I had an interesting experience teaching Financial Management to my MBA students last month. I like to incorporate my own experiences when I teach, so I have been using a case that I wrote based on a consulting assignment I undertook a few years back. It’s a cash-flow forecasting case where, in two pages, I have written up all the information that I got in my initial interview with the president of a small company that was about to launch a new product. My task in the consulting was to create a spreadsheet model of the company’s cash flow and to see how much they would have to borrow, and when, to undertake the expansion.
In a typical MBA case assignment, the student reads the case and prepares their solution either for verbal discussion in class or in written form as a report to be handed in. This case was to be worth 10% of the student’s grade, so it was a written assignment. My problem using this case in the past has been that the case was rather complex, even if it could be written up in only two pages, and students rarely did a good job creating a spreadsheet model.
This time I thought, “Why not give the students my own solution to the case and have them explain how my spreadsheet solves the case and do some sensitivity analysis of the solution on their own.” As soon as I had that thought, it struck me that in defining the assignment that way, I am allowing the students to see an example of a very good (IMHO) spreadsheet model, so they are learning by seeing good practice. Then, as a second step, in another case study on cash flow forecasting, they should be able to do it on their own. So the students’ assignment was to explain how each part of my spreadsheet model represented some aspect of the information given in the case, do some sensitivity analysis on the solution, and write up a report to the president of the company as if they were the financial analyst who had built the spreadsheet model.
I’m now doing that with another case study that I have written, a complex case in which students need to combine discounted cash-flow with a decision tree to value an entrepreneurial firm that is about to sell shares to family and friends in one round and then, if the project is successful, sell shares to a venture capitalist to fund the production of a new product. That, too, is a complex case. None of my former students at the University of Texas at Austin (a Top 20 MBA program) knew how to value a firm’s shares in that context, so a case like that is a natural for the “explain how the prof did it” type of case study assignment.
MUM is a remarkable university in that the faculty are always looking for ways to improve their teaching. I like to think of my cash-flow assignment as one more example of that.