Case Study on Leverage Analysis – The Free Cash Flow Solution HBS Case Analysis


In the book ‘Profits Without Borders’, by the company of Harvard, there is a case study on leverage analysis. The Harvard Case Study Solution describes this as follows: “Whenever you see the word ‘capital’, the word ‘capital’ means assets that have been transformed into a financial statement that describes the current status of assets and their value. The statement ‘Current Assets’ may be placed between the line item ‘Wages’ and the line item ‘Sales’ on the balance sheet.”

With the following definition in mind, it is quite easy to read and understand the term ‘Capital’. It is difficult, however, to realize the concept behind it. So, with this brief introduction, let us explore further what the term ‘Capital’ actually means.

In its simplest form, capital is nothing but an asset. So, capital is only a measure of the value of one’s assets. When we say ‘capital’ we mean cash on hand and any such financial resources. It could also include the accounts receivable, the accounts payable, the loans and all other loans and financial instruments. Thus, the total worth of one’s assets must be taken into account to determine the true value of one’s assets.

Also, the simple word ‘capital’ implies an asset value that can be measured and compared with others’ assets in order to determine the value of one’s current assets. When we assess the financial position of a firm, we always take into account all financial assets that could be measured and compared with others’ assets.

It is advisable for any company to first create a financial statement (however, there is no set standard method in order to create such financial statements) and then try to understand the flow of cash flows. After understanding the nature of the flows, one can come up with a ‘net-net’ figure that would indicate the net value of the company’sassets.

For large corporations, a free cash flow analysis is quite tedious because the size of the company means that they are responsible for accounting for both assets and liabilities. The good news is that such corporations can apply the Harvard Case Study Solution by developing a free cash flow analysis using a series of spreadsheets.

The best thing about this analysis is that it can be easily converted into a free cash flow analysis, once the flow of money has been figured out. The key objective of the Harvard Case Study Solution is to create a consolidated statement of net worth, which includes all assets minus all liabilities, and all expenses, as well as income.

The main goal of a free cash flow analysis is to calculate the total value of assets at a particular period of time. All assets are calculated and the resulting amount is either positive or negative. The final result of the analysis is either positive or negative and this is what Harvard calls the net-net value of the company’s assets.

As with any other type of analysis, in the case of the free cash flow analysis, there are different theories that can be applied, depending on the particular company and its objectives. However, the general concepts are similar and the book provides an adequate introduction into the subject.

There are various advantages of doing a free cash flow analysis. These include identifying the hidden risks, determining the market value of an asset, determining the state of the market, determining the state of the business and much more.

The bottom line is that the analysis helps to identify the state of the company and analyze whether or not it is a profitable enterprise. Thus, it can help to provide the best option for any company and can also be used to determine whether or not there is a cash surplus and to avoid a major loss. The free cash flow analysis provides an additional perspective and if the analysis is done in detail, it can help to give a very accurate picture of the state of the company and its operations. There are many companies that use this type of analysis, especially when they want to determine the value of their assets and find it difficult to come up with an answer on their own.