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McKinsey Prep > Final Week - no Google > Flashcards

Final Week - no Google Flashcards

1
Q

of businesses in USA

A

28M

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2
Q

% of households that are homeowners in USA

A

66%

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3
Q

Canada’s population

A

36M

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4
Q

India’s population

A

1.4B (same as China)

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5
Q

If we lower prices by 10%, how much does quantity have to increase for us to break even?

A

11.11% (1/9)

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6
Q

5 Ways to expand internationally

A
  1. Exporting
  2. Licensing
  3. Franchising
  4. Joint Venture
  5. Foreign direct investment (acquisition or startup)
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7
Q

If we lower prices by 50%, how much does quantity have to increase for us to break even?

A

100%

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8
Q

If we lower prices by 25%, how much does quantity have to increase for us to break even?

A

33.3%

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9
Q

An investment project requires an initial investment of $1M and will result in a profit of $10M in 8 years. The discount rate is 9%. What’s the NPV?

A

NPV = PV of profits - PV of Investment+costs

With discount rate of 9%, using “Rule of 69-72”, the investment will double in 8 years.

So the $10M profit 8 years from now is worth half today, or $5M.

So the NPV = 5M - 1M = 4M

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10
Q

EU’s population

A

500M

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11
Q

If we increase prices by 25%, how much does quantity have to decrease for us to break even?

A

20%

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12
Q

China’s population

A

1.4B (same as India)

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13
Q

If the prompt involves “green” or something non-profit, need to…

A

incorporate non-financial factors as well

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14
Q

What is NPV?

A

PV of cash inflows MINUS PV of cash outflows (investments)

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15
Q

How to measure whether your retail company’s growth is from opening new stores or from improved performance?

A

Comparable Store Sales (Same-Store Sales) Growth.

This metric compares the sales performance of existing stores over a specific period, excluding the impact of newly opened stores, thus isolating growth due to improved performance from growth due to expansion. By comparing overall growth with Comparable Store Sales Growth, you can determine how much of the growth is attributed to new store openings versus enhancements in existing stores.

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16
Q

If we lower prices by 33.3%, how much does quantity have to increase for us to break even?

A

50%

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17
Q

Inverse proportions - give examples of formulas and the general rule

A
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18
Q

If we increase prices by 10%, how much does quantity have to decrease for us to break even?

A

9.09% (1/11)

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19
Q

Most common way of measuring efficiency in retail?

A

Sales per square foot, compare to competitors

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20
Q

If we increase prices by 50%, how much does quantity have to decrease for us to break even?

A

33.3%

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21
Q

Y1: -25%

Y2: -16%

Overall Change?

A

-41 + 4 = -37%

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22
Q

If we increase prices by 20%, how much does quantity have to decrease for us to break even?

A

16.6% (1/6)

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23
Q

What is contribution margin?

