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:
Sales
EBIT
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.
Working Capital Analysis:
Working capital management is critical for business. Inappropriate working capital management will lead to major problems for the operations of the company. Management of the company has to make estimation about future expected sales, costs and so