Finance Case Analysis Template (Case Method, Teaching Note)

Decision maker and question, situation and issue diagnosis, WACC and NPV/IRR analysis, valuation, alternatives scoring, recommendation, implementation, teaching note

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使い方: Use it when you write up a business-school corporate finance, valuation or investment case for class, an exam or a case competition. Fill the decision question and the financial analysis first, building your own exhibits from the case, then write the one-page summary last. The main pitfall is ranking alternatives by IRR or payback when they differ in size; compare NPV and capital at risk instead.

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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.

Document control

Field	Value
Document ID	[CASE-001]
Case title	[Case title]
Case reference	[Author(s), publisher, product number, year]
Case type	[Capital budgeting / Cost of capital / Financing / Payout / Valuation / M&A / Investment]
Course or competition	[Course code and name / Competition name and round]
Instructor or judge panel	[Name]
Authors	[@student-1], [@student-2], [@student-3]
Submission limits	[N pages plus N pages of exhibits; font; file format]
Due date	YYYY-MM-DD HH:MM
Version	[0.1]
Status	[Draft / Team review / Submitted / Graded]
Owner	[@student-1]
Approvers/reviewers	[@team-members], [@faculty-advisor]
Last updated	YYYY-MM-DD
Classification	[Course use only]

Approvals

Role	Name	Decision	Date
Team lead	[@student-1]	[Approved for submission]	YYYY-MM-DD
Team member	[@student-2]	[Approved]	YYYY-MM-DD
Faculty advisor (competitions)	[@faculty-advisor]	[Reviewed]	YYYY-MM-DD

Revision history

Version	Date	Author	Change
0.1	YYYY-MM-DD	[@student-1]	Decision question, situation analysis
0.2	YYYY-MM-DD	[@student-2]	Financial analysis and exhibits
1.0	YYYY-MM-DD	[@student-1]	Submitted version

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

Item	Value
Organisation	Lunaris Home Goods (fictional online home goods retailer, IFRS reporter, functional currency EUR, financial year = calendar year) (Example)
Decision maker	[Name], Chief Financial Officer (Example)
Decision deadline	Board meeting, [month year] (Example)
Authority	CFO recommends; board approves capital expenditure above EUR 2.5m (Example)
Case date	[Month year in which the case is set]
Currency and units	EUR millions unless stated (Example)
Other stakeholders	Head of operations, Vietnam country manager, lenders, shareholders (Example)

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.

Point	Summary (Example)
Value	Positive NPV of EUR 3.29m at a 10.16% project discount rate; IRR 24.6%
Risk	Lowest capital at risk among the options that give operational control; NPV stays positive under every sensitivity tested
Strategy	Keeps control of service quality, which is the cause of refunds, while preserving the option to build later
Main risk	Lease terms in the second phase; mitigated by negotiating an option on adjacent space now
What we gave up	Alternative A has the highest NPV (EUR 4.81m) but puts EUR 12.0m at risk before demand is proven

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?

In scope	Out of scope
Options for fulfilment capacity in Vietnam (Example)	Expansion into new countries (Example)
Financing of the chosen option within the existing facility (Example)	Refinancing the group capital structure (Example)
Eight-year evaluation horizon (Example)	Product pricing decisions (Example)

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.

Metric (Example)	FY2025	Calculation	Comment
Revenue	240.0	Case Exhibit [N]	Growing 18% a year
EBITDA	31.2	Case Exhibit [N]
EBITDA margin	13.0%	31.2 / 240.0	Below listed peers
Net debt	54.6	Borrowings less cash
Net debt / EBITDA	1.75x	54.6 / 31.2	Covenant maximum 2.5x
EBIT	19.2	Case Exhibit [N]
Interest cover	6.0x	19.2 / 3.2	Interest expense 3.2

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

Stakeholder	Position	Evidence in the case	Implication
Head of operations (Example)	Wants own building	Interview, case p. [N]	Values control over cost
Vietnam country manager (Example)	Wants speed	Refund trend exhibit	Values time to capacity
Lenders (Example)	Covenant 2.5x	Facility summary	Limits debt funding

5. Issue diagnosis

ID	Issue	Symptom or cause	Evidence	Priority
ISS-001 (Example)	Capacity shortfall	Cause	Utilisation above 95% for 6 months	High
ISS-002 (Example)	Picking accuracy	Cause	Error rate trend	High
ISS-003 (Example)	Late deliveries	Symptom	Customer complaints	Follows from 001 and 002
ISS-004 (Example)	Forecast error	Contributing	Variance to plan	Medium

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

k_e = r_f + \beta \times ERP

WACC = \frac{E}{V} k_e + \frac{D}{V} k_d (1 - t)

