Stretegy Results

7/21/2019 Stretegy Results

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FinGame Results


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Profitability


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Financial ReasoningFinancial Reasoning

y Quarter ! we noticedy Quarter ! we noticedthat productivity was notthat productivity was notbeing ma"imi#ed due to abeing ma"imi#ed due to alack of plant space. $e thenlack of plant space. $e thendecided to compensate fordecided to compensate forthe decit through athe decit through a

purchase increase, yetpurchase increase, yetfailed to reali#e that onefailed to reali#e that oneunit of plant capacityunit of plant capacitye%uals one unit of product,e%uals one unit of product,and thereforeand thereforeunderestimated the amountunderestimated the amountof plant space needed toof plant space needed tomeet future productions.meet future productions.

&t was also recogni#ed in&t was also recogni#ed inthis %uarter that the e"cessthis %uarter that the e"cessin machinery was causingin machinery was causingus to lose money.us to lose money.

&n regards to this&n regards to this

%uarter, we should%uarter, we should

have purchased morehave purchased more

plant space when theplant space when the

game began so thatgame began so thatour nancialour nancial

ineiciency would notineiciency would not

have occurred, andhave occurred, and

allowed us to possiblyallowed us to possiblybe more protablebe more protable

earlier on.earlier on.


5/17

Counteracting Long TermCounteracting Long Term

Debt Through Short TimeDebt Through Short Time

FinancingFinancing Though we felt incurring the initial debtThough we felt incurring the initial debtof the factory would eventually net aof the factory would eventually net a

substantial income we still wanted tosubstantial income we still wanted to

decrease the amount of debt that wedecrease the amount of debt that wecurrently possessed. Therefore, wecurrently possessed. Therefore, we

attempted to pay o our short termattempted to pay o our short term

debts, which would negate the amount ofdebts, which would negate the amount of

debt we possessed leaving the bonddebt we possessed leaving the bond

taken on to nance the ac%uisition of thetaken on to nance the ac%uisition of the

plant.plant.


6/17

Debt RatioDebt Ratio

'atio used to determine how risky a company is and'atio used to determine how risky a company is andhow much it owes to its investorshow much it owes to its investors

The proportion of liabilities that a company has relativeThe proportion of liabilities that a company has relativeto its assetsto its assets

&n the beginning of the game we were more&n the beginning of the game we were moreconservative due to lack of knowledge of theconservative due to lack of knowledge of theenvironment but towards the end of the game we tookenvironment but towards the end of the game we tookon more debt through bond loans, high interest rateson more debt through bond loans, high interest ratesand short(term investmentsand short(term investments

)ur overall debt ratio for the game as a whole was .)ur overall debt ratio for the game as a whole was .!*!+!*!+

howing that we were relatively conservative in ourhowing that we were relatively conservative in ournancial decisionsnancial decisions


7/17

Debt Ratio Cont.Debt Ratio Cont.

&nitially our goal was -ust to have a debt ratio&nitially our goal was -ust to have a debt ratioless than oneless than one

owever, as we became more familiar withowever, as we became more familiar withthe game, we wanted to maintain the debtthe game, we wanted to maintain the debt

ratio that paired with the highest stock price,ratio that paired with the highest stock price,which was ./0which was ./0 trengths &nvestors consider our companytrengths &nvestors consider our company

safe to invest in, we were not re%uired to paysafe to invest in, we were not re%uired to payhigh interest rates, and we did not run thehigh interest rates, and we did not run the

risk of running out of money when neededrisk of running out of money when needed $eakness 2issing out on potential protable$eakness 2issing out on potential protable

investments and sitting on large amounts ofinvestments and sitting on large amounts ofcash instead of using it to prot the businesscash instead of using it to prot the business


8/17

Debt Ratio (Actual)


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Debt Ratio (ProForma)


