AUDIO LECTURE 4. Assessments\3. Data Sheets\1A Assess 3 Data Sheets.WMA

Cathedral Career TrainingAssociate Track 1

Assessment 3Data Sheets

Topics

1. Where do the Data Sheets fit in Consulting?2. How are the Data Sheets done?3. What are the components of the Data Sheets?4. What are the differences between the BR and OA Data Sheets?5. What is the financial analysis for BR and OA?

Reading (May need to be ‘copied’ to open. Some files show that they are not available, but when copied to a local folder, they open easily.):

1. OA Data Sheets Non-Profit (by cglynn@cathedralconsulting.com - 2), this folder.

2. OA Data Sheets THE UNION 120918, this folder.3. TEMPLATE Data sheets Professional Service Firm 091107, this

folder.4. TEMPLATE Data sheets Standard 110609, this folder.5. Financial Analysis for BR.xls, this folder.6. FinAnalysisFamUni111201(1), this folder.

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7. BR Report E Step Consulting 2010, this folder.8. OA Data Sheets THE UNION 120918, this folder.9. OADataSheetsFamUni121204, this folder.

Lecture

1. Where do the Data Sheets fit in Consulting?a. Data Sheets are the analysis tool to be used in the Work

Phase of a consulting project.i. The engagement letter identified and shaped the issues.

ii. The Work Phase started with the planning of the questionnaire, the interview and the gathering of other data.

iii. Now the data should be gathered and the analysis part of the Work Phase begins.

2. What are the components of the Data Sheets?a. The Data Sheets have the following components:

i. Topic.1. The flow of the Data sheets should following the

Questionnaire which in turn should allow for a reasonable flow to evaluate the enterprise.

2. The topic should match the question on the Questionnaire.

ii. Data1. The Data is the answers given to the question, plus

all other information gathered.2. It is important to put all of the answer/information

in this box.3. While the Data Sheet follows the Questionnaire, it

is to be the gathering place for analysis of all information on the enterprise.

iii. Best Practices.

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1. Best practices are an abbreviated look at the alternatives for the topic.

2. When a Questionnaire is prepared, these best practices should also be prepared.

3. In effect this component is the “Research” in the Assessment.

4. Therefore, doing adequate preparation of the Data Sheet in creating the Questionnaire is how Cathedral efficiently prepares the alternatives for issues identified.

5. The Best practices will also be the trigger for identifying issues, weakness or opportunities or threats that need to be addressed.

iv. Findings and Implications:1. Findings and implications are developed from the

comparison of the data received to the best practices.

3. How are the Data Sheets done?a. Data Sheets should be completed by the Associate who has

answered the questions and done the research. b. While there is a temptation to put the question answers

directly on the data sheets, this has proven to be a bit risky, since the data sheets do not have the full information that the Questionnaire will have.

c. The process is as follows:i. Taking the answers to the Questionnaire and research

and other information, the Data component is completed.

ii. After the Data component is completed, the best practices are compared to the data received.

iii. The comparison should highlight differences. These differences need to be noted.

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iv. The material differences should be highlighted for MD review.

v. The completed Data sheets are reviewed with the MD to identify the SWOT components of the Assessment.

d. Let’s consider the Data Sheets for E.Step Consulting.i. The Data sheets have been completed and included as

an addendum.1. Many clients find this a useful read.2. Clients also find that it validates the work done in

the Work phase.ii. On page 13 of the report, the Data Sheet topic is Market

Positioning:1. There are several answers given in the Data

component:

According to its website, E-Step Consulting hasbeen assisting higher educational institutions toimplement various applications within the OraclePeopleSoft® line of products since 2000.

New service innovations include strategicpartnerships.

2. The Best practices highlight some principles:Management should know the market and then positionthe company accordingly. Some market segments can begenerally defined as:a) Pricingbe) Qualityc) Speed of serviced) Strategic relationships form effective marketpenetration strategies. These relationships can rangefrom referrals to full joint ventures.

3. The Findings and implications have some recommendations:

Knowledge of competition and what is occurring in themarket place is important for success to continue. Acompetitor analysis would be helpful to see who else

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is competing for this market segment in the area, andhow much room remains for growth of the E-StepConsulting, Inc. model.

With that being said, the company has done well inunderstanding the market and providing services tomeet a need in the market without this official analysis.The desired strategic partnerships could add a uniqueadvantage in a competitive market.

4. Some observations on this exercise:a. The data and findings were completed.b. But the findings do not connect well with the

data or the best practices. It suggests that there was other information that was not entered in the Data section.

c. The engagement was focused on the need for revenue growth, so more attention here would have been useful.

d. In a MD review, this should be highlighted and more development done.

e. Let’s look at Union Data Sheets:i. Under the first Topic, Mission.

ii. Data contains the following answer:The mission of the International Union Against Tuberculosis and Lung Disease is to "bring innovation, expertise, solutions, and support to address health challenges in lwo and middle income populations around the world."

iii. Best Practices has the following:A mission statement states your beliefs which lead to a statement of purpose and function. This statement provides future-oriented thinking and a laser-like focus.

iv. The findings and implications has the following:[no posting]

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v. What do we see?1. This is a case where the data is entered well.2. But the findings do not follow the application of

the best practices.f. The Family Unity Data sheets are an excellent example of fully

completed Data Sheets.i. Topic: Mission

ii. Data:“To contribute to the prosperity of the working boys and their families is to contribute to the present and future welfare of the community.” Members in the meeting were not able to clearly recite the mission statement.

iii. Best Practices:A mission statement states your beliefs which lead to a statement of purpose and function. This statement provides future-oriented thinking and a laser-like focus.

iv. Findings:It is recommended that board members and staff are able to recite the mission statement.

g. One of the real issues is that Data Sheets take time.i. The time for entry and review is often pressured to a

minimum.ii. But the Data sheet is the analysis form that assures a

measure of consistency in quality of thinking.iii. The Data sheet gives the Associate the ability to see

things they are not as familiar with.iv. The Data Sheet gives the MD a way to look at the data

gathered to identify concerns and opportunities for the client.

v. Therefore, it needs to be the engagement team’s collective responsibility to focus on good completions of the Data Sheets.