Input (Example)	Value	Source
Risk-free rate $r_f$	3.0%	Assumption A-01
Equity beta $\beta$	1.20	Assumption A-02 (peer median, relevered)
Equity risk premium	5.5%	Assumption A-03
Cost of equity $k_e$	3.0% + 1.20 x 5.5% = 9.6%	Computed
Pre-tax cost of debt $k_d$	6.0%	Facility margin plus base rate
Tax rate $t$	20%	Assumption A-04
After-tax cost of debt	6.0% x (1 - 0.20) = 4.8%	Computed
Target weights E/V, D/V	70% / 30%	Assumption A-05
WACC	0.70 x 9.6% + 0.30 x 4.8% = 6.72% + 1.44% = 8.16%	Computed
Country risk premium for the project	2.0%	Assumption A-06
Project discount rate	10.16%	Computed

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

NPV = \sum_{t=0}^{T} \frac{CF_t}{(1+r)^t}, \qquad 0 = \sum_{t=0}^{T} \frac{CF_t}{(1+IRR)^t}

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

Year (Example)	0	1	2	3	4	5	6	7	8
A Build own centre	-12.0	2.0	2.8	3.2	3.4	3.4	3.4	3.4	4.9
B Expand third-party contract	-1.5	0.85	0.85	0.85	0.85	0.85	0.85	0.85	0.85
C Phased lease and fit-out	-5.0	1.0	1.4	1.6	1.7	1.7	1.7	1.7	2.2

Measure at 10.16% (Example)	A Build	B Third party	C Phased lease
Initial outlay	12.0	1.5	5.0
PV of inflows	16.81	4.51	8.29
NPV	4.81	3.01	3.29
IRR	19.2%	55.0%	24.6%
Profitability index (PV inflows / outlay)	1.40	3.01	1.66
Simple payback (years)	4.2	1.8	3.6
Undiscounted net cash flow	14.5	5.3	8.0

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

NPV, EUR m (Example)	A Build	B Third party	C Phased lease
Base case (10.16%)	4.81	3.01	3.29
Discount rate +2 pp (12.16%)	3.53	2.70	2.66
Discount rate -2 pp (8.16%)	6.26	3.36	4.00
Operating cash flows -10% (years 1 to 8, salvage unchanged)	3.20	2.56	2.48
Break-even: cut in operating cash flows that sets NPV to zero	29.8%	66.7%	40.8%

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.

Method	Key inputs	Value range	Weight	Why this weight
DCF (free cash flow to firm)	Forecast, WACC, terminal growth or exit multiple	[Range]	[%]	[Reason]
Trading comparables	Peer set, EV/EBITDA, P/E	[Range]	[%]	[Reason]
Precedent transactions	Deal set, control premium	[Range]	[%]	[Reason]
Total		[Point estimate]	100%

EV = \sum_{t=1}^{N} \frac{FCFF_t}{(1+WACC)^t} + \frac{FCFF_{N+1}}{(WACC - g)(1+WACC)^N}

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.

Measure (Example)	Before	After A (debt funded)	After C (debt funded)
Net debt, EUR m	54.6	66.6	59.6
Net debt / EBITDA (FY2025 EBITDA 31.2)	1.75x	2.13x	1.91x
Headroom to 2.5x covenant, EUR m	23.4	11.4	18.4

7. Alternatives

ID	Alternative	Description	Main advantage	Main drawback
ALT-0 (Example)	Status quo	Stay with current third-party warehouse at current capacity	No outlay	Refunds keep rising; does not answer the question
ALT-A (Example)	Build own centre	Purchase land use rights and build a 20,000 m2 centre	Highest NPV; full control	EUR 12.0m at risk; 18-month build
ALT-B (Example)	Expand third-party contract	Larger space with the current provider, with service-level penalties	Fast, low outlay	Control over accuracy stays limited
ALT-C (Example)	Phased lease and fit-out	Lease a building, fit out half now, half on a demand trigger	Control plus flexibility	Lease renewal risk

8. Evaluation criteria and scoring

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

Criterion	Weight	A Build	B Third party	C Phased lease
Value created (NPV)	35%	5	3	4
Downside risk and capital at risk	25%	2	4	4
Control of service quality	20%	5	2	4
Flexibility (options to expand or exit)	10%	2	4	5
Execution speed and complexity	10%	2	5	3
Weighted score (Example)	100%	3.65	3.35	4.00

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

ID	Risk	Likelihood	Impact	Mitigation	Owner
RSK-001 (Example)	Lease renewal on worse terms	Medium	High	Negotiate renewal option and adjacent-space option now	[@cfo]
RSK-002 (Example)	Order growth slower than forecast	Medium	Medium	Phase 2 only on trigger	[@country-manager]
RSK-003 (Example)	FX: EUR-funded outlay, VND operating costs	Medium	Low	Natural hedge from local revenue; review with the treasury policy	[@treasurer]
RSK-004 (Example)	Staffing and training delay	Low	Medium	Hire supervisors before fit-out completes	[@head-of-operations]

KPI (Example)	Baseline	Target after 12 months
On-time delivery	[%]	[%]
Refund rate	[%]	[%]
Cost per order, EUR	[Value]	[Value]

