Harvard Business Publishing: Working Capital Simulation: Managing Growth Assignment
Ch. 1 - 21 ofFundamentals of Corporate Finance
All additional resources from each week
Review the following scenario:
Acting as the CEO of a small company, you will apply the principles of capital budgeting to invest in growth and cash flow improvement opportunities in three phases over 10 simulated years. Each opportunity has a unique financial profile and you must analyze the effects on working capital. Examples of opportunities include taking on new customers, capitalizing on supplier discounts, and reducing inventory.
You must understand how the income statement, balance sheet, and statement of cash flows are interconnected and be able to analyze forecasted financial information to consider possible effects of each opportunity on the firm's financial position. The company operates on thin margins with a constrained cash position and limited available credit. You must optimize use of internal and external credit as you balance the desire for growth with the need for maintaining liquidity.
Sign-in to the simulation and review each of the following:
- Welcome Statement
- How to Play
- Terminology Primer
- More Details (this includes information to help you understand how to play the simulation)
Write a paper of no more than 1,400 words that analyzes your decisions during each phase (1-3) and how they influenced each of the following final outcomes (metrics) of SNC:
- Net Income
- Free Cash Flow
- Total Firm Value
Address the following in your paper:
- A summary of your decisions and why you made them
- How they affected SNC's working capital
- What general effects are associated with limited access to financing
Include scholarly references (in addition to your course textbook and simulation materials) to support your positions.
Format your paper consistent with APA guidelines.
Click the Assignment Files tab to submit your assignment.
Meriden Company has a unit selling price of $550, variable costs per unit of $330, and fixed costs of $19,!0"Compute the brea#even point in units using the mathematical e%uation"
The mathematical equation:
$550& ' $330& ( $19,!0 ( $0$))0& ' $19,!0& '
Contribution margin per unit $))0, or *$550 + $330- ' $19,!0 . $))0- ' !9/ units
or urgo Company, variable costs are 32 of sales, and fixed costs are $19,00" Management4s net income goal is $50,00"Compute the re%uired sales in dollars needed to achieve management4s target net income of $50,00"f variable costs are 32 of sales, the contribution margin ratio is *$1 + $0"3 . $1 ' 0"3"6e%uired sales in dollars ' *$19,00 ( $50,00 . 0"3 '
or 7o8y Company, actual sales are $1,1)/,000 and brea#even sales are $/1,!/0"Compute the margin of safety in dollars and the margin of safety ratio"Margin of safety ' $1,1)/,000 + $/1,!/0 '
Margin of safety ratio ' $3!),10 . $1,1)/,000 '
Montana Company produces bas#etballs" t incurred the folloing costs during the year":irect materials$1/,9:irect labor$)5,91ixed manufacturing overhead$9,59;ariable manufacturing overhead$31,9!9<elling costs$)1,3/=hat are the total product costs for the company under variable costing>