What exactly am I supposed to do when asked conduct a break even analysis of a mall or a feasibility analysis of a mall

Hello!

Precisely for the high amount of questions (1) asked by my coachees and students and (2) present in this Q&A, I created the “Math & Formulas - Economic and Financial concepts for MBB interviews”, recently published in PrepLounge’s shop (https://www.preplounge.com/en/shop/prep-guide/economic_and_financial_concepts_for_mbb_interviews).

After +5 years of candidate coaching and university teaching, and after having seen hundreds of cases, I realized that the economic-related knowledge needed to master case interviews is not much, and not complex. However, you need to know where to focus! Hence, I created the guide that I wish I could have had, summarizing the most important economic and financial concepts needed to solve consulting cases, combining key concepts theorical reviews and a hands-on methodology with examples and ad-hoc practice cases.

It focuses on 4 core topics, divided in chapters (each of them ranked in scale of importance, to help you maximize your time in short preparations):

• Economic concepts: Profitability equation, Break even, Valuation methods (economic, market and asset), Payback period, NPV and IRR, + 3 practice cases to put it all together in a practical way. 
• Financial concepts: Balance sheet, Income statement/P&L and Performance ratios (based on sales and based on investment), +1 practice case
• Market structure & pricing: Market types, Perfect competition markets (demand and supply), Willingness to pay, Pricing approaches, Market segmentation and Price elasticity of demand, +1 practice case
• Marketing and Customer Acquisition: Sales funnel, Key marketing metrics (CAC and CLV) and Churn, +1 practice case

Feel free to PM me for disccount codes for the guide, and I hope it helps you rock your interviews! 

Hi,

below are some practice cases around commercial feasibility and break-even analyses. Those are not focused on malls but provide a general approach to these types of cases.

https://www.preplounge.com/de/case-sammlung/candidate-led-ueblicher-stil/anfaenger/options-evaluation-profitability-of-brewing-company-startup-327?lang=en

https://www.preplounge.com/de/case-sammlung/candidate-led-ueblicher-stil/anfaenger/commercial-feasibility-of-natural-gas-pipeline-329?lang=en

Best

HI,

that's pretty direct :

1. Evaluate the cost (fixed and variable) to build and run the mall. Probably function of the number of square meter built

2. Evaluate the revenue model. In case of a mall, I assume revenue are maily generated from rental of floor space to stores and brands

3. Calculate break even. In this case it would be to evaluate the number of square meter to rent at price detailed in 2. to cover the cost described in 1.

Let me know if you need more details.
Best
Benjamin

Hi Khushi,

in terms of break-even analysis, you are supposed to calculate the volume that will allow reaching a level of revenues equal to total costs. The formula to derive the value of the volume is given by fixed costs divided by the contribution margin.

Specifically, the formula would be the following

R-VC-FC=0

p*q-c*q-FC=0

q=FC/(p-c)

where p=price, q=quantity, c=variable cost per unit, FC=fixed cost

Feasibility analysis is a bit more generic term that should be clarified with the interviewer to be aligned on the exact meaning in the context of the case. In general terms, it means to verify that the project is feasible both from a technical point of view and from a point of view of minimum return expected by the client.

Hope this helps,

Francesco

سلام 

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