Case #19 Compass Records Synopsis and Objectives The cofounders of Compass Records‚ a small‚ independent music recording company‚ must decide whether to produce and own the next album of an up-and-coming folk musician‚ or simply license her finished recording. The case presents information sufficient to build cash flow forecasts for either investment alternative. The task for the students is to build a valuation model for the two capital investment alternatives‚ whereby they can evaluate the
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COMPASS RECORDS BACKGROUND Compass records is a small‚ independent music recording company and co-founded in 1994 by musicians Alison Brown and Garry West. Compass is a new breed of roots-music label: eclectic‚ sophisticated‚ and artist-friendly. It is called “one of the greatest independent labels of the last decade” by Billboard Magazine‚ Compass Records has provided a thriving haven of creativity for artists and a reliable beacon of quality for music fans. Its 2006 acquisition of the Green
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Backgrounds Alison Brown and her husband Gary West‚ who were both musicians‚ founded compass Records in 1995. Compass Records is a small independent recording company that centered on folk and roots music. Compass Records occupies only a tiny part of the 32-billion dollar music recording industry‚ competing with some multi-national corporations dominating 86% of the business‚ such as Sony/BMG‚ Universal Music Group‚ Warner Music Group‚ and EMI. However‚ the industry has witnessed a stagnant growth
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Descriptions In 1993‚ Brown launched Small World Music in Nashville‚ Tennessee with husband Gary West and then went on to create Compass Records in 1995. Compass records is a small‚ independent artist-run company that established their niche in musical genres such as folk‚ roots‚ and celtic. In the context of the 2-billion dollar music recording industry‚ Compass Records has low market share in comparison to the multi-national corporations dominating the business. Brown was formally an investment
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SENSITIVITY ANALYSIS The solution obtained by simplex or graphical method of LP is based on deterministic assumptions i.e. we assume complete certainty in the data and the relationships of a problem namely prices are fixed‚ resources known‚ time needed to produce a unit exactly etc. However in the real world‚ conditions are seldom static i.e. they are dynamic. How can such discrepancy be handled? For example if a firm realizes that profit per unit is not Rs 5 as estimated but instead closer
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Health economics What is sensitivity analysis? Matthew Taylor PhD MSc Senior Consultant‚ York Health Economics Consortium‚ University of York G While economic models are a useful tool to aid decision-making in healthcare‚ there remain several types of uncertainty associated with this method of analysis. G One-way sensitivity analysis allows a reviewer to assess the impact that changes in a certain parameter will have on the model’s conclusions. G Sensitivity analysis can help the reviewer to
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Linear Programming Notes VII Sensitivity Analysis 1 Introduction When you use a mathematical model to describe reality you must make approximations. The world is more complicated than the kinds of optimization problems that we are able to solve. Linearity assumptions usually are significant approximations. Another important approximation comes because you cannot be sure of the data that you put into the model. Your knowledge of the relevant technology may be imprecise‚ forcing you to approximate
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Sensitivity analysis is a technique that indicates exactly how much a project’s profitability (NPV or IRR) will change in response to a given change in a single input variable‚ other things held constant. Sensitivity analysis begins with a base case developed using expected values (in the statistical sense) for all uncertain variables. Then‚ each uncertain variable is usually changed by a fixed percentage amount above and below its expected value‚ holding all other variables constant at their expected
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The case study presented a decision that needs to be made by Compass Records between owning and producing or licensed the recording rights for an up and coming Dublin folk music star‚ Adair Roscommon. Both scenarios offer different benefits and risks. Within the attached spreadsheet‚ each option has been analyzed based on their own specific cost structures over a span of year 0 – year 3‚ with equal sales figures. To begin‚ I will speak about the results of the two cash flow analyses‚ which
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Analysis of “Compass and Torch” By Elizabeth Baines Many children today‚ experience that their parents end up being separated. Unfortunately a separation is very likely to also make the relationship between the child and either the mother or father very complicated as well. In this story‚ we hear about an 8-year-old boy and his divorced parents – along with the mother’s new man‚ Jim. First of all‚ it doesn’t seem like the boy and his dad sees each other very often. The man and his son are spending
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