Presentation on theme: "Structured Approach to the Simulation Analysis Report"— Presentation transcript:
1 Structured Approach to the Simulation Analysis Report
BA 411Structured Approachto theSimulation Analysis ReportCreated by Nancy L. McClure for classroom use only.Do not distribute, photocopy, or reprint without permission.
2 Get help with your Capsim and Breakout Assignment questions
Help SessionsGet help with your Capsim andBreakout Assignment questionsTwo sessions available every week:6:00 – 7:15 p.m. Tuesday – 69 Willard6:00 – 7:15 p.m. Wednesday – 69 WillardSessions Start at 6:00 p.m. and continue until 7:15 p.m. or until there are no further questions
3 BA 411 - Extra Credit Opportunity Smeal SWAP
Sign up in the SWAP folder on ANGEL. To receive credit for the SWAP you must include:Your NameYour ANGEL IDGo to Poverty Resolutions Facebook group to document your fundraiserFirst SWAP Deadline is Tuesday, March 15thRaise $50 per student for Poverty Resolutions by this date and earn 2% extra credit
4 Simulation Analysis Report
Grading Criteria for SAR at the top of the ANGEL website:Due Date for SAR is 2/24/16 at 9:00 a.m.Submit to Turnitin (Turnitin instructions provided by your TA)
5 How to Prepare your Simulation Analysis Report
Materials/References Required:Capsim Courier (all 7 rounds) and Related Financial Reports“Seven Deadly Sins of Analytical Writing” Article
6 How to Prepare your Simulation Analysis Report
Key Questions to Consider:Who is my Audience?What is the purpose of this communication?What are the key points I need to make?What is the best way to communicate this information?
7 How to Prepare your Simulation Analysis Report
Analysis – The “Big” Picture:Should focus on answering:Why you made key decisionsImpact of decisions on operations and profitabilityConsider your strategy and the competitive environment when analyzing these decisionsProvide quantitative analysis (including charts and graphs you construct) to:support these decisions, andexplain their impact on your company’s profitability
8 How to Prepare your Simulation Analysis Report
Key Functional AreasStrategyR & DMarketingFinanceProduction
9 How to Prepare your Simulation Analysis Report
Analysis – Application to Your Capsim Company:Consider your Strategy, and its impact on the following key areas:R&DMarketingProductionFinance
10 Linking Strategy and Operations and ROI
For Each Functional Area, consider expected ROI for potential investments:MarketingROI for investments in Awareness and AccessibilityR&DROI for investments to update current products or introduce new productsProductionROI for investments in capacityFinanceROI for debt (leverage)
11 How to Prepare your Simulation Analysis Report
R&D Analysis:Some Key Questions to consider when analyzing your R&D decisions:Why did you change (or not change) your products placement on the perceptual map, including the timing of the adjustments?How, specifically, did this impact your company’s profitability?How did your competitors’ actions impact your decisions and profitability?What will you do differently in the future to improve your R&D outcomes?How could you quantitatively demonstrate these points in charts/ graphs?
12 How to Prepare your Simulation Analysis Report
Marketing Analysis:Some Key Questions to consider when analyzing your Marketing decisions:How, specifically, did you invest in your products’ awareness and accessibility?How did the timing and amount of your investments impact your company’s profitability?What impact did your competitive environment have on the amount, timing, and profitability of your investments?What will you do differently in the future to improve your Marketing outcomes?How could you quantitatively demonstrate these points in charts/ graphs?
13 How to Prepare your Simulation Analysis Report
Production Analysis:Some Key Questions to consider when analyzing your Production decisions:How did you link your sales forecasts to your production schedule? How did you manage any over/underproduction issues?How did you allocate your resources for capacity and production (e.g., purchase/sell capacity by product, overtime, automation, etc.)? What was the impact on your profitability of these decisions?How did you contribution margins impact your production decisions?How did you use TQM and Human Resources to improve your profitability?How did your competitors’ actions impact your decisions and profitability?What will you do differently in the future to improve your Production outcomes?How could you quantitatively demonstrate these points in charts/ graphs?