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h. Data Sheets need to be saved as part of the work product for an engagement, even if not included in the report.

4. What are the differences between the BR and OA Data Sheets?a. The formats are identical.b. The flow is consistent with the Cathedral Way for Assessment

Tools.c. However, it is important to be sure that each question or

topic is fully “best practiced.”d. It is the discipline of doing the Questionnaire with the Best

practice research that gives the depth of analysis that good consulting looks to generate.

e. Alternatives should be part of the Best practices. This then allows the Associate and MD to evaluate alternatives to issues that may be identified.

5. What is the financial analysis for BR and OA?a. The financial analysis is designed to use the prior years’

information to give normal trend and other information. i. The financial analysis should be presented in the

Background Section of the Report, since it is based on historic data.

ii. Good financial analysis will add to the SWOT findings.b. The template in this folder is a good example of the type of

financial analysis warranted. The components are:i. Sales trends.

ii. Revenue/customer grouping and trends.iii. Cost of Sales trends, including components.iv. Income statement trends, using an abbreviated income

statement.v. Balance sheet trends.

vi. Basic balance sheet rations, such as working capital and liquidity.

vii. Equity trends, including amount and returns.

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c. The purpose of financial analysis is to highlight the information that the financials reveal.

i. Simple examples are 1. Profitability –

a. Is it going up or downi. As a % of sales

ii. In whole dollars.2. Liquidity –

a. How much working capital is needed?b. What is the trend of working capital?c. How much liquidity is available?d. Is there a seasonality to working capital?

ii. The key is to look at the financials fully as given.iii. Then to evaluate them according to any issues or

worries that the client may have. 1. For example, if the client has expressed concerns

about cash flow, the working capital analysis is critical.

2. If the client expressed concerns about profits, the expense analysis is critical. Product profitability may be another critical analysis.

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3. If the client has expressed concerns about revenue, the customer and revenue components is critical.

Fee Income by Customer for 2007 Sales

% of Total Sales

Caraway $ 92,097 33%

Osprey $ 42,086 15%

Maple $ 36,818 13%

Ivory $ 26,696 9%

Giraffe $ 25,828 9%

Sapphire $ 17,875 6%

Ginger $ 15,406 5%

Other $ 7,715 3%

Egret $ 5,200 2%

Jasmine $ 4,368 2%

Sunflower $ 2,450 1%

Cardinal $ 2,000 1%

Nightingale $ 1,863 1%

Tanager $ 1,191 0%

Total*

$281,592 100%

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d. In this folder is a good financial analysis for Family Unity.i. Endowments for nonprofits can be a key issue, so here

the analysis shows what is happening.

2009 2010 2011$0.00

$200,000.00

$400,000.00

$600,000.00

$800,000.00

$1,000,000.00

$1,200,000.00

$1,400,000.00

Endowment by Year

Endowment

Year

Amou

nt

ii. P&L or Activity is always relevant, so the trends of expenses to revenue is shown:

2009 2010 2011$0.00

$500,000.00

$1,000,000.00

$1,500,000.00

$2,000,000.00

$2,500,000.00

Income & Expense Comparison by Year

IncomeExpenses

Year

Amou

nt

1. Clearly this chart shows the weakening operating position.

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iii. The assets strength can be relevant as shown in this chart.

2008 2009 2010 $-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000 $3,624,049 $3,611,003 $3,555,621

$140,611 $222,635 $297,082

$3,483,438 $3,388,368 $3,258,539

Growth of Assets

Total AssetsTotal LiabilitiesNet Assets

Year

Amou

nt

1. That liabilities are growing and the assets declining is a problem

2. But liability growth is consistent with the lack of cash flow from current activities as shown by P&L.

e. Many times the ability to do analysis is limited due to available financial information.

i. The key is to do the best with what has been given.ii. The lack of financial information will need to be both a

Weakness and a Threat. iii. This kind of analysis with what is given can highlight the

importance of financial information.f. Industry information should be added to the financial

analysis.i. There are several sources of financial information for the

industry.ii. Using industry benchmarks is the equivalent to having

best practices in the financial analysis section.

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g. Financial analysis can be presented in the form of charts. i. Under the Modeling course, lecture 5 is on presenting

financial analysis. Only a brief summary is used here.ii. Charts help get the picture of trends.

2005 2006 2007 $(500,000)

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

Income Trend

Revenues

Cost of Sales

Gross Profits

Net Income

Year

Do

lla

r A

mo

un

t

iii. Charts can help see the rations.

2005 2006 2007

0%

25%

50%

75%

100%

125%

150%

100%

65%50%

100%

151%

102%100%

27% 27%

Income Trend Analysis

RevenuesCost of SalesGross Prof-its

Year

Pe

rce

nta

ge

Review and take the Quiz

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