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Financial risk is, in good measure, related to the uncertainty of profit coverage of interest payments and principal repayments. This note examines the effects of cyclical changes in volume on financial safety and on stockholder income and illustrates the factors that have more profound effects on income/risk considerations in a financial decision. The note is divided into three parts. The first section considers the impacts of leverage (both operating and financial), sales volatility, and growth on profits after taxes (a step away from shareholder income). The next part traces the relationship of these variables to burden coverage. These terms will be defined as appropriate. A final section illustrates financial risk from the equity shareholder's point of view.

A positive net present value (NPV) is a direct estimate of value creation for shareholders and is an operational way of carrying through on the strategy of trying to maximize shareholder wealth. To calculate NPV, however we need to estimate the cash costs and benefits of any decision at hand. In this note we discuss the evaluation of investment proposals.

This note links pro forma forecasting of financial statements with project valuation of cash flows. Students are shown the link among income statements, balance sheets, and cash flows. The exercise affords practice in forecasting and project analysis, including effects of inflation, changes in working-capital requirements, and calculation of a discount rate.

Instead of embarking on an odyssey for the perfect mentor, individuals should pursue a strategy of building a network of developmental relationships. In this note, we explore the process by which such a network can be established and cultivated: 1) What functions can developmental relationships serve? 2) How are these relationships formed and maintained? 3) With whom in an organization can an individual establish such relationships? and 4) What are some of the special challenges those in the minority face in building these relationships? In summary, we offer guidelines for building a constellation of developmental relationships.

Designed to help nonprofit entrepreneurs design fund-raising strategies that are appropriate for their specific organizations. Discusses the major fund-raising alternatives, including foundations, corporations, government sources, wealthy individuals, and the public, and provides references for further research.

The uncertainty and complexity of most business environments make successful management a difficult art. Frequently, bright, experienced, well-educated people manage their companies into strategic distress. Many of these bad results are not simply a matter of bad luck. This note discusses problems caused by cognitive biases and heuristics (ways of thinking about problems) that managers commonly use when analyzing strategy under uncertainty. Shows where these problems are likely to arise in strategy analysis and discusses five practices that help to mitigate the biases.

This technical note describes, compares, and contrasts the strategic-planning techniques developed by the Boston Consulting Group, McKinsey, and Arthur D. Little consulting firms in the mid-1970s. The approaches were developed to classify the businesses within a diversified firm in order to decide which businesses to fund for growth. The assumptions and philosophies underlying each approach are contrasted, as are the consultants' relationships with client firms.

Provides a relatively simple introduction to multivariate regression analysis.

Provides the reader with a basic understanding of organizational structure. The first section outlines some of the key tools and criteria that must be taken into account in designing organizational structures. In the second section, some archetypal forms of organizational structure and their strengths and weaknesses are described. Finally, some emerging trends in how organizations are structured are discussed in the last section of this note, supplemented by a brief summary, in timeline format, of the evolution of organizational structure in theory and practice.

Gives some simple examples to illustrate the concept of the value of information in decision making. Both perfect and imperfect information are considered.

Explains a method for deciding upon inventory levels when demand is uncertain.

Provides anyone considering starting a nonprofit organization with a basic understanding of the nature of nonprofit status, tax and regulatory issues for nonprofits, and the distinctive management challenges associated with a nonprofit start-up.

Describes traditional bank lending product, the role of the lending officer, credit evaluation, and the structuring of credit facilities and loan agreements.

This note provides a series of steps used in the preparation of pro-forma income statements and balance sheets, using the aging of accounts and a plug for cash requirements. A simple example is used for illustration.

This note, which is introductory in nature, provides a classification scheme for some of the more common examples of price discrimination. For each case that is discussed, the note characterizes the appropriate market segments, the alternative product "versions," and the differences in the firm's economics from one version to another.

Examines the economic tradeoffs affecting a firm's decision to offer one or more versions of a product to a segmented market. Also presents some arguments for and against product variety.

Gives an elementary introduction to formulating linear programming models and interpreting linear programmings output. Other aspects of linear programming are discussed briefly.

Examines the experiences of being a "recipient" of change and how to help individuals cope with change. The first part describes how people typically respond to changes likening it to a loss experience. The second part describes what organizations can do to help individuals through difficult transitions, while the third part identifies what individuals can do for themselves. Finally, raises the challenges for individuals to deal with multiple and continuous change.

An introduction to sampling and statistical inference that covers the main concepts (confidence intervals, tests of statistical significance, choice of sample size) that are needed in making inferences about a population mean or percent. Includes discussion of problems of sampling in the real world where response bias and nonrepresentativeness violate the principles on which statistical inference is based.

Examines the important economic considerations affecting a firm's price-quantity decision for a product. Begins with a discussion of the appropriate decision criterion. Next, it motivates the concept of a demand curve for a product and defines demand elasticity. Marginal analysis is used to establish the following necessary condition for optimal price and quantity: marginal revenue must equal marginal cost. Price-quantity determination in the presence of a resource constraint and competition is also discussed.