I know for capital one the case interview is quite quantitative and broad but Im really struggling with the framework of a profitability case, especially when it’s so general. For example “What factors would you look at when considering the profitability of an Ice Cream Company?”
I don’t really understand what buckets to use or how to structure my answer and then also how to lead into asking for data. Could someone type a sample response? Any help appreciated! Thank you
Profitability Case Framework? Capital One Mini Case Interview
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Hi there, and thanks for asking,
Indeed, setting up the framework for a profitability case can be a bit confusing, however, I would advise you not to think of “THE” framework when structuring such a case, rather, focus on setting up a framework tailored to the specific case you are given,
Now, to answer your main questions,
Step 1: Framework
Think of the framework as the overarching structure which directs your thinking throughout the case and involves all the major elements you would consider to solve it,
E.g.: This is the prompt of your case: What factors would you look at when considering the profitability of an Ice Cream Company?
The main task is to assess the profitability, to do so, think of what are the main elements that constitute profitability. It would be revenues and costs, so these are the main factors to look into
Step 2: Now that we have our main elements, we can go a bit deeper in each, this is what we call sub-buckets, which are the elements you look into to assess the main buckets
In your case: We have revenues and costs
2.1- Revenues: How does an ice cream company generate revenue?
2.1.1- Well here you should look into the revenue streams of the company (i.e.: we might have multiple types of ice cream products, such as cones, etc…, eventually the total revenue will depend on the volume of production)
2.1.2- What you can also look at is the distribution channels (i.e.: do we sell our products more B2B or B2C?)
2.2- Costs: what are the main costs involved? the main costs involved in your case are mostly OPEX (operating expenses), split into fixed or variable costs
2.2.1- Fixed costs: these are costs we are paying regardless of volume of production such as rent, etc…
2.2.2- Variable costs: these are costs that are function of the production volume
Finally profitability:
Profitability has a simple equation:
Profitability= Profits/Revenues that will yield you your final answer,
Also don't forget to comment on the answer,
Obviously you will be asking for the data I mentioned throughout the case, it's just about knowing what you need to solve the problem, and structuring it. You can then ask for the content.
Hope this answers your question,
Best of luck!
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