific needs of your target market.

2. Innovative Credit Assessment: Leveraging technology for credit assessment can open new avenues and democratize access to financial products.

3 Risk and Reward: The move to eliminate personal guarantees, while riskier, positioned Brex as a game-changer, highlighting the balance between risk and innovation in FinTech.

Related: Is FinTech a Dying Career Industry?

Case Study  9 : SoFi – Transforming Personal Finance

Essential term: financial services platform.

A financial services platform offers a range of financial products and services, such as loans, investment options, and banking services, through a unified digital interface.

SoFi, short for Social Finance, Inc., was founded in 2011 to revolutionize personal finance. Initially focused on student loan refinancing, SoFi quickly expanded its offerings to include a broad spectrum of financial services, including personal loans, mortgages, insurance, investment products, and a cash management account. This expansion was driven by a vision to provide a one-stop financial solution for consumers, particularly catering to the needs of early-career professionals.

1. Fragmented Financial Services: Consumers often had to navigate multiple platforms and institutions to manage their various financial needs, leading to a disjointed financial experience.

2. Student Loan Debt: Many graduates needed more flexible and affordable refinancing options with student debt escalating.

3. Accessibility and Education: A significant segment of the population lacked access to comprehensive financial services and the knowledge to navigate them effectively.

1. Diverse Financial Products: SoFi expanded its product range beyond student loan refinancing to include a suite of financial services, offering more holistic financial solutions.

2. Tech-Driven Approach: Utilizing technology, SoFi provided streamlined, user-friendly experiences across its platform, simplifying the process of managing personal finances.

3. Financial Education and Advice: SoFi offered educational resources and personalized financial advice, positioning itself as a partner in its customers’ financial journey.

1. Expanding Consumer Base: SoFi succeeded in attracting a broad customer base, especially among young professionals looking for integrated financial services.

2. Innovation in Personal Finance: The company’s expansion into various financial services positioned it as a leader in innovative personal finance solutions.

3. Brand Recognition and Trust: With its comprehensive approach and focus on customer education, SoFi built a strong brand reputation and trust among its users.

1. Integrated Services Appeal: Offering a broad array of financial services through a single platform can attract customers seeking a unified financial management experience.

2. Leveraging Technology for Ease: Using technology to simplify and streamline financial services is key to enhancing customer experience and satisfaction.

3. Empowering Through Education: Providing users with financial education and advice can foster long-term customer relationships and trust.

Related: FinTech vs Investment Banking

Case Study  10 : Apple Pay – Redefining Digital Payments

Essential term: mobile payment system.

A mobile payment system allows consumers to make payments for goods and services using mobile devices, typically through apps or integrated digital wallets.

Launched in 2014, Apple Pay marked Apple Inc.’s foray into the digital payment landscape. It was introduced with the aim of transforming how consumers perform transactions, focusing on enhancing the convenience, security, and speed of payments. Apple Pay allows users to make payments using their Apple devices, employing Near Field Communication (NFC) technology. This move was a strategic step in leveraging the widespread use of smartphones for financial transactions.

1. Security Concerns: The rising incidences of data breaches and fraud in digital payments made consumers skeptical about the security of mobile payment systems.

2. User Adoption: Convincing consumers to shift from traditional payment methods like cash and cards to a digital platform requires overcoming ingrained habits and perceptions.

3. Merchant Acceptance: For widespread adoption, a large number of merchants needed to accept and support Apple Pay.

1. Enhanced Security Features: Apple Pay uses a combination of device-specific numbers and unique transaction codes, ensuring that card numbers are not stored on devices or servers, thereby enhancing transaction security.

2. Seamless Integration: Apple Pay was designed to work seamlessly with existing Apple devices, offering an intuitive and convenient user experience.

3. Extensive Partnership with Banks and Retailers: Apple forged partnerships with numerous banks, credit card companies, and retailers to ensure widespread acceptance of Apple Pay.

1. Widespread Adoption: Apple Pay quickly gained a significant user base, with millions of transactions processed shortly after its launch.

2. Market Leadership: Apple Pay became one of the leading mobile payment solutions globally, setting a standard in the digital payment industry.

3. Influence on Payment Behaviors: The introduction of Apple Pay substantially accelerated the shift towards contactless payments and mobile wallets.

