<< Chapter < Page Chapter >> Page >

Financial sensitivity analyses and stress tests

Projecting the financial performance of a new online edition of a journal will be subject to multiple cost and income variables.These variables, and the inherent nature of projections, render precise financial estimates impossible, even when reliable market information isavailable.

The best a society can do is to test the sensitivity of its financial projections to ensure that the society is not unduly exposed inthe event that the society’s costs and/or income projections vary more than anticipated. To better understand the risk caused by this uncertainty, a societycan test the sensitivity of the financial projection for several key variables— including operating costs, institutional subscription adoption rate, andindividual member retention—to identify critical performance benchmarks that the society should monitor.

Operating cost sensitivity

A society can test its cost scenarios—for both development and ongoing operating costs—to determine the cost over-runs that thesociety could sustain before the journal’s net income would drop below an acceptable level. (The financial baseline described in “Establishing a FinancialPerformance Baseline,” above, provides a basis for determining an acceptable performance threshold.)

If such a stress test indicates that a society could incur one-time development and/or annual operating costs substantiallyhigher than those estimated for an online edition before falling below an acceptable financial performance threshold, then the society should have asufficient margin of error from a cost perspective. On the other hand, if a relatively slight cost overrun would lead to an unacceptable financial result,the society may need to reduce its development or operating costs, or adjust its pricing to provide a greater operating cushion.

Institutional subscription adoption rate sensitivity

While it is safe to predict that academic libraries will continue to prefer online-only subscription options, it is far moredifficult to determine specific uptake rates by medium for any given field or discipline, let alone for a specific title. It follows, therefore, thatprojecting revenue by format option after the launch of an online edition will be inherently imprecise.

If a society adopts a pricing approach (such as those described in Chapter Five’s “Member Publication Benefits” and“Institutional Subscription Format Options”) that renders it largely indifferent to the adoption rate of an online edition, even substantial fluctuations inuptake scenarios should have little effect on net income from subscriptions. However, a simple way to test income sensitivity by medium would be to run thejournal’s financial projection assuming a worst-case scenario wherein all institutional subscribers opt for the version of the service providing thelowest revenue contribution (see “Revenue Contribution,” above).

Individual member retention sensitivity

Chapter Three’s “Assessing Exposure to Online Licenses” describes how a society can estimate its exposure to potential riskposed by institutional online site licenses. Once a society has assessed the approximate risk to individual memberships it might face, it would be prudent todetermine the potential effect on net dues income were the society’s members to demonstrate less-than-anticipated commitment to the organization.

A society can project the net dues income that it would forgo (that is, member dues less the cost of providing all memberbenefits) were its membership base to decline n percent more than anticipated. The loss threshold that the society tests will depend on its confidence in its risk analysis. Ifthe society is confident in its estimate, it might use a lower percentage. Obviously, for most societies, any significant loss of membership would be moreimportant than the foregone dues income.

Questions & Answers

how do they get the third part x = (32)5/4
kinnecy Reply
can someone help me with some logarithmic and exponential equations.
Jeffrey Reply
sure. what is your question?
ninjadapaul
20/(×-6^2)
Salomon
okay, so you have 6 raised to the power of 2. what is that part of your answer
ninjadapaul
I don't understand what the A with approx sign and the boxed x mean
ninjadapaul
it think it's written 20/(X-6)^2 so it's 20 divided by X-6 squared
Salomon
I'm not sure why it wrote it the other way
Salomon
I got X =-6
Salomon
ok. so take the square root of both sides, now you have plus or minus the square root of 20= x-6
ninjadapaul
oops. ignore that.
ninjadapaul
so you not have an equal sign anywhere in the original equation?
ninjadapaul
Commplementary angles
Idrissa Reply
hello
Sherica
im all ears I need to learn
Sherica
right! what he said ⤴⤴⤴
Tamia
what is a good calculator for all algebra; would a Casio fx 260 work with all algebra equations? please name the cheapest, thanks.
Kevin Reply
a perfect square v²+2v+_
Dearan Reply
kkk nice
Abdirahman Reply
algebra 2 Inequalities:If equation 2 = 0 it is an open set?
Kim Reply
or infinite solutions?
Kim
The answer is neither. The function, 2 = 0 cannot exist. Hence, the function is undefined.
Al
y=10×
Embra Reply
if |A| not equal to 0 and order of A is n prove that adj (adj A = |A|
Nancy Reply
rolling four fair dice and getting an even number an all four dice
ramon Reply
Kristine 2*2*2=8
Bridget Reply
Differences Between Laspeyres and Paasche Indices
Emedobi Reply
No. 7x -4y is simplified from 4x + (3y + 3x) -7y
Mary Reply
is it 3×y ?
Joan Reply
J, combine like terms 7x-4y
Bridget Reply
how do you translate this in Algebraic Expressions
linda Reply
Need to simplify the expresin. 3/7 (x+y)-1/7 (x-1)=
Crystal Reply
. After 3 months on a diet, Lisa had lost 12% of her original weight. She lost 21 pounds. What was Lisa's original weight?
Chris Reply
what's the easiest and fastest way to the synthesize AgNP?
Damian Reply
China
Cied
types of nano material
abeetha Reply
I start with an easy one. carbon nanotubes woven into a long filament like a string
Porter
many many of nanotubes
Porter
what is the k.e before it land
Yasmin
what is the function of carbon nanotubes?
Cesar
what is nanomaterials​ and their applications of sensors.
Ramkumar Reply
what is nano technology
Sravani Reply
what is system testing?
AMJAD
preparation of nanomaterial
Victor Reply
Yes, Nanotechnology has a very fast field of applications and their is always something new to do with it...
Himanshu Reply
good afternoon madam
AMJAD
what is system testing
AMJAD
what is the application of nanotechnology?
Stotaw
In this morden time nanotechnology used in many field . 1-Electronics-manufacturad IC ,RAM,MRAM,solar panel etc 2-Helth and Medical-Nanomedicine,Drug Dilivery for cancer treatment etc 3- Atomobile -MEMS, Coating on car etc. and may other field for details you can check at Google
Azam
anybody can imagine what will be happen after 100 years from now in nano tech world
Prasenjit
after 100 year this will be not nanotechnology maybe this technology name will be change . maybe aftet 100 year . we work on electron lable practically about its properties and behaviour by the different instruments
Azam
name doesn't matter , whatever it will be change... I'm taking about effect on circumstances of the microscopic world
Prasenjit
how hard could it be to apply nanotechnology against viral infections such HIV or Ebola?
Damian
silver nanoparticles could handle the job?
Damian
not now but maybe in future only AgNP maybe any other nanomaterials
Azam
can nanotechnology change the direction of the face of the world
Prasenjit Reply
At high concentrations (>0.01 M), the relation between absorptivity coefficient and absorbance is no longer linear. This is due to the electrostatic interactions between the quantum dots in close proximity. If the concentration of the solution is high, another effect that is seen is the scattering of light from the large number of quantum dots. This assumption only works at low concentrations of the analyte. Presence of stray light.
Ali Reply
the Beer law works very well for dilute solutions but fails for very high concentrations. why?
bamidele Reply
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
Privacy Information Security Software Version 1.1a
Good
Got questions? Join the online conversation and get instant answers!
QuizOver.com Reply

Get the best Algebra and trigonometry course in your pocket!





Source:  OpenStax, Transitioning a society journal online: a guide to financial and strategic issues. OpenStax CNX. Aug 26, 2010 Download for free at http://cnx.org/content/col11222/1.1
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Transitioning a society journal online: a guide to financial and strategic issues' conversation and receive update notifications?

Ask