11. Assumptions log

ID	Assumption	Value	Basis	Sensitivity tested
A-01 (Example)	Risk-free rate	3.0%	[Government bond yield as of case date, source]	Rate +/- 2 pp
A-02 (Example)	Equity beta	1.20	Peer median, relevered at target D/E	Rate +/- 2 pp
A-03 (Example)	Equity risk premium	5.5%	[Survey or textbook source]	Rate +/- 2 pp
A-04 (Example)	Tax rate	20%	[Case statement or statutory rate as of case date]	Not tested
A-05 (Example)	Target capital structure	70% equity, 30% debt	Case Exhibit [N] and management target	Not tested
A-06 (Example)	Country risk premium	2.0%	[Source]	Included in rate tests
A-07 (Example)	Salvage values	A 1.5, C 0.5	Depreciated fit-out and resale estimates	[Test]
A-08 (Example)	Cash flows nominal, end of year		Convention	Not applicable

12. Class discussion and competition preparation

Likely question	Our answer in one line	Supporting exhibit
Why not build if NPV is highest? (Example)	Capital at risk and covenant headroom; build stays open as a phase 3	6.3, 6.6
Is the 2% country premium double counting? (Example)	Cash flows are base-case expectations, not haircut, so the premium is in the rate only	6.2
What would change your mind? (Example)	Order volume above trigger or lease terms outside range	9

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

ID	After the session, participants can	Evidence
LO-01 (Example)	Separate incremental from non-incremental cash flows	Cash flow exhibit
LO-02 (Example)	Build a project discount rate and justify a country risk adjustment	WACC exhibit
LO-03 (Example)	Explain why IRR and payback can rank projects of different size wrongly	Ranking discussion
LO-04 (Example)	Weigh value against flexibility and capital at risk	Scoring matrix

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

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

13.4 Session plan

Block	Minutes	Activity	Board plan
Opening (Example)	10	Vote: build, outsource or lease?	Vote tally
Analysis (Example)	30	Cash flows and WACC built from the class	NPV table
Debate (Example)	25	Value versus flexibility	Scoring matrix
Wrap-up (Example)	10	What the CFO did (if known) and lessons	Three takeaways
Total	75

13.5 Expected analysis and common mistakes

Mistake (Example)	Why it is wrong	How to redirect
Ranking by IRR	Ignores scale of investment	Ask for NPV per euro of capital and the incremental IRR of A over C
Including allocated head-office costs	Not incremental	Ask which costs change if the project is rejected
Discounting interest payments	Double counts financing	Ask what the WACC already contains

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

Exhibit	Title	Source	Referred to in
EX-01 (Example)	Financial position and covenant headroom	Built from case financials	4.2
EX-02 (Example)	Cost of capital build	Assumptions A-01 to A-06	6.2
EX-03 (Example)	Cash flows and NPV by alternative	Built	6.3
EX-04 (Example)	Sensitivity table	Built	6.4
EX-05 (Example)	Scoring matrix	Built	8

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.

Year (Example)	Cash flow	Present value	Cumulative PV
0	-12.0	-12.000	-12.000
1	2.0	1.816	-10.184
2	2.8	2.307	-7.877
3	3.2	2.394	-5.483
4	3.4	2.309	-3.175
5	3.4	2.096	-1.079
6	3.4	1.903	0.824
7	3.4	1.727	2.551
8	4.9	2.259	4.810

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

Term	Meaning
Case method	Teaching by discussion of a real or realistic decision, where participants analyse and recommend before the class
Decision maker	The protagonist who must act, and whose constraints frame the analysis
Incremental cash flow	The change in the firm's cash flows caused by the decision
NPV	Net present value: the sum of discounted cash flows, including the outlay
IRR	Internal rate of return: the discount rate at which NPV is zero
Profitability index	Present value of inflows divided by the initial outlay
WACC	Weighted average cost of capital: the blended required return of debt and equity holders
CAPM	Capital asset pricing model: cost of equity as risk-free rate plus beta times the equity risk premium
Country risk premium	An extra return required for exposure to a country's economic and political risk
Covenant	A financial condition in a loan agreement, such as a maximum net debt to EBITDA
Teaching note	The instructor's plan for a case: objectives, questions, session plan and analysis

15.2 References

Reference	Use
[Case: author(s), title, publisher, product number, year]	The case analysed (cited, not reproduced)
[Corporate finance textbook: author(s), title, edition, publisher, year]	Methods (cited, not reproduced)
[Data source for risk-free rate, ERP, peer betas, with date]	Assumptions A-01 to A-03
Harvard Business Publishing and Ivey Publishing (case publishers, named for orientation)	Source of licensed cases; obtain cases and teaching notes through your institution
Investment Appraisal (`finance/investment-appraisal`) and Valuation Report (`finance/valuation-report`)	Practitioner versions of the same analysis

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.