1. Trust Through Security: The emphasis on security can be a major driving force in user adoption of new financial technologies.

2. Integration and Convenience: A system that integrates seamlessly with users’ daily lives and provides tangible convenience can successfully change long-standing consumer habits.

3. Strategic Partnerships: Building a network of partnerships is key to the widespread acceptance and success of a new payment system.

These stories of globally renowned FinTech trailblazers offer invaluable insights, providing a must-read blueprint for anyone looking to make their mark in this rapidly evolving industry.

1. Square shows that focusing on user needs, especially in underserved markets, can drive innovation and market share.

2. Robinhood serves as both an inspiration and a cautionary tale, advocating for democratization while emphasizing the importance of ethical practices.

3. Stripe proves that simplifying complex processes through customizable, user-friendly solutions can redefine industries.

4. Coinbase highlights the transformative potential of making new financial instruments like cryptocurrency accessible while reminding us of regulatory challenges.

5. Revolut sets the bar high with its user-centric, all-in-one platform, emphasizing the need for agility and competitive pricing in the sector.

The key to FinTech success lies in simplicity, agility, user focus, and ethical considerations. These case studies serve as guiding lights for future innovation, emphasizing that technological superiority must be balanced with customer needs and ethical responsibilities.

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Financial Analysis Case Study

McDonald’s Financial Analysis Case Study The purpose of this study is to assess a company’s future financial health. This study provides a “hands on” experience to synthesize the finance concepts that we learned throughout the course by applying them to a “real life” individual or organization. On this study I elected to assess McDonald Corporation’s future financial health. McDonald’s Corporation franchises and operates McDonald’s restaurants in the global restaurant industry. These restaurants serve a menu at various price points providing value in 119 countries globally.

As of December 31, 2011 out of the 33,510 restaurants in 119 countries around the world 27,075 were franchised or licensed (including 19,527 franchised to conventional franchises, 3,929 licensed to developmental licensees and 3,619 licensed to foreign affiliates primarily in Japan and the Company operated 6,435. McDonald’s menu includes Big Mac, Quarter Pounder with Cheese, hamburgers and cheeseburgers, Filet-O-Fish, Chicken McNuggets, some chicken sandwiches, salads, Snack Wraps, French fries, oatmeal, shakes, sundaes, McFlurry desserts, soft serve cones, pies, soft drinks, McCafe beverages, coffee and other beverages.

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McDonald’s, the world famous fast food restaurant has been successful across the years. Over the years, they have ensured there is no change in their services, and product line, but kept the quality high and maintained the standards across their branches. Not only do they offer customers a delicious meal, but also offer something for the children and adults alike- their happy meal! Children look forward to the doll inside, while parents look forward to watching their children enjoy a meal without a complaint. Now we’ll see and find out what was their growth? How much was their annual sales? And any future plans.

Investors and other external users of financial information will often need to measure the performance and financial health of an organization. This is done in order to evaluate the success of the business, in this study we will determine any weaknesses of the business, compare current and past performance, and compare current performance with industry standards. Financially stable organizations are desirable, because a financially stable business is one that successfully ensures its ability to generate income for investors and retain or increase value. Financial summary: McDonald’s has announced for the six months ended 0 June 2012, the company revenues increased 3% to $13. 46B. Net income decreased less than 1% to $2. 61B. Revenues reflect U. S. segment increase of 6% to $4. 34B, APMEA segment increase of 7% to $31. 1B, Company’s store sales(Growth%) U. S. increases of 69% to 6. 3%. Net income reflects U. S. segment income increase of 6% to $1. 84B, APMEA segment income increase of 4% to $742. 7M. Valuation Ratios Price/Earnings (TTM)16. 58 Price/Sales (TTM)3. 24 Price/Book (MRQ)6. 34 Price/Cashflow (TTM)12. 8 Profitability Ratio (%) Gross margin (TTM)39. 54 Operating Margin (TTM31. 45 Net Profit Margin (TTM)20. 03 Financial Strength

