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Exercise on Analysing a Business Earning Model

Explore this exercise on analyzing the financial foundation of Triple Tech.
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© University of Twente

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 the 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.

 

© University of Twente
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