BU121 Lecture Notes - Lecture 5: Operating Leverage, Fixed Cost, Contribution Margin
Document Summary
Contribuion analysis- helps you make decisions, worried about risks and money: cash breakeven helps you calculate costs. New venture financing, cash budgeing, cash burn, new venture valuaion, strategies for growth/exit all covered in next slide deck ater midterm. Recall csf- achieving financial performance is most relevant in inance, however they"re all important because you can"t have one without them all. 7 principles of entrepreneurial finance: real, human, and inancial capital must be rented" from owners. Everyone expects a return if you"ve borrowed something from somebody because they could have invested elsewhere. Think of the opportunity costs: risk and expected reward go hand in hand. Big risk=big reward, low risk=lower reward: accouning is called the language of business, cash is the currency. Cash is very important: new venture inancing involves search, negoiaion, and privacy, a venture"s inancial objecive is to increase value, it is dangerous to assume that people act against their own self-interest.