Quick Ratio (MRQ)1. 21 Current Ratio (MRQ)1. 24 LT Debt/Equity (MRQ)0. 91 Total Debt/Equity (MRQ)0. 97 Per Share Data Earnings (TTM)5. 32 Sales (TTM)26. 59 Book Value (MRQ)13. 92 Cash Flow (TTM)6. 74 Cash (MRQ)2. 29 Management Effectiveness (%) Return on Equity (TTM)39. 54 Return on Assets (TTM)31. 45 Return on Investment (TTM)20. 03 Dividend Information Dividend Yield (%)3. 17 Dividend per Share (MRQ)0. 70 Payout Ratio (MRQ)52. 66 TTM: Trailing twelve months; MRQ: Most recent quarter; Latest fiscal year: 2011; Most recent quarter: 2; Fiscal year end month: December; All Ratios are calculated for the latest fiscal year end.

Key Ratio and Statistics Financial Strength Financial strength looks at business risk. The stronger a company is from a financial standpoint, the less risky it is. The Quick Ratio compares cash and short-term investments (investments that could be converted to cash very quickly) to the financial liabilities they expect to incur within a year’s time. Financial Strength12-Mo Dec 0912-Mo Dec 1012-Mo Dec 11MRQ3-Year Average Quick Ratio0. 961. 221. 051. 211. 08 Current Ratio1. 141. 491. 251. 241. 29 LT Debt/Equity0. 750. 790. 840. 910. 79 Total Debt Equity0. 750. 790. 870. 970. 8

Current Ratio is calculated by dividing the Current Assets of a company by its Current Liabilities. It measures whether or not a company has enough cash or liquid assets to pay its current liability over the next fiscal year. The ratio is regarded as a test of liquidity for a company. This concept is one of the most commonly cited financial ratios, measures the firm’s ability to meet its short-term obligations. A measure of liquidity calculated by dividing the firm’s current assets by its current liabilities (Gitman & Zutter, 2012, p. 71). Current ratio = Total Current Assets ?

Total Current Liabilities From the above the above equation, we will determine the current ratio or liquidity for McDonald’s in 2011 is. McDonald’s Current ratio = 4,403. 00 ? 3,509. 20 McDonald’s Current ratio = 1. 25 Typically, short-term creditors will prefer a high current ratio because it reduces their overall risk. However, investors may prefer a lower current ratio since they are more concerned about growing the business using assets of the company. Acceptable current ratios may vary from one sector to another, but generally accepted benchmark is to have current assets at least as twice as current liabilities (i. . Current Ration of 2 to 1). As with the current ratio, the quick ratio level that a firm should strive to achieve depends largely on the nature of the business in which it operates. The quick ratio provides a better measure of overall liquidity only when a firm’s inventory cannot be easily converted into cash. If inventory is liquid, the current ratio is a preferred measure of overall liquidity (Gitman & Zutter, 2012, p. 72). Quick Ratio = (Cash + Short Term Investments + AR) ? Total Current McDonald’s QR = (2,335. 7 + 1,334. 7) ? 3,509. 2 McDonald’s QR = 1. 05

The Long Term Debt/Equity Ratio looks at the company’s capital base. A ratio of 1. 00 means the company’s long-term debt and equity are equal. The Total Debt/Equity Ratio includes long-term debt and short-term debt. Long Term Debt To Total Equity is equal to the Total Long Term Debt divided by Total Shareholder Equity. While Total Debt to Total Equity is equal to the Total Debt divided by Total Shareholder Equity for the same period. McDonald’s LT Debt/Equity ratio = 12,133. 8 ? 14,390. 2 McDonald’s LT Debt/Equity ratio = 0. 84 Then, McDonald’s Total Debt/Equity Ratio = 12,500. 4 ? 14,390. 2

McDonald’s Total Debt/Equity Ratio = 0. 87 Profitability Is a class of financial metrics that are used to assess a business’s ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor’s ratio or the same ratio from a previous period is indicative that the company is doing well. These ratios realize overall profitability, or the bottom line. Profitability12-Mo Dec 0912-Mo Dec 1012-Mo Dec 11TTM3-Year Average Gross Margin (%)38. 6540. 0339. 5739. 5439. 42 Operating Margin (%)30. 831. 0431. 4531. 4530. 9 Net Profit Margin (%)20. 0120. 5520. 0320. 0320. 31 Interest Coverage14. 4616. 5717. 31 16. 11 Gross Margin shows the amount of revenue left over after deducting direct costs of producing the goods or services. Operating Profit and Operating Margin trace the progress revenue down to another important level. From gross profit, we now subtract indirect costs, often referred to as overhead e. g. facilities and salaries associated with headquarters operations. Finally, Profit Margin shows you how much of each revenue dollar is left after all costs, of any kind, are subtracted.

