Industry Revenue/Cost Breakdown Flashcards
Banking & Financial Services Revenue
Interest, premiums, fixed or variable fees (m&a fees, trading commissions, asset management fees)
Banking & Financial Services Cost
IT (back end processing, apps, security, website) Real estate costs Losses on investments; loan defaults Labor (customer service offshored) Marketing
Banking & Financial Services Trends
Growth of mobile banking, regulations (dodd frank), larger market for retirement products
Retail Revenue
Conversion rate (visits vs purchase)
Basket size (driven by consumer spending)
Price/item
Sales per square foot
Total retail revenue =
Traffic * Conversion Rate * Basket Size * Avg Price/Item
Retail Costs
COGS Returns Inventory management Distribution Delivery Labor Real estate Online retail
Retail Trends
Seasonality; lots of sales end of year and holiday season
Social media presence; brand and mktg
E-commerce and tech reduces bargaining power of retailers (customers can easily compare price online)
Consumer Packaged Goods Revenue
Sales to customers vs sales to retailers (lower margin)
Shelf placement vs competition drives revenue
Packaging and price tiering
Product portfolio (cannibalization vs complementary products)
Key metric: price elasticity of demand; elastic demand if >/= 1 indicating very responsive to changes in price
Consumer Packaged Goods Costs
COGS Packaging Manufacturing facilities Distribution Inventory Management R+D Environmental + regulatory MKtg
Consumer Packaged Goods Trends
Discounts and price promotions lowered margins
Cannibalization issue when introducing new products
Try to have complementary products
Packaging and shelf placement
Technology Revenue
Online Services (security, productivity, platforms) -Ads -Subscriptions Hardware (computers, smartphones, servers) -price * # goods sold -after sales service Software (search, storage) -Licenses -Managed services (SaaS)
Key metric: product obsolescence
Technology Costs
R+D Product development IT+infrastructure Labor Hardware + component COGS Software
Healthcare Providers Revenue
3rd party payers (insurance companies)
co-pays
inpatient+outpatient services without insurance
government reimbursement
Key metrics: bed capacity utilization, # deaths in surgery, # patients seen
Healthcare Providers Costs
Hospital facility + equipment (high upfront cost), physicians, insurance (malpractice liability), SG&A, medical suppliers, other labor
Healthcare Payers Revenue
Insurance premiums
Government subsidies
Healthcare Payers Costs
Payouts to healthcare providers (negotiation directly with healthcare providers on reimbursement rates)
Re-insurance
Labor
Healthcare Payers Considerations
Bottom line increase due to pressure to eliminate/lower coverage caps, reduce denials based on pre-existing conditions etc
Life Sciences (Pharma) Revenue
Key Metric
Drug sales
3rd party payer reimbursement
Government subsidies
Key Metric: price of drug * # of dosages # of patented drugs
Life Sciences (Pharma) Cost
High R&D Regulatory and legal costs Manufacturing and production Distribution and sales Labor
Life Sciences (Pharma) Considerations
Patents protect drugs for up to 20 years
FDA approvals last 5 years with high failure rate of drugs
High growth in emerging markets
Airlines Revenue
Key Metric
Ticket fees
Extra baggage fees
In-flight purchases - Food and Beverage + Entertainment
Tiered amenities - legroom
Key Metric: Load factor (% aircraft capacity filled by paying passenger)
Airline Cost
Gate leases Fuel Airline leases Insurance & legal fees Maintenance/equipment Crew & ground staff In-flight consumables (Food and Beverage, Entertainment) Marketing Technology
Airline Considerations
High fixed costs create major consolidation
Rise in 3rd party booking websites (expedia, booking.com)
Airlines use reward programs (miles) and partnerships with hotels, car rentals, and credit card companies to increase loyalty/differentiate
Cargo vs commercial flights
Leisure (price-sensitive) vs business class (price inelastic)
Media and Entertainment Revenue
Key Metric
Advertising
Subscriptions
Licensing fees
One-time purchases
Key metric: viewership / readership
Media and Entertainment Costs
Media production costs - studio, equipment, printing presses
Talent - actors, editors, writers
Other labor
Marketing
Technology - especially for digital media
Media and Entertainment Considerations
High importance of network effects to increase viewership/readership
Online news/online streaming and digital content disruption
Consumer and advertising spend highly dependent on macroeconomic conditions
Oil and Gas Revenue
Key metric
Upstream (drilling and extracting oil) - Raw oil price (largest % of revenue)
Midstream (transporting raw oil) - Transportation fees
Downstream (refining and selling finished petroleum products) - Sale of gasoline, oils, fuel
Key metric: Price of crude oil (affected by oil futures market)
Oil and Gas Costs
Upstream - Exploration, drilling and extraction
Midstream - Crude oil, transportation and storage
Downstream - Crude oil, refinery PP&E (property, plant, and equipment)
Oil and Gas Considerations
OPEC (Organization of Petroleum Exporting Countries) accounts for 45% of global oil production and 70% of worlds proven oil resources.
Effectively controls oil price
Industrials Revenue
Key metric
Electrical equipment / components, heavy machinery, construction, aerospace and defense
Volume
Contract length
Bundling of product/service (maintenance package)
New technologies&products (automation)
Key Metric: Capacity utilization
Inventory Turnover
Book-to-bill ratio
Industrials Cost
Manufacturing - capital intensive Labor (unions) Distribution & inventory management R+D Marketing and trade shows
Industrials Considerations
Highly tied to GDP growth, production and capacity utilization and other economic indicators
Greatly impacted by recession since drop in overall capital and construction spend decreases
