Finance Case Analysis Template (Case Method, Teaching Note)

Finance Case Analysis: [Case title]

Written analysis of a business-school finance case for class submission, a case exam or a case competition: corporate finance (capital budgeting, cost of capital, financing and payout), valuation (DCF, multiples, transactions) and investment cases. It follows the case method used at business schools such as Harvard Business School and Ivey Business School (named for orientation only): identify the decision maker and the decision, analyse the situation with your own exhibits, compare alternatives against stated criteria, and recommend an action with an implementation plan. An optional teaching-note section supports instructors and competition coaches. Replace every [bracketed] value and every row marked Example. This is a document format, not financial, investment, tax, legal or accounting advice.

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Contents

• 1. Case identification and decision maker
• 2. Executive summary and recommendation
• 3. Decision question and scope
• 4. Situation analysis
• 5. Issue diagnosis
• 6. Financial analysis
• 7. Alternatives
• 8. Evaluation criteria and scoring
• 9. Recommendation
• 10. Implementation, risks and contingencies
• 11. Assumptions log
• 12. Class discussion and competition preparation
• 13. Optional teaching note
• 14. Appendix: calculations and exhibits
• 15. Glossary and references
• Standard and licence note

1. Case identification and decision maker

Summarise the case in three sentences: who, what is at stake, why now.

Example: Lunaris Home Goods sells furniture, kitchenware and home textiles online to consumers in Europe and Southeast Asia. Order growth in Vietnam has outrun the third-party warehouse it uses, causing late deliveries and rising refunds. The CFO must recommend to the board how to add fulfilment capacity in Ho Chi Minh City within budget and without breaching the group's leverage covenant.

2. Executive summary and recommendation

Recommendation: [one sentence: what to do, how much, by when].

Example: Lease and fit out a fulfilment centre in phases (Alternative C), at an initial outlay of EUR 5.0m, with a pre-agreed trigger to expand if Vietnamese order volume exceeds [N] orders a day for two consecutive quarters.

3. Decision question and scope

Decision question: [Should / how should] [decision maker] [action] given [binding constraint]?

Example: How should Lunaris add fulfilment capacity in Vietnam over the next eight years to fix delivery performance, while keeping net debt to EBITDA below the 2.5x covenant?

4. Situation analysis

4.1 Business and industry

[Business model, revenue drivers, cost structure, competitors, market growth, regulation. Cite case exhibits by number.]

4.2 Financial position

Build a short exhibit from the case financials. Show the ratios that bear on the decision.

Headroom check: at the covenant maximum of 2.5x, net debt could reach 2.5 x 31.2 = EUR 78.0m, so the debt-funded headroom is 78.0 - 54.6 = EUR 23.4m before any EBITDA change. A EUR 12.0m build fits, but uses more than half of it.

4.3 Constraints and stakeholder positions

5. Issue diagnosis

6. Financial analysis

6.1 Cash flow rules

• Use incremental, after-tax cash flows: include opportunity costs and working capital; exclude sunk costs and allocated overheads that do not change.
• Discount nominal cash flows at a nominal rate, real at real.
• Keep financing out of project cash flows when you discount at WACC; financing effects are in the rate.
• State the timing convention (end of year unless stated) and the terminal or salvage value.

6.2 Cost of capital

Say whether you add a country risk premium to the rate or adjust the cash flows instead, and why. Do not do both. Adding the premium to the whole WACC, as here, is a simplification; many practitioners add it to the cost of equity only, often scaled by the project's exposure to the country. Match currencies: discount EUR cash flows at a EUR rate, or convert VND cash flows at forecast forward rates before discounting.

6.3 Capital budgeting results

Incremental cash flows, EUR millions, end of year, year 8 includes salvage value (A: 1.5, C: 0.5):

Read the results with care. B has the highest IRR and profitability index because its outlay is small; IRR and payback rank projects of different size badly. NPV measures value added, so A ranks first on value, C second and B third. The question is whether the extra EUR 1.52m of NPV in A over C justifies EUR 7.0m more capital at risk.

6.4 Sensitivity and scenarios

All three options keep a positive NPV in every case tested. The break-even line divides each NPV by the present value of operating inflows (excluding salvage): A loses all its value if operating cash flows fall by about 30%, C only at about 41%. Compare these margins with the forecast error in the case history: if past forecasts missed by 25%, A has little room left. Where the case gives probabilities, show scenario-weighted NPV; otherwise state the scenarios and their triggers without inventing probabilities.

6.5 Valuation cases

When the case asks what a company or stake is worth, show at least two methods and reconcile them.

Check that the terminal growth rate $g$ is below long-run nominal GDP growth and that terminal value is not an implausible share of the total. For a full valuation deliverable, use Valuation Report (finance/valuation-report); for one method in depth, Comparable Companies Analysis (finance/comparable-companies-analysis).

