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Exercise: Analyse a business earning model

In this exercise you will be analysing the financial foundation of a fictional company Triple Tech.

Case

Beginning of 2018. Triple Tech, technical consultants in research, development and time to market, is a young startup. The company was launched in 2015 with their first consultancy projects for their client base of industrial companies implementing IT applications to their products. Triple Tech claims to have reached break even exploitation in 2017 and is ready for the next step of growth. In the following table you can find the financial figures of Triple Tech.

Triple Tech, technical consultants in research, development and time to market

Balance sheet begin of year (Euro thousands) 2017 2018
Non-current Intangible assets (R&D investments) 350 450
Non-current Property, Plant, Equipment 410 460
Current assets - work in progress 400 440
Current assets - accounts receivable 430 470
Cash and cash equivalents 270 91
Total assets 1.860 2.011
     
Equity 780 811
Non-current liabilities - bank debts 780 830
Current liabilities accounts payable 300 370
Total equity and liabilities 1.860 2.011
Income statement over the year (Euro thousands) 2017 —-
Revenues 860  
Cost of projects -520  
Depreciation -50  
Selling and administrative expenses -90  
Other operating expenses -110  
Operating income (EBIT) 90  
Interest expenses -56  
Income before tax 34  
Income taxes -3  
Net profit 31  
Cash flow statement over the year (Euro thousands) 2017 —-
Net profit 31  
Depreciation 50  
Changes in current assets -80  
Changes in current liabilities 70  
Cash flow from operating activities 71  
Cash flow from investing activities -300  
Cash flow from financing activities 50  
Change in cash and cash equivalents -179  

In the development of a new business venture, we distinguish between an economic healthy Business Model and the process of Building Business step by step towards a sustainable business.

Questions:

a) Why is it important to distinguish between these two aspects?

b) Analyze Triple Tech on both aspects. Mention what in your opinion are the three most critical points about the business model of Triple Tech and the three most critical points about building business at Triple Tech.

Below you can find one PDF file with the exercise as shown above. In this same document you will find the model answers as well.

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Technology Entrepreneurship: How to Start a New Venture

University of Twente

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