A

Same as marginal profit = sale price minus variable cost per unit

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24
Q

Mexico’s population

A

130M

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25
Percentage change of revenue when adjusting price, quantity
% change = price change 1 + price change 2 + (price change 1 \* price change 2) example: A company has $300m in revenue which grows by 20% and then shrinks by 10%. What's the net change in revenue? 1 + 20% - 10% + (-10%\*20%) --\> 120% - 10% + -2% = 108%, so 8% change. example: How much will revenue change if a company increases prices by 20% which leads to a 20% decrease in sales? --\> 1 + 20% + -20% + -4% = 96% --\> change of -4%
26
5 ways to price differentiate/discriminate in order to improve revenue and profitabality
• Customer Segmentation • Product Versioning • Dynamic Pricing • Bundle Pricing • Personalized Pricing
27
Avg size of household in USA
2.5 people (there are 120m households with 300m/2.5-=120)
28
Estimate Baseline: 900,000 CAGR: 40% Years: 1
1,260,000
29
$400M growing at 10% for 5 years will be worth?
600M
30
If we lower prices by 20%, how much does quantity have to increase for us to break even?
25%
31
of households in the USA
120m (300m population divided by 2.5 people per household)
32
Price elasticity and inelasticity
Price elasticity = |%Demanda%| ———————— |%Preço| Se %D > %P: reduzir preços aumenta receitas Se %D < %P: reduzir preço reduz receita Se %D = %P —> inelástico
33
What are the four main stages of a product's lifecycle?
New product, growth, maturity, decline
34
Constant growth formula
multiply growth rate by the number of years, that gives the percent it will grow
35
Multi-stage growth problems
Growth problems: Multi-stage problems \*Always\* ask whether an exact answer is required first. If estimating. use the compound growth formula: PV \* (1 + growth rate) ^ (# of periods). For example, 50m with 2 years of growth at 10%: $50,000,000 \* (1 + 0.10) ^ (2 years). Then, the key insight is to prove to yourself that (1.10)^2 is very, very close to adding the growth rates together and then adding 1: Multiplying for exact: 1.10 \* 1.10 = 1.21 Adding for estimation: 1 + 0.10 + 0.10 = 1.20 Obviously, the latter route is much easier and for the purposes of estimating gives you a solid footing to work from. Now return to the problem with the estimated approach, the formula is now $50,000,000 \* 1.2. This could be simplified to $50 \* 1.2 \* M, or $60M, very close to accurate.
36
Rate Change formula
Rate change = 1 + rateQuantity + ratePrice + (rateQuantity \* ratePrice) Let's look at why this is true: Say you've got a scenario where a firm selling widgets grows sales (the number of units sold) by 50% but in the process drops price 45% in year one. If they had a target to grow overall revenue by 5%, would they achieve it? Revenue0 = Quantity0 \* Price0 Revenue1 = (Quantity0 \* (1 + 0.5)) \* (Price0 \* (1 + -0.45)) Revenue1 = Revenue0 \* (1 + 0.5) \* (1 + -0.45) Revenue1 / Revenue0 = (1 + 0.5) \* (1 + -0.45) Rate change = (1 + 0.5) \* (1 + -0.45) Rate change = 1 + 0.5 + -0.45 + (0.5 \* -0.45) Rate change = 1 + 0.05 + (-0.225) Rate change = 0.825
37
65/5
13 Divide by 5 by dividing by 10 and doubling or doubling and dividing by 10
38
8*75 Half and double
600
39
Population of most US large metro regions other than NYC/LA/Chicago?)
3-6M
40
5 things to do when given a market sizing task:
Clarify scope; Ask for available data; Suggest additional research; Present your approach; Confirm assumptions. ———————— • Clarify the scope: What market exactly are we analyzing (geography, B2C or B2B, etc.)? For example, does “NY” refer to NYC or the entire state? • Ask for available data: Is there any data on parameters like household size, income levels, or any specific local deviations from national averages? • Suggest additional research: Should any further research or data gathering be conducted to improve the estimate? Is any specific source available for data validation? • Present your approach: Can I walk you through my framework and thought process, including assumptions, before I proceed with the calculation? • Confirm assumptions: Are the assumptions I’m making reasonable, or would you suggest adjustments before moving into the math phase?
41
NYC population Metropolitan NYC population SP population Metropolitan SP population
8/23 11/23
42
Chicago city population Chicago metropolitan population
2,3M 10M
43
US Persons per Household
2.5 or 3
44
4,200\*2.5 Multiply by (1/4)\*10^n
10,500
45
Germany GDP per capita
52K
46
EU GDP per capita
40k
47
Convert 45% to fraction to multiply easier
9 \* 5% = 9/20
48
75\*6 Multiply by 25 by multiplying by 3/4 then by 100, or by dividing by four then multiplying by 3 and then 100, or by subtracting a quarter and multiplying by 100.
450
49
Canada GDP per capita
53K
50
Germany population
80M
51
US GDP 2024
29T
52
Los Angeles city population
4M
53
US GDP per Capita
80k
54
Germany population
80M
55
65\*4 \*4 by doubling twice
260
56
3,500\*12 Half and double
42,000
57
NYC Metro population
23M
58
US Households
100 or 120M
59
Canada population
40 M
60
Los Angeles Metro population
13M
61
Chicago city population
2.5M
62
GDP per capita: India China USA Nigeria Brasil União Europeia
• India: $2,5k • China: $14k • USA: $80k • Nigeria: $2,5k • Brazil: $10k • UE: $40k
63
India population
1.4B
64
US Population by 10-year age band, both sexes
40M (320M total, life expectancy 80 years, 320/8 = 40)
65
Population of most US large cities besides NYC/LA/Chicago/Dallas/Houston/Philly)
0.5M
66
Brazil GDP per capita
10K
67
.
68
US Households
100 or 120M
69
US GDP
25T
70
NYC city population
8M
71
65\*160 Half and double
10,400
72
US Median household income
70k
73
Population of most US large metro regions other than NYC/LA/Chicago?)
3-6M
74
EU 🇪🇺 population Europe
500M 750M
75
6\*24 Half and double
144
76
Chicago city population
2.5M
77
EU GDP per capita
35k
78
Eletrônicos Alimentos Remédios (genérico e marca) Combustíveis Viagens Mercado de luxo Mercado de ULTRA luxo
Elásticos; Inelasticos; Marca = inelastico; genérico = elástico combustíveis = inelastico Viagens = elásticos Mercado de luxo: lealdade reduz elasticidade, pois deixa menos sensível a preço Ultra luxo: menor sensibilidade a preço, logo, menor elasticidade

McKinsey Prep (10 decks)

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