4. Observations for Corporate Finance

To fully understand this chapter, you will need to read Chapter 3 first.

In large corporations it is easy to identify high-level problems, but finding out the root causes of these problems is more tricky. Such corporations generate a deluge of information that can quickly drown anyone trying to analyze it.

For example, one of the principal measures of a company’s performance is its final revenue. If the revenue shows a notable dip, then some analysis needs to be done to find out why. Such an analysis for Aroma Coffee Makers (ACM) showed that their equipment sales income was reduced, although their costs were still reasonable. This was most noticeable in their Northeast region. Looking further showed that ...

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