6.6 Financing and payout cases

When the decision is how to fund or how much to return, show the effect on leverage, coverage, earnings per share and rating headroom for each option, and the covenant test after the transaction.

7. Alternatives

8. Evaluation criteria and scoring

Scores from 1 (poor) to 5 (strong). Weighted score = sum of weight x score.

Working for C: 0.35 x 4 + 0.25 x 4 + 0.20 x 4 + 0.10 x 5 + 0.10 x 3 = 1.40 + 1.00 + 0.80 + 0.50 + 0.30 = 4.00. Test whether the ranking holds if the value weight rises to 50% (taking 15 points from downside risk); if it flips, say so and explain why you keep or change the answer.

Example: with value at 50% and downside risk at 10%, A scores 0.50 x 5 + 0.10 x 2 + 0.20 x 5 + 0.10 x 2 + 0.10 x 2 = 4.10 and C scores 4.00, so the ranking flips. We keep C because the board has signalled that capital at risk before demand is proven is its main concern (case p. [N]); say this openly in the presentation rather than hiding the flip.

9. Recommendation

[Recommendation in two or three paragraphs: the action, the amount, the timing, the reasons and the conditions that would change it.]

Example: Recommend Alternative C. It creates EUR 3.29m of value at the project discount rate, keeps net debt to EBITDA at 1.91x after funding, and fixes the root cause of refunds by bringing picking operations in house. It gives up EUR 1.52m of base-case NPV relative to building, but avoids committing EUR 12.0m before demand in Vietnam is proven. Revisit the build option if daily orders exceed the expansion trigger for two consecutive quarters, or if the lease cannot be renewed on terms within [N]% of the current rent.

10. Implementation, risks and contingencies

11. Assumptions log

12. Class discussion and competition preparation

Rehearse answers aloud and time them: a good reply to a cold call or a judge's question takes under 30 seconds, gives the number first and points to the exhibit. When a questioner attacks an assumption you cannot defend, concede it, show the sensitivity that covers it (section 6.4) and explain why the recommendation still holds. Assign each team member the questions on the sections they wrote, and keep one person responsible for the numbers so the team never gives two different figures for the same NPV.

Numbers to know without notes: [NPV of the recommendation, IRR, covenant ratio after funding, the break-even assumption].

For case competitions, add: the time limit for the presentation, the slide count, the judging criteria as published by the organiser, and a rehearsal log with timings. Keep the same structure as this document so the deck and the written analysis tell one story.

13. Optional teaching note

13.1 Learning objectives

13.2 Audience and placement

[Course, level (MBA core, master's elective, executive education), prerequisite topics, position in the syllabus and session length.]

13.3 Assignment questions

1. [Question that forces the decision.]
2. [Question that requires the main calculation.]
3. [Question about a qualitative trade-off.]

13.4 Session plan

13.5 Expected analysis and common mistakes

13.6 Epilogue

[What happened after the case date, if public and if the case is based on a real organisation; otherwise state that the case is fictional.]

14. Appendix: calculations and exhibits

14.1 Exhibit list

14.2 Present value working for Alternative A

Discount factor at 10.16% for year $t$ is $1/(1.1016)^t$. Values in EUR millions, rounded to three decimals.

The discounted payback falls in year 6 (5 + 1.079 / 1.903 = 5.6 years). Simple payback: cumulative undiscounted cash flow is -0.6 after year 4, so payback is 4 + 0.6 / 3.4 = 4.2 years.

14.3 Model hygiene checklist

• Inputs in one place, separated from calculations and outputs.
• Every hard-coded number traced to the case or the assumptions log.
• Signs consistent: outflows negative, inflows positive.
• Units and currency labelled on every exhibit.
• Totals cross-checked; scoring weights sum to 100%.
• Spreadsheet file name and version recorded in Document control.

15. Glossary and references

15.1 Glossary

15.2 References

Standard and licence note

Structure aligned with the case method as practised in business-school finance teaching and case competitions, and with standard corporate finance techniques (incremental cash flow analysis, NPV and IRR, CAPM and WACC, sensitivity analysis and multi-criteria scoring), which are general methods and are explained here in original wording. Harvard Business School, Harvard Business Publishing, Ivey Business School and Ivey Publishing are named only to identify the method and the usual case sources; no case text, exhibit, teaching note or publisher material is reproduced, and this template is not affiliated with or endorsed by them. Published cases are copyrighted: obtain them through your institution and cite them. Lunaris Home Goods and all figures in the examples are fictional. This template is original text written for this collection. Check your course or competition rules for the current submission requirements before use. Template licence: MIT.