Pick a company from the list below and identify the key business drivers you would understand in order to do both a revenue and expense forecast of the company. Explain the driver, what it means, and how it impacts the financials. Don’t focus on smaller items—focus on the big things that will impact the financial statements.
Example: Netflix
Key business drivers:
–Number of subscribers
–Average subscriber life
–Cost of acquiring a subscriber
–Average number of organic referrals per subscriber (in other words, you tell a few friends
about Netflix and they subscribe).
–Headcount
–Average cost of an hour of content: original and licensed
You’d explain each of these and why it’s important to doing a forecast of the company. You can look at analyst reports, earnings decks, etc. to assemble this. Because we’re talking about practical forecasting over the next few weeks I’d like you guys to dig into this. It will also help you analyze companies you interview with to talk about the business and demonstrate your acumen.
Here’s the list of companies:
Apple
Salesforce.com
Zynga (because you’ve already looked at the M&A)
EA (see Zynga above)
Facebook
Starbucks
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