That’s correct

S. So the first car would take 5 min to reach the other end. Following that every 15 seconds there is another car coming out of the ceiling.

So Total time = 2 hrs 30min = 150 min

First car takes 5 min , Balance 145 min or 8700 seconds No of cars = 8700/15 = 580

Total No = 580+1 = 581

No of lanes = 4 , Hence total = 581*4= 2325 approximately I. Ok

Summary: He was mainly interested in me identifying the throughput concept, where the first item takes the entire time and the second follows with the

I. Perfect

S. Should I consider the length of the car? I. That is irrelevant to this calculation

S. The average speed of the car is taken as 60km/hr

S. The waiting time at the toll gate is assumed to be 15 seconds. This is just like a production line with the first item taking the time to cover the entire stretch and the next would be every 15 seconds.

at’s correct

S. So the first car would take 5 min to reach the other end. Following that every 15 seconds there is another car coming out of the ceiling.

So Total time = 2 hrs 30min = 150 min

First car takes 5 min , Balance 145 min or 8700 seconds rs = 8700/15 = 580

Total No = 580+1 = 581

No of lanes = 4 , Hence total = 581*4= 2325 approximately

Summary: He was mainly interested in me identifying the throughput concept, where the first item takes the entire time and the second follows with the time delay between the two.

Page 125 d of the car is taken as 60km/hr

S. The waiting time at the toll gate is assumed to be 15 seconds. This is just like a production line with the first item taking the time to cover the entire stretch and the next would

S. So the first car would take 5 min to reach the other end. Following that every 15 seconds there is another car coming

First car takes 5 min , Balance 145 min or 8700 seconds

No of lanes = 4 , Hence total = 581*4= 2325 approximately

Summary: He was mainly interested in me identifying the throughput concept, where the first item takes the entire time

2014 SPJIMR Consulting Casebook

Let’s look that some

14. Can you tell me the different types of profitability ratios? Operating profit and Net Profit ( Refer the basic FSA book for the ratios and its interpretation)

15. When are these ratios used?

To measure the health of operations during a merger or a takeover, operating margin is looked upon. The reason being that the interest and depreciation is not accounted. Hence it gives the actual picture of the operations of a company. Shareholders are more

dividends are calculated as a percentage of the net profits. (Elaborated in detail)

16. If there are two projects namely A and B, how will you select which project to go ahead with?

Look at the NPV of both the projects.

project only if the NPV is positive. Among the projects, the one with a greater NPV would be selected. ( NPV is calculated by discounting the free cash flow for the duration of the project) (Elaborated in detail)

17. Is there any other selecting a project?

Internal rate of return. This would show how much could be expected from a project. (Elaborated in detail)

18. Is there a possibility that the NPV of Proj A > Proj B but the IRR of Proj A < Proj

encountered?

Let’s look that some Finances

14. Can you tell me the different types of profitability ratios? Operating profit and Net Profit ( Refer the basic FSA book for the ratios and its interpretation)

15. When are these ratios used?

o measure the health of operations during a merger or a takeover, operating margin is looked upon. The reason being that the interest and depreciation is not accounted. Hence it gives the actual picture of the operations of a company. Shareholders are more interested in the net profit as the dividends are calculated as a percentage of the net profits. (Elaborated in detail)

16. If there are two projects namely A and B, how will you select which project to go ahead with?

Look at the NPV of both the projects. We would consider a project only if the NPV is positive. Among the projects, the one with a greater NPV would be selected. ( NPV is calculated by discounting the free cash flow for the duration of the project) (Elaborated in detail)

17. Is there any other aspect which has to be looked upon in selecting a project?

Internal rate of return. This would show how much could be expected from a project. (Elaborated in detail)

18. Is there a possibility that the NPV of Proj A > Proj B but the IRR of Proj A < Proj B. If so when can this situation be encountered?

Page 126 14. Can you tell me the different types of profitability ratios? Operating profit and Net Profit ( Refer the basic FSA book for

o measure the health of operations during a merger or a takeover, operating margin is looked upon. The reason being that the interest and depreciation is not accounted. Hence it gives the actual picture of the operations of a company. interested in the net profit as the dividends are calculated as a percentage of the net profits. 16. If there are two projects namely A and B, how will you

We would consider a project only if the NPV is positive. Among the projects, the one with a greater NPV would be selected. ( NPV is calculated by discounting the free cash flow for the duration of the project) aspect which has to be looked upon in

Internal rate of return. This would show how much could be 18. Is there a possibility that the NPV of Proj A > Proj B but B. If so when can this situation be

2014 SPJIMR Consulting Casebook

I was not sure of the answer. I said it is possible. But am not able to think of a situation now.

19. Is there anything else that you would look at in selecting this project?

(S- Self) (I

S. Yes. The opportunity cost of the amount deployed. I. Is there a term for this?

S. Are you looking for WACC, the cost of capital? I. That’s right

S. Explained the concept of WACC and that’s the minimum expected rate of return below which the project would discarded.

Summary: Understand the fundamentals of finance. It is more of the application which they are concerned. Just ratios don’t make any sense.