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A new location is a major commitment of time and money with the potential to expand a company’s business and increase profits. New locations also come with risks. Sales may be lower than expected while costs are higher. The new location may pull more resources from existing operations and strategy than anticipated. Could we have better anticipated this?

In this course, We:

  • Explore some of the key financial considerations when opening a new location.
  • Describe how to project common revenue and expense items for a new location.
  • Explain how to build a net contribution and cash flow forecast.
  • Illustrate analysis methods like breakeven analysis and scenario analysis.
  • Demonstrate scenario analysis and sensitivity analysis with Excel’s Goal Seek, Scenario Manager, and Data Table functions.
  • Define common metrics like NPV, IRR, and Time to Breakeven. I’ll show multiple ways to analyze this in Excel. For Excel gurus, you can do this yourself. For others, this gives you an idea of what an accountant, analyst, or consultant can do for you.
  • Reveal common decision mistakes people make when analyzing new locations and how to avoid these mistakes.

This course is focused on the financial analysis of the location and how a new location fits financially into a company’s larger strategy. Some things I don’t cover or don’t cover in detail in this course:

  • Merger and Acquisition (M&A) Analysis
  • Analyzing where to locate the store or new location
  • Detailed financial accounting entries and financial statement disclosure
  • Tax considerations and treatment. I will briefly mention some relevant tax items like cost segregation studies

Course Key Concepts: Capital budgeting, Capital planning, Budgeting, Net contribution, Scenario analysis, Breakeven analysis, Sensitivity testing, Behavioral finance, Net Present Value (NPV), Internal Rate of Return (IRR).

Note:This course is also available in Text Based format. https://www.illumeo.com/courses/analyzing-whether-add-new-locations-capital-budgeting-text-based-course

Learning Objectives

  • Identify key revenue and expense items for a new location analysis.
  • Recognize sources of information for new location projections.
  • Discover and recall analysis metrics like Net Present Value (NPV), Internal Rate of Return (IRR), and Time to Breakeven.
  • Recognize Excel What-If functions like Goal Seek, Scenario Manager, and Data Tables.
Last updated/reviewed: October 11, 2022

1 Review (2 ratings)Reviews

4
Member's Profile
Lots of information and good considerations for this type of analysis.

Prerequisites

Course Complexity: Foundational
No advanced preparation or prerequisites are required for this course.

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
  3:12Overview to Analyzing Whether to Add a New Location
  7:50Are You Ready To Grow
  5:16Profit Or Cash Flow Analysis
  quizREVIEW QUESTIONS: Profit or Cash Flow Analysis?
Revenues and Expenses
  11:42Estimating Revenues
  12:06Buying Or Leasing The New Location
  5:38Building Loan Considerations
  11:32Expenses
  quizREVIEW QUESTIONS: Expenses
ANALYSIS
  12:30Net Contribution And Cash Flow Analysis
  6:42Modeling Scenarios With Scenario Manager
  10:50Break Even Analysis
  2:48Using Excel Goal Seek For Break Even
  9:40Two-Variable Analysis And Beyond
  8:56Analysis Metrics
  10:52Avoiding Decision Mistakes
KEY TAKEAWAYS
  10:50Key Takeaways
  quizREVIEW QUESTIONS: Key Takeaways
CONTINUOUS PLAY
  2:10:24Analyzing Whether to Add a New Location - Capital Budgeting
SUPPORTING MATERIAL
  PDFSlides: Analyzing Whether to Add a New Location - Capital Budgeting
  PDFAnalyzing Whether to Add a New Location - Capital Budgeting Glossary/Index
Course Resources
  PDFBusiness Growth Checklist
  PDFIndustry Research Reports
  PDFWays to Project Numbers
  XLSXCVP Analysis
  XLSXNew Location Analysis
  XLSXTwo Variable Data Table
REVIEW AND TEST
 examFINAL EXAM