These other costs include such items as interest on corporate debt and income taxes. Gross Margin: This value measures the percent of revenue left after paying all direct production expenses. It is calculated as Revenue minus the Cost of Goods Sold divided by the Revenue and multiplied by 100. McDonald’s Gross Margin = (Gross Profit ? Revenue) x 100 McDonald’s Gross Margin = (10,686. 60 ? 27,006. 00) x 100 McDonald’s Gross Margin = 39. 57 McDonald’s gross margin at end of December 2011 decreases by 1. 16% compare from its previous period ends at December 2010.

Operating Margin: This value measures the percent of revenues remaining after paying all operating expenses. It is calculated as Operating Income divided by the Total Revenue, multiplied by 100. Net Profit Margin: Also known as Return on Sales, this value is the Income After Taxes divided by Total Revenue for the same period and is expressed as a percentage. Interest Coverage: The Operating Income divided by the company’s interest obligations. Management Effectiveness A company’s ability to operate profitably can be measured directly by measuring its return on assets.

ROA (Return On Assets) is the ratio of a company’s net profit to its total assets, expressed as a percentage. Management Effectiveness (%)12-Mo Dec 0912-Mo Dec 1012-Mo Dec 11TTM3-Year Average Return on Assets %15. 5115. 916. 9416. 6216. 12 Return on Equity %33. 234. 5137. 9237. 9335. 21 Return on Investments %17. 1217. 5818. 818. 7617. 83 Return on Assets: This value is the Income After Taxes divided by the Average Total Assets, expressed as a percentage. Return On Equity: Income Available to Common Stockholders divided by the Common Equity and expressed as a percentage.

Return on Investments: Income after taxes divided by the average total long term debt, other long term liabilities and shareholders equity, and expressed as a percentage. Return on Assets (%) = (Income After Taxes ? Average Total Assets) x 100 McDonald’s ROA (%) = (5,503. 10 ? 32,482. 55) x 100 McDonald’s ROA (%) = 16. 94 % ROA measures how well a company’s management uses its assets to generate profits. It is a better measure of operating efficiency than ROE, which only measures how much profit is generated on the shareholders equity but ignores debt funding. This ratio is particularly relevant for banks, which typically have huge assets.

Annual dividend is the total amount ($) of dividends you could expect to receive if you held the stock for a year (assuming no change in the company’s dividend policy). The dividend yield is the indicated annual dividend rate expressed as a percentage of the price of the stock, and could be compared to the coupon yield on a bond. The Payout Ratio tells you what percent of the company’s earnings have been given to shareholders as cash dividends. A low payout ratio indicates that company has chosen to reinvest most of the profits back into the business. Dividend Information12-Mo Dec 0912-Mo Dec 1012-Mo Dec 11TTM3-Year Average Payout Ratio %49. 48. 7147. 4752. 6648. 45 Dividend per share2. 052. 262. 530. 702. 28 Now we will determine what McDonald’s Payout ratio at the end of December 2011 : This ratio is the percentage of the Primary/Basic Earnings Per Share Excluding Extraordinary Items paid to common stockholders in the form of cash dividends. Calculation: McDonald’ Payout Ratio = (Dividend per share ? Primary EPS) x 100 McDonald’ Payout Ratio = (2. 53 ? 5. 33) x100 McDonald’ Payout Ratio = 47. 47 The Dividend Per Share is calculated as Common Stock Cash Dividends divided by the shares outstanding.

