1. Presented by:
Analysis
Slides

2. EndEnd
In today’s world making the right business decisions can
often be the difference between being a market leader or
a competitor’s acquisition
But decisions have to be balanced between a company’s:
• Strategy
• Resources
• Acumen
• Desire

3. EndEnd
Strategic Analysis is needed to evaluate alternatives and
optimally align the competing interests to make the best
decision
Some examples of Strategic Analysis tools include:
• Financial Statement Analysis
• Benchmarking
• Operational Analysis
• Contribution Margin
• Market Share
• Product Composition
• Net PresentValue

4. End
Financial Statement Analysis
Metric Ratio Brightstar
2011 2010 2009
Benchmark
2010 2011 2009
Liquidity Current
Quick
Solvency Debt to
Equity
Profitability
ROS
Asset
Management
DSO
Inv. Turns
.19 0.38 0.22 0.16 0.12 0.14
21.9% 23.2% 13.8% 24.6% 27.4% 18.9%
43.9 35.4 21.7 34.6 25.3 19.6
5.9 7.3 12.9 5.8 6.0 7.3
2.3 3.4 5.7 7.9 3.8 3.9
1.8 2.2 4.6 7.2 3.1 3.2
Example: Compares a Company to a Benchmark along a number of financial
metrics

5. End
Operational Analysis
Production Process
Maps production from start to finish

6. End
Contribution Margin
Contribution Margin helps determine what products are
profitable and at what sales volume are products
profitable

7. End
Market Share
Market Share explains where the company is compared
to others in the industry.

8. End
Product Composition
Product Composition explains what the company is currently
selling and usually what it is good at selling.

9. End
Net Present Value
Appendix 6 - BC Hydro
(In $Millions, except salesprice/Kilowat) 2012 2013 2014-25 2026 2012 2013 2014-25 2026
Financial Summary (NPV) Yr 0 Yr 1 Yr 2 Yr 3-14 Residual Yr 0 Yr 1 Yr 2 Yr 3-14 Residual
Initial Investment in Hydro Plant (125) (250)
Total Power Produced
Ownership Interest (5%)
Power Consumed
$0.087 $0.090
3%
constant
growth
$0.128 $0.087 $0.090
3%
constant
growth
$0.128
Kilowatts Sold (000's) 306 306 306 306 676 676 676 676
IRR = 20%
Sales 26.72 27.53 402.37 39.25 59.04 60.81 888.89 86.70
Operating Costs 2.67 2.75 40.24 3.92 5.90 6.08 88.89 8.67
Cost Savings by not purchasing power (5.38) (5.54) (80.9) - (5.38) (5.54) (80.9) -
Net Change in Cash Flow (prior to tax) 29.43 30.31 443.07 35.32 58.51 60.26 880.94 78.03
Taxes RATE= 25% (7.36) (7.58) (110.77) (8.83) (14.63) (15.07) (220.23) (19.51)
After Tax Cash Flow 22.07 22.73 332.30 26.49 43.88 45.20 660.70 58.52
Discretionary Cashflows (DCF):
Annual DCF (125) 22.07 22.73 332.30 26.49 (250) 43.88 45.20 660.70 58.52
PV of DCF WACC= 10% (125) 20.06 18.79 150.86 90.59 (250) 39.89 37.35 299.94 200.14
Cumulative PV of DCF: (125) (104.94) (86.15) 64.71 155.30 (250) (210.11) (172.75) 127.19 327.33
Notes:
5% Ownership (Investment: $125M) 10% Ownership (Investment: $250M)
7,400 Gigawatts/ annually 7,400 Gigawatts/ annually
370 Gigawatts / Annually 370 Gigawatts / Annually
64 Gigawatts 64 Gigawatts
Sales Price / Kilowatt (3% growth/yr)
All excess power is sold
BMC usage remains constant at 64 Gigawatts until 2025 then drops to zero (reflected in residual calc)
Often Major Initiatives take more than 1 year to evaluate. A Net
Present Value takes into account discounting future cash flows
to create a value for today for direct comparison.

10. EndEnd
Align All
For
Success
Evaluate All
Areas of the
Company
Help Optimize
Decision
Making
Evaluate
Strategic
Alternatives
Outline Goals
Using Strategic
Analysis will: