Tutor profile: Jared Y.

Explain few useful functions in Excel

Math and Financial Functions – SQRT, DEGREE, RAND(), GCD Logical Functions – IF, AND, FALSE, TRUE Date and Time functions – NOW(), DATEVALUE(), WEEKDAY(NOW()) Index Match – VLOOKUP and INDEX MATCH Pivot tables

How does $10 depreciation flow through financial statements?

Starting with the income statement, you have a $10 depreciation expense, but a $4 tax benefit. The net income is -$6, which flows through to the statement of cash flows. Add back non-cash expenses (depreciation) of $10 and you get an increase in cash from operations of $4. This flows through to the balance sheet where cash increases by $4, net property, plant, & equipment decreases by$10, and the difference from that (found in net income) is -$6 which flows into the statement of retained earnings.

Your best friend is going to start their own company and is deciding between a fast-food franchise and an educational software service. Which would you recommend that they start? Please provide multiple reasons for your answer

I would recommend that my friend starts an educational software service. With the educational software service, our friend can tap into the many benefits of a Software-as-a-Service (SaaS) business model. Most SaaS contracts are billed annually with a length of anywhere from 1 – 5 years. This makes the revenue much stickier than that of a fast-food franchise. His/her business will also benefit from recurring revenue, which means their cash flows will be much more stable and predictable than that of the fast-food franchise. Software also has a much lower cost of sales, which leads to a much higher margin product. If our friend has a good business model, he/she can expect anywhere from 70-90% margins. He/she might be lucky to get high single digit margins in the fast-food restaurant industry. The business will also be significantly cheaper to operate, with little to no capex and fairly low operating expenses, depending on how much he/she wants to spend on marketing and development. Although the fast-food industry TAM may be larger, it will be much harder to capture a meaningful percentage than with an educational software. The software may be able to carve out a specific niche in the educational technology market. Moreover, the global educational software industry is experiencing outsized growth, with a CAGR of 16.3%, while fast food is predicted to grow at a meager 4.5% CAGR.