10/17

Fundamentals of theFundamentals of the

businessbusiness 3very company has a common goal of producing a3very company has a common goal of producing a

great product which increases revenue whilegreat product which increases revenue while

keeping the cost of labor low and increasing theirkeeping the cost of labor low and increasing their

e%uitye%uity

$hile stockholders4 common goal is to have a$hile stockholders4 common goal is to have ahigher rate of return in the company of theirhigher rate of return in the company of their

choicechoice

mart investors look for the subtle changes in amart investors look for the subtle changes in a

non(cyclic company. &f revenues and prots are onnon(cyclic company. &f revenues and prots are ona steep upward trend, with no indication ofa steep upward trend, with no indication of

leveling o, then they will invest and the stock willleveling o, then they will invest and the stock will

increaseincrease


11/17

Sector Changes and MarketSector Changes and Market

SwingsSwings ector changes are simply sudden changes in the market,ector changes are simply sudden changes in the market,

which can have an negative of positive impact on the stockwhich can have an negative of positive impact on the stockprice5ours being the 6$ehrley hift7price5ours being the 6$ehrley hift7

2arket swings are the natural 8ow of the market+ it could go2arket swings are the natural 8ow of the market+ it could goup or down at any time, which can push stocks up or down+up or down at any time, which can push stocks up or down+which accounts for the variation in accumulated wealthwhich accounts for the variation in accumulated wealth

The 8uctuations in our stock price was a direct correlation ofThe 8uctuations in our stock price was a direct correlation ofour net income and investments in the companyour net income and investments in the company


12/17

Return on !uityReturn on !uity

9ened as how eicient a company is in9ened as how eicient a company is inreinvesting earnings to generate additionalreinvesting earnings to generate additionalearningsearnings

&nvestors look for a high and growing ')3&nvestors look for a high and growing ')3percentage rate of companies to invest inpercentage rate of companies to invest in

The shareholders of our company did not receiveThe shareholders of our company did not receivea good return on their capital that was invested ina good return on their capital that was invested inthe business due to the sharp increase of interestthe business due to the sharp increase of intereste"pense, decrease in gross prot margin ande"pense, decrease in gross prot margin andtherefore decrease in net income during Quartertherefore decrease in net income during Quarter

:.:. The ')3 was also decreased because of the bondThe ')3 was also decreased because of the bondwe used to nance the large amount of plantwe used to nance the large amount of plantpurchased, signicantly reduced our net incomepurchased, signicantly reduced our net income


13/17

Return on Equity (ROE)

Actual


14/17

Return on Equity (ROE)

ProForma


15/17

Mistakes and Ti"s forMistakes and Ti"s for

Future GenerationsFuture Generations ;ailing to purchase a plant;ailing to purchase a plant

when needed left us withwhen needed left us withe"cess machinery, ae"cess machinery, asteadily raising demandsteadily raising demandand an absence ofand an absence ofinventory for the last twoinventory for the last two%uarters%uarters

This small mishap cost usThis small mishap cost usa lot of money, trust witha lot of money, trust withour shareholders and haltour shareholders and haltin productivityin productivity

;or a percentage of the;or a percentage of thetime our ')3 variedtime our ')3 variedslightly from the bankslightly from the bankbecause we were notbecause we were notusing our assets properlyusing our assets properly

Take advantage of theTake advantage of the6wehrley4s shift7 to buy6wehrley4s shift7 to buyback sharesback shares

and')3?')3?

@ever sit on idle cash,@ever sit on idle cash,always reinvest it in thealways reinvest it in thecompany for growthcompany for growthandAor distribute toandAor distribute toshareholdersshareholders


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ConclusionConclusion

>s a result of not purchasing more>s a result of not purchasing more

plant space upon the commencement ofplant space upon the commencement of

the game we failed to ma"imi#ethe game we failed to ma"imi#e

productivity, which ultimately caused aproductivity, which ultimately caused aloss in possible prot. )nce recogni#edloss in possible prot. )nce recogni#ed

prots began to increase and the newprots began to increase and the new

focus became the management andfocus became the management andnancing of debt incurred as a result ofnancing of debt incurred as a result of

asset ac%uisitions and debt control.asset ac%uisitions and debt control.


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Documents

Stretegy Results