On the next concept we will evaluate the firm’s earnings per share. From the table below, the most important Per-Share Data item is Earnings Per Share. That’s because ultimately, the price of your stock is related in some way to the value of the stream of earnings attributable to that share. Per Share Data12-Mo Dec 0912-Mo Dec 1012-Mo Dec 11TTM3-Year Average Earning Per Share4. 114. 585. 275. 320. 12 Sales Per Share20. 5422. 2925. 8526. 590. 08 Book Value13. 0313. 8914. 0913. 920. 05 Cash Flow4. 114. 585. 276. 740. 12 Cash Per Share1. 672. 272. 292. 290. 07 Earnings Per Share = Adjusted Income Avail. o Common Shareholders ? Diluted Weighted Average Shares This section also includes the amount of Cash Per Share the company had at the time of its most recent quarterly or annual report. Most of the time, this number will be far below the stock price. In a healthy industrial company, a Cash Per Share figure that is close the stock price might suggest that investors are underestimating the worth of the company’s ongoing business, thereby creating an interesting investment opportunity to every investor. From the equation of earning per share;

McDonald’s Earning Per Share = 5,503. 10 ? 1,044. 90 McDonald’s Earning Per Share = 5. 27 EPS Excluding Extraordinary Items: This is the adjusted income available to Common divided by the diluted weighted average shares outstanding. Sales (Revenue) Per Share: Total Revenue divided by the Average Diluted Shares Outstanding. Book Value Per Share: This is defined as the Common Shareholder’s Equity divided by the Shares Outstanding. Cash Flow: Cash Flow is defined as the sum of Income After Taxes minus Preferred Dividends and General Partner Distributions plus Depreciation, Depletion and Amortization.

Cash Per Share: This is the Total Cash plus Short Term Investments divided by the Shares Outstanding. McDonalds operates within a competitive food chain and restaurant environment. Evaluating its rivals not only allows the company to recognize its own strengths and weaknesses nevertheless also help to identify opportunities for and risks to the organization from the industry. Let us examine these principals in relative to the core competence of McDonalds, one of the largest food chain companies around the world. Let us first start with the positive aspects and strengths, which describe the performance of this company.

How can we describe the company’s strengths? Strength is a distinctive experience that gives the firm a comparative benefit in the market place. Among other major rivals, McDonalds is the no: 1 fast food chain stores with a 40 million customers visiting it per day. It has over 30,000 branches in 120 countries. It derives 80% of its revenues from eight countries like US, Canada, Australia, UK, France, Brazil, Japan, Germany and France. The ultimate strength was building an image in the minds of the people and hosting them to the fast food culture.

Customer care, delivery speed, and cleanliness are the core strengths on which these stores expanded. They built a corporate symbol and their advertisement promotions were highly effective in establishing the brand image and logo in the minds of the millions. Two foremost competitors generally recognized with McDonalds are the KFC and Burger King. McDonalds marketing strategy is apprehensive with the internal resources, external environment and its basic capabilities along with its shareholders. McDonald’s product value is also its greatest strengths. Customers realize what to expect when they stride into a McDonalds store.

It offers a great accent to human resources by rewarding both the customer and the employees. Next is the improvement aspect where new products line up to catch up with the new fashions and tastes of the people. Its diversity into further new business endeavors can furthermore be measured as its strengths. Liabilities/Earnings: Clearly McDonald’s is great at earning money, but this can be in danger if it faces severe debt or other liabilities. Fortunately, this is not the case for McDonald’s. One year of earnings is nearly double the current liabilities ($3. 5 billion).

Furthermore, just a few years of earnings could easily cover all of McDonald’s liabilities, short-term and long-term ($18. 6 billion). Even without earnings, McDonald’s has more in current assets than in current liabilities, and more in total assets than total liabilities. For these reasons, there is no chance that McDonald’s will run into any financial difficulties. McDonald’s has a proven business model that allows it to never give up earnings; this gives it the financial strength necessary to take on debt with ease. Profit Margin: McDonald’s has a strong foundation in financial strength and business-model tenacity.

Last year, it brought in about $26 billion in revenue. From there, its primary cost was the cost of bringing in this revenue, $16 billion. After that, it only had minor expenses, mainly in taxes. At the end of the day, McDonald’s made $5. 5 billion in profit – a margin of over 20%. For years, it has been the exact same story. This $5. 5 billion profit is then spent on investments and expenditures to allow growth, with the rest going to shareholders via dividends and share buybacks. ? Reference Gitman, L. J. , & Zutter, C. J. (2012). The Role of Managerial Finance.