14 How to Prepare your Simulation Analysis Report
Finance Analysis:Some Key Questions to consider when analyzing your Finance decisions:Why did you choose your current capital structure (i.e., proportion of debt to equity)? How has this choice impacted your profitability?How did you utilize (e.g., earn a return) and manage (e.g., generate funds to repay) your debt?How did you manage your operating cash flows as they related to your finance decisions?How did your competitors’ actions impact your decisions and profitability?What will you do differently in the future to improve your Finance outcomes?How could you quantitatively demonstrate these points in charts/ graphs?
15 How to Prepare your Simulation Analysis Report
Additional Considerations:You should perform your basic ratio/quantitative analysis and then choose the key issues you will address in your paperYou can identify the key issues by asking yourself what are they three most important points you need to communicate to your audienceThen, you can provide the background analysis for the key issues and link them to your:strategy,competitive environment,profitability, andplanned improvements for the future
16 Financial Analysis: Brief Tutorial
The following slides provide a brief tutorial on financial analysis of a business.You may use these slides as a starting point for the analysis of your Capsim company.You may also use the Excel spreadsheet provided in the lecture notes folder on ANGEL to build your company’s financial analysis (e.g., to build ratios, charts, graphs, etc.).Next week, in lecture, we will dig deeper into the use of ratios and other tools to analyze your business.
17 Financial Analysis - Brief Tutorial A “Road Map” for Performance Measurement
Financial Analysis Measures Company’s:Ability to pay debt as it comes dueEffectiveness and efficiency of operationsProfitability
18 Financial Analysis: Overview
Financial Information useful when company compared to:Itself over time (longitudinal analysis),Industry measures of performance (horizontal analysis, benchmarking), andEconomy-wide measures of performance.
19 Financial Analysis: Overview
Performance Analysis – Two Approaches:Common-Size AnalysisRatio Analysis
20 Common Size Analysis: Overview
Compares:firms of differing sizes, oryear-to-year results for a single firm
21 Common Size Analysis: Computation
Built by dividing each number on a statement by the largest number on that statementBalance Sheet - Items are stated as a percentage of Total AssetsIncome Statement - Items are stated as a percentage of Total Revenues
22 Sample Common Size Balance Sheet and Income Statement
Balance Sheet - Items are statedas a percentage of Total AssetsIncome Statement - Items are stated as a percentage of Total RevenuesSource: Investopedia.com
23 Ratio Analysis: Overview
Converts financial data to percentagesAllows comparison of:Same firm over time – trendsDifferent firms at the same time – benchmarks
24 Ratio Analysis: Categories
Major Categories:Liquidity – Cash to pay debt on timeActivity – Efficiency of company’s operationsLeverage – Mix of equity and debtProfitability – Earnings achieved
25 Ratio Analysis: Liquidity
Able to payshort-termdebt?LiquidityCurrent RatioCurrent LiabilitiesCurrent AssetsQuick Ratio(Cash+Mkt. Secs.+Receivables)Do our Assets Convert Easily to Cash?
26 Ratio Analysis: Activity
Effective atCollecting Debt?ActivityAccounts Receivable TurnoverNet SalesAve. A/RInventoryTurnoverCGSAve. InventoryAccounts PayableInventory Purchs.Ave. A/PTimes Inventory SoldRate Pay SuppliersDo We Use Assets Efficiently?
27 Ratio Analysis: Leverage
SolvencyDebt toAssetsTotal AssetsTotal DebtInterestCoverageOp. Income beforeInterest ExpenseInterest & TaxesWhat % assets financedby debt?How many times can we pay interest?Can we Pay our Long-Term Obligations?
28 Ratio Analysis: Profitability
% of Inc. available to pay Op. CostsProfitabilityContributionMarginSales – V.C.SalesReturn on AssetsNet IncomeAssetsReturn on EquityTotal EquityInc. Earned per Dollar of AssetsIncome per Dollar of EquityHave we covered our costsand earned sufficient returns?
29 Financial Statement Analysis: Caution
Remember when using Ratio Analysis:Financial ratios merely compare one value to anotherDeemphasize relative size of firmsNo absolute answersCan help you ask the right questionsGIGO Rule Applies - Garbage In, Garbage OutNo single “correct” way to compute ratiosMust understand structure and interpretation of ratiosWatch out for accounting distortions
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