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Medium Profitability Improvement

Hamm’s University

#Higher Education #Non-Profit
ProHub Comment

This case tests financial analysis and quantitative reasoning by requiring candidates to identify that research grant revenue is the most replicable growth lever. The math problem elegantly connects researcher hiring to net income improvement through a clear cost-benefit model. The key insight is recognizing that Private School 2's revenue structure (grant-heavy vs. endowment-heavy) is more achievable given Hamm's existing research strengths.

Estimated Time 15 minutes
Difficulty Medium
Source ROSS
50 / 100
Our client, Hamm’s University, is a mid-size not for profit private university in the Midwest of the United States, well-known for its liquid gold colored sports uniforms. Over the last few years, Hamm’s University has received less state and federal aid, leading to a negative net margin. However, other Universities near us have overcome this issue and haven’t seen margin erosion. The Board of Regents has engaged our firm to help the University strengthen its position.

Clarifying Information

  1. Hamm’s University is located near a city with a population size of ~450,000 in a state with a population of ~7M. A majority of students are from the same state or surrounding states
  2. There are 2 other private universities and a large state school within an hour of Hamm’s
  3. Hamm’s University has sports teams in the Division II league
  4. There are several graduate schools, with programs for Medicine, Law, Dentistry, Business, Psychology and Engineering
  5. Psychology & Econ departments are highly ranked in faculty prowess & research
  6. The Board wants to increase net income by 25M/year within 2 years (was -5M last year)