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Data Services provides flexible, scalable data processing and information storage to the fast-food industry. Sales have grown steadily, but the company has operated at a loss since its founding five years ago. Data Services management is enthusiastic about the company's prospects. The chief executive of Armistead, the insurance company that owns Data Services, is under pressure from corporate officers to slough off the subsidiary. A business analysis is done not only to help the CEO decide whether to continue investment in Data Services, but also to determine if the company is well managed. Information includes the day-to-day operations of Data Services, its sales process, profit and loss statement, revenue and expense analysis, and cost allocations.

A business analyst at Mead Corporation had just begun the process of estimating Mead's cost of capital for the fourth quarter of 1990. As part of her analysis, she hoped to explain why the cost of equity had increased and recommend whether the company should consider the increase a problem.

This case examines a set of expansion options for a successful Internet luggage retailer, with a particular emphasis on the operational complexities.

Dick Mayo, one of the most celebrated value investors in America was puzzled by the New Economy's continuous bias toward growth investment strategies. He examines the basics of his philosophy versus that of a growth orientation by evaluating the long-term expected returns of several value and growth stocks. This case can be used to pursue several objectives: (1) to define value and growth investing-where the differences lie and whether one approach is superior to the other or whether both have merit; and (2) to discuss issues related to consistency of one's investment philosophy. Should one stay true to one's philosophy even when the market seems to run counter to it for a prolonged period of time? Can value investing deliver value in this New Economy or is it only an Old Economy concept? The students are instructed to perform basic valuations of Cisco Systems (a growth company), CVS, R.R. Donnelley, and Manor Care (value companies) and compute their long-term expected returns. The case comes with an Excel spreadsheet containing the data and relevant valuation ratios for the above firms. The valuations are straightforward, but they tell an interesting story: the expected returns of glamorous stocks in reality may not be so glamorous.

In the early months of the 2007-08 financial crises, a loan manager faces a real estate financing decision. Should he approve a bullet structure three-year loan to a longstanding client, a legendary Texan developer? The developer, who near retirement downsized his business, is seeking financing for his only project: residential or commercial development on an attractive piece of land in suburban Houston. The loan manager considers the decision in light of the mortgage market turmoil, seeing commercial projects as safer, but also factoring that the residential market could bring higher returns if the market stabilizes soon. The manager collects the data and asks an analyst to assess the risks; that ultimately requires assessing the economics of both projects from both the bank's and the developer's perspectives. The bank could still change the interest rate on the loan to receive adequate compensation for the risk it carries, but the loan manager knows that doing so will change their long-term client willingness to take on the loan.

The financial success of dairy farms depends critically on the price of their main output, milk. Large volatility in the price of milk poses a considerable business risk to dairy farms. This is particularly true for family-run dairy farms. The question then arises: how can a farm owner hedge the milk price risk? The standard approach to establish a price floor for a commodity such as milk is to purchase put options on commodity futures. At the Chicago Mercantile Exchange, farmers can buy put options on the price of a variety of milk products. However, the price a farm receives for its milk depends on many factors and is unique to the farm. Thus, a farmer cannot directly buy put options on the price he receives for the milk his farm produces. Instead the farmer needs to determine which of the options available for trade at the Chicago Mercantile Exchange offer the best hedge for his own milk price. The assignment in this case is to examine historical data on several prices of milk products and the milk price received by a family-run dairy farm in California. Students need to find the price that is most closely correlated to the farm's milk price and to then choose options with the appropriate strike price that serve as the best hedge for the farm's price risk.

The objective is to expose students to an interesting but simple finance application of linear regression analysis. To solve the case, students must run several simple linear regressions, then use the best regression model they find to make a prediction for the dependent price variable and analyze the prediction interval in order to achieve the desired objective outlined in the case. By completing the case, students will acquire a good understanding of their regression model and its usefulness.

This case is an abridged version of UVA-F-1115. This version is intended for use with audiences requiring less source documentation than is available in the unabridged version. The teaching note, however, contains all the source documentation in an appendix.

This case presents an application of conjoint analysis in a financial services setting. It is best used in a course on marketing research. The decision in the case centers on a fund manager's need to generate additional profit from a mutual fund. To do this, he needs to determine a new pricing structure for the fund. The case presents students with the results from a real-world conjoint analysis and requires them to work through the pricing and profit implications of that analysis.

This case follows the performance review and financial-statement-forecasting decisions of a Value Line analyst for the retail building-supply industry in October 2002. The case contrasts the strong operating performance of Home Depot with the strong stock-market performance of Lowe's. Students examine a financial ratio analysis for Home Depot that acts as a template to generate a comparable ratio analysis for Lowe's. The student ratio analysis is designed to build intuition with respect to interpreting individual ratios as well as ratio interrelationships (e.g., the DuPont framework). The historical-performance comparison suggests that investors are skeptical of the ability of Home Depot to maintain its performance trajectory, yet they project sustained improvements for Lowe's. Students are invited to scrutinize the analyst's five-year income-statement and asset-side balance sheet forecast for Home Depot. The case expressly focuses on the asset side of the balance sheet as a preview for other cases using free-cash-flow forecasting. The Home Depot forecast exercise exposes students to the mechanics of financial-statement modeling and sensitivity analysis, which they can use in building their own forecast for Lowe's. Finally, the strong-growth assumptions for Home Depot relative to the modest-growth forecast for the industry suggest that the company can be expected to capture massive and perhaps unreasonable market share in the near term. The exercise provides a striking example of the importance of comparing bottom-up business forecasting with top-down industry forecasts.

International marketing, distribution channel management, market entry, strategic management.

Masters level management students and executives specializing in distribution channel management. This case can also be applied to Masters level analysis of strategic marketing.

The case examines BBMCI, a wholly owned subsidiary of a multinational making an entry in the Indian consumer appliances market. The focus of the case is the distribution aspect of the market entry strategy, its formulation and implementation.

The key learning objective is to evaluate distribution channel design and monitoring mechanisms. The case examines the linkage of distribution strategy formulation and the implementation challenges in a large and internationally extended sales organization. The key takeaway would be the need to change the distribution strategy as the organization's position in market evolves.

Teaching note.