Outside break-even analysis, what else shoud I consider to determine whether a venture is worthwhile?
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Determining Whether a Venture is Worthwhile
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Breakeven is not the best way to determine this...
NPV is because it take into account Cost of Equity/Capital, Hurdle Rates, etc. etc.
Take a look here:;
https://www.preplounge.com/en/consulting-forum/net-present-value-9411
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Hello!
Breakeven is a bit simplistic, although in many cases the interviewer will directly indicate you in that direction.
However, the right way would be NPV:
- Calculate future cashflows, either year by year or at perpetuity
- Calculate NPV: bring to the present the value of the future money
Hope it helps!
Cheers,
Clara
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Hello,
The most common KPI used in business case is NPV. Another interesting index could be the ROI but it's not very common.
Anyway, interviewer will usually suggest you what to use in order to evaluate the investment when you will ask about the client's target.
Best,
Luca
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Hey, can you define what you are referrring to as "venture" please..market entry? Acquisition? Investment decision?
Broadly speaking, there should be an uplift/improvement in the following areas:
- Customer Experience
- Channel mix
- Revenue
- Cost Reduction
- Employee satisfaction
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I would classify this as a market entry case. In addition to the economics/financial returns (e.g., break-even), I would look broadly at whether the market is attractive (e.g., market dynamics, competitive landscape, customer preferences, etc.) as well as feasibility/path to execution/risks.
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