In Principles of Managerial Finance. Boston, MA: Prentice Hall. Homepagehttp://www. aboutmcdonalds. com Investor Relationshttp://www. aboutmcdonalds. com/mcd/investors. html Press Releaseshttp://www. aboutmcdonalds. com/mcd/newsroom/press_releases. html Financial Informationhttp://www. aboutmcdonalds. com/mcd/investors/sec_filings. html Products/Serviceshttp://www. aboutmcdonalds. com/mcd/franchising. html Executives’http://www. aboutmcdonalds. com/mcd/our_company/leadership. html Corporate History/Profilehttp://www. aboutmcdonalds. com/mcd/our_company. html Yahoo Financehttp://finance. yahoo. com

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Case Study: Financial Crime and Fraud

After completing this reading , you should be able to :

• Describe elements of a control framework to manage financial fraud and money laundering risk.
• Summarize the regulatory findings and describe the lessons learned from the USAA case study.

This chapter discusses fraud and financial crime risk management in different forms: fraud, money laundering, and terrorism financing.

Internal and external fraud are common types of operational risk banks managed long before the introduction of ORM. Non-financial risk management comprises anti-money laundering (AML) and counter-terrorism financing (CTF). These two are responsible for effective control against the risk of terrorism and money laundering.

Definition of Financial Crime

According to the Financial Conduct Authority’s (FCA) Handbook of the UK, financial crime refers to “ any kind of criminal conduct relating to money or to financial services or markets, including any offense involving: fraud or dishonesty; or misconduct in, or misuse of information relating to, a financial market; or handling the proceeds of crime; or the financing of terrorism. “

Financial crime comprises internal and external fraud, money laundering, and terrorism financing.

Internal Fraud : According to BCBS, internal fraud refers to “losses due to acts of a type intended to defraud, misappropriate property or circumvent regulations, the law or company policy, excluding diversity/discrimination events, which involve at least one internal party.”

Internal fraud can be of two types: “unauthorized activities” and “theft and fraud.” “Unauthorized activities” may lead to loss of money in an organization. Indeed, it includes any intentional violation of the law or internal policies perpetrated by a firm’s employees. Examples of unauthorized activities under the Basel event type classification include intentional non-reporting of transactions, mismarking trading positions, or the execution of unauthorized transaction types. Passwords, disclosure of confidential information, or the mis-selling of financial products to vulnerable clients are also examples of unauthorized activities.

On the other hand, “theft and fraud” involve the misappropriation of assets, such as extortion, embezzlement, malicious destruction of assets, bribery, and tax evasion.

External Fraud : According to BCBS, external fraud refers to losses due to acts of a type intended to defraud, misappropriate property or circumvent the law by a third party .

The subcategories of external fraud are “theft and fraud” and “systems security,” which involves hacking damage and theft of information. “Systems security” is particularly becoming prominent as a result of the increasing digitalization of financial services. Since about a decade ago, cyber and information risk management has also evolved into a specialized branch of operational risk management, sometimes called information security risk management (ISR).

Recent studies show that the COVID-19 pandemic has increased (by more than two times) the banks’ exposure to internal and external fraud. The work-from-home program particularly led to an increase in fraudulent wire transfers and email scams.

Definition of Anti-money Laundering (AML) and Terrorism Financing (TF)

Different countries may have different laws against money laundering and terrorism financing. In this section, however, we use the definition of the European Union. On May 20, 2015, the European Parliament and Council issued a directive to prevent the use of the financial system for money laundering or terrorist financing. According to article 1 of this directive, money laundering involves any of the following:

• Knowingly converting or transferring property derived from criminal activity in order to disguise the illicit origin of the property or to assist someone involved in such an activity to evade the legal consequences of their actions.
• The disguise of the true nature, source, location, disposition, movement, or ownership rights of property derived from criminal activity or participation in criminal activity knowingly.
• Acquiring, possessing, or using property, knowing, at the time of ownership, that the property had been obtained through criminal activity.
• Associating with, participating in, committing, attempting to commit, as well as aiding, assisting, facilitating, and counseling the commission of any of the actions listed in points (i), (ii), and (iii).

The IMF defines terrorism financing as the provision or collection of funds to be used, partly or in full, to facilitate any offense considered by the authorities as a terrorism act.

Financial Crime Risk Management

This section will review the prevention and mitigation of internal fraud and anti-money laundering practices.

Internal Fraud Management

Historically, the internal audit department was responsible for managing internal and external fraud for banks. Some banks used to have “inspections,” which were orchestrated by a subdivision of the internal audit responsible for detecting, monitoring, and reporting fraud.

In their risk appetite framework, most firms state that they have zero tolerance for internal fraud.

The figure below presents a framework of controls and measures to mitigate internal fraud risks. The framework presented below consists of four components:

• Selection: Involves screening of employees and associated third parties. The organization’s culture is also considered in this step. When firms employ people who share the same values and ethical standards, it is easier for the firms to manage such employees. Selection is also an important mitigation mechanism in AML and third-party risk management.
• Prevention: The key controls for fraud prevention are found in this step. The rights, authority, and access of each function must be clearly defined in order to manage fraud risk effectively.
• Detection: Time to detection is critical in limiting the effects of an operational risk event. Detective controls are essential in internal fraud management and act as a deterrent as well: Fraud is least likely to happen if the consequences are severe. Effective supervision and monitoring help to limit internal fraud.
• Deterrents: These are sanctions and actions announced following any act of fraud. Deterrents also disincentivize employees to commit fraud, thus promoting the risk-reward balance.  

External Fraud Management

External fraud management shares many of the aspects of internal fraud management. The point of departure is that external fraud management focuses on bad external actors.

Bank robbery, check kiting, fraudulent wire transfers, credit card fraud, and identity theft are examples of external fraud. Misrepresentations of income, assets, and collateral values in loan applications are also classified as fraudulent by most institutions. It is sometimes necessary to subdivide external fraud into first-party and third-party fraud. This helps distinguish between fraud customers commit or those a business partner commits for their own benefit from fraud committed by an external actor, which may affect both the bank and the customer.

It is, therefore, necessary for special teams to manage the different types and actors of external fraud. For example, ensuring security is in place to secure the buildings and assets of the financial institution against robbery. Banks also work with local authorities to handle such issues whenever they occur.

AML Risk Management

It is common for criminals to disguise the proceeds of their criminal activities into legitimate sources of funds in two or three phases. The following are the three phases of money laundering:

• Placement: Involves all methods intended to disguise the origins of the funds: cash transfer to business, false invoicing, use of trusts and offshore companies, “smurfing” (keeping a bank account or credit card under the AML reporting threshold by making a series of small transactions rather than a single large transaction), using foreign bank accounts, etc.
• Layering: Involves different placement and extraction strategies to make tracking transactions as difficult as possible and circumvent AML controls.
• Integration or extraction: Involves getting the money out to use while evading taxes and law enforcement through activities such as fake payments to employees, fake loans, or dividends to accomplices.

The figure below presents key risk mitigation measures for AML.

Regulators recommend a risk-based approach to AML risk management. That is, the higher the risks, the tighter the controls, and vice versa. Customers are categorized as low, medium, or high risk based on associated risk factors which are used as monitoring criteria.

Firms should have robust governance and a prudent money laundering risk officer (MLRO) responsible for the management of AML. In addition, establishing written policies, training employees, and thorough reviews can also contribute to effective AML risk management.

The Regulatory Findings and Lessons Learned from the USAA Case Study

Financial crime controls at uk challenger banks.

In its 2022 report, the FCA examines financial crime controls at challenger banks, which are fully digital and offer customers the ability to open accounts very quickly. According to FCA, there is a risk that accounts opening information is insufficient to identify higher-risk customers. The following are some key findings highlighted by UK regulators:

• The reviews revealed some evidence of good practice, e.g., the application of technology in identifying and verifying customers quickly.
• However, a number of weaknesses were found, which increased the risk of financial crime during the customer onboarding process and during the customer’s tenure with the bank. In order to address the weaknesses highlighted, challenger banks should adjust their risk management strategies.
• The FCA recommends a risk-based approach to AML risk management characterized by continuous monitoring of controls to ensure they are fit for purpose in light of some challenger banks’ high growth rates.
• Weaknesses were also found in both customer due diligence (CDD) and the consistent application of EDD (enhanced due diligence) in some banks, for example, in the case of PEPs (politically exposed persons). A well-established customer risk assessment is needed to address these weaknesses.
• Among other weaknesses, inconsistent or inadequate rationales for ignoring transaction monitoring alerts were identified.
• According to the UK regulator, challenger banks should adjust their oversight and control frameworks as their business models evolve and grow.

Case Study: USAA

According to the banking and compliance press, the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC) fined USAA Federal Savings Bank (FSB) $140 million for failing to implement and maintain a BSA/AML compliance program.

Deficiencies pointed out include inadequate internal controls; detection, evaluation, and reporting of suspicious activity; staffing; training, and third-party risk management, as well as significantly understaffed BSA/AML compliance departments.

This is a common practice in banking, especially when many workloads are coupled with tight deadlines. However, USAA failed to train or ensure contractors had the necessary qualifications, worsening the situation.

It has been reported that the new transaction monitoring system implemented by USAA FSB is “too sensitive and generates an unmanageable number of alerts and cases.”

An important lesson from this case is that heavy regulatory fines do not occur by accident: They result from accumulating failures and procrastinating about implementing the necessary changes to meet regulatory requirements. Due to the difficulty and discomfort associated with transformations, most firms delay implementing changes in response to regulatory findings until the last minute. This may be too late, as in the case of USAA.

A weak control environment can attract fines by regulators anywhere in the world, as has happened in the US, UK, and Asia. In Asia, for example, regulators charged banks fines totaling $5.1 billion for failing to comply with AML laws.

Banks are required to review, verify, and report suspicious activity in response to regulatory findings and sanctions. An AML risk management framework should incorporate technology and automation for detection and alerts as well as proper recording of false positives and false negatives. Moreover, the COVID-19 pandemic changed customer and business behavior, particularly with the rise of remote transactions, which makes it more difficult for financial institutions to detect anomalies. Fraud risk management and AML are constantly changing as new opportunities present themselves for fraudsters in new economic and business environments.

Practice Question Given the lessons from the USAA FSB case, which of the following best represents a key consideration for financial institutions seeking to maintain a robust AML program? A. Employing third-party contractors inherently improves AML monitoring capabilities. B. Rapid account growth is a valid justification for non-compliance with AML standards. C. Introducing new transaction monitoring systems, regardless of their sensitivity, will always enhance AML compliance. D. Instituting adequate controls is crucial, especially when using automated detection systems, to manage the volume of alerts and ensure they do not produce an overwhelming number of false positives or false negatives. Solution The correct answer is D . The USAA FSB case clearly illustrates the importance of having adequate controls, particularly when utilizing automated detection systems. The challenge that the bank faced with 90,000 unreviewed alerts and nearly 7,000 unreviewed cases was primarily due to their newly introduced transaction monitoring system being overly sensitive. This emphasizes that while automation can aid in detecting potential AML violations, it’s critical to ensure that these systems are well-calibrated to manage the number of alerts and minimize false positives and negatives. A is incorrect because simply employing third-party contractors does not guarantee improved AML monitoring. In the case of USAA FSB, they utilized third-party contractors due to staffing shortages but failed to train them adequately in AML compliance matters, which compounded their problems. B is incorrect because rapid account growth should never be an excuse for non-compliance with AML standards. Financial institutions must scale their compliance programs in tandem with their growth to ensure they continue to meet all regulatory requirements. C is incorrect as the case demonstrates that merely introducing new transaction monitoring systems does not guarantee improved AML compliance. The new system at USAA FSB was overly sensitive, producing an excessive number of alerts that overwhelmed their compliance processes. This highlights the importance of ensuring that any new system introduced is properly calibrated and tested to suit the institution’s needs. Things to Remember Automation isn’t flawless: The USAA FSB case underscores the importance of calibrating automated detection systems. While they can be powerful tools, they must be optimized to avoid excessive false positives and negatives. Quality over quantity: It’s not about the number of alerts but their quality. An overwhelming number of alerts, if not actionable, can hamper the efficiency of an AML program. Training is key: Even with third-party assistance, training is paramount. Outsourcing without ensuring the contractors’ understanding of AML can exacerbate compliance issues. Scalability with compliance: Rapid growth of accounts or transactions requires scalable compliance mechanisms. Growth should never be a reason for AML non-compliance. System implementation needs oversight: Introducing new monitoring systems requires thorough testing and calibration, ensuring they are tailored to the institution’s specific requirements and challenges.

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