Analytic Point Report breakdown. Instructions are in the pdf attached.
Rev 9/18 Assignment #2 Analyst Report (100 points) The Analyst Report on the Capsim site is a detailed means of evaluating the performance of your simulated company. This is one of the most beneficial instructional areas of the Capsim site. Reading carefully will help understand how the simulation works!!! Both the Analyst Report and the Balanced Scorecard are used to measure the health and success of your company. The Analyst Report can be one of the most useful tools available in determining the “how to” part of the class assignments. Analyst categories are listed below and each is explained in detail in the online report. Explanations include the importance of the subject, and how to improve your decisions in route to a healthier company. (At least one round of the simulation must be completed and processed to access the Analyst Report) Instructions: Go to the Capsim site. Click “Reports”, Click “Debrief Reports”, Click “Analyst Report” Click the drop down arrow next to “Points Analysis” to see the following categories: Margins Profits Emergency Loans Working Capital Market Share Forecasting Customer Satisfaction Productivity Financial Structure Wealth Creation Select the category that you wish to view, and then click the “points analysis” button. The answers to the questions below are found under the “points analysis” explanations. Instructions: - Each part is worth 3 points. - Cut & paste is acceptable for criteria and question answers. (Copy only the answer to the question, points deducted if the full section is submitted) - Copy the questions to your page and then fill in the answers. (The Point criteria breakdown on questions on 1-4 is listed in the analysis report and it tells how the score is calculated) Rev 9/18 1. Margins: a. Name the 3 areas that earn points, AND the point criteria breakdown. b. What do net margins tell us? c. What is critical in the big picture? 2. Profits: a. How many points did your team earn AND the point criteria breakdown. b. Profit category examines what? c. If you are not earning all the points, give the 3 areas to examine. 3. Emergency Loans: a. How many points did your team earn AND give the point criteria breakdown. b. What happens in the real world when Big Al is not available? c. What is at the root of most emergency loans? 4. Working Capital: a. How many points did your team earn AND give the point criteria breakdown. b. What 3 areas are included in working capital? Give the formula for each. c. Why do bankers & vendors hate to see a current ratio of 1? 5. Market Share: a. How many points did your team earn? b. Give the point criteria breakdown. c. Give the 3 reasons that you want high market share. 6. Forecasting: a. How many points did your team earn? b. How does each product earn points? c. As inventory days increase, what else increases? 7. Customer Satisfaction: a. How many points did your team earn? b. Give the point criteria breakdown. c. Customer survey is developed using ______________________. d. Give one main point for each of the 4 P’s. 8. Productivity: a. How many points did your team earn? b. Give the point criteria breakdown. c. Give 3 ways to improve sales per employee 9. Financial Structure: a. How many points did your team earn? b. Give the point criteria breakdown. c. What 3 popular definitions exist for leverage? d. Explain why the simulation prefers Assets/Equity? 10. Wealth Creation: a. How many points did your team earn? b. Give the point criteria breakdown. c. Profit measures wealth creation, but give two ways profits are limited. d. Market Capitalization is _________________________, figured by________. Margins Margins Points for SimID C129422 / Round 2 (By Team) Team Name: Andrews ProductContribution Margin %Points Earned Able30.90%6.7 Acre19.80%0 Adam30.30%6.7 Aft3.40%0 Agape25.20%0 Ace--0 NA--0 NA--0 Total13.3 ProductNet Margin %Points Earned Able3.70%0 Acre-5.10%0 Adam4.10%0 Aft-71.20%0 Agape-35.40%0 Ace--0 NA--0 NA--0 Total0 Profits Profits Points for SimID C129422 / Round 2 (By Team) Team Name: Andrews ActualTargetPoints Earned ($12,711,849)$8,000,0000 How your score is calculated... Profits The Profit category examines the rate at which wealth is being created. Where margins look at percentages, this category examines the actual value of the profit. Because the industry is growing, the profit required to earn 100 points increases each year. Year 1 $6 million Year 2$8 million Year 3$10 million Year 4$12 million Year 5$16 million Year 6$21 million Year 7$27 million Year 8$35 million For example, if this is Year 1, and your Net Profit is $3 million, you earned $3M/$6M or 50 points. Of course, negative profits earn no points. You want your profits to be as high as possible. If you are not earning 100 Profit Points, begin your diagnosis by examining your margins. 1. If your ROS is above 5%, chances are the problem is rooted in below average Sales. 2. If your ROS is below 5%, but your Net Margin Percentage is above 20%, you either experienced some extraordinary "Other" expense like a write-off on plant you sold, or you are paying too much Interest (If TQM is enabled, you may also have spent heavily on TQM initiatives). 3. If your Net Margin Percentage is below 20%, but Contribution Margin is above 30%, the problem is heavy expenditures on Depreciation (perhaps you have idle plant) or on SGA (perhaps you are pushing into diminishing returns on your Promo and Sales Budgets). 4. If your Contribution Margin is below 30%, the problem can be traced to some combination of Marketing (customers hate your products), Production (your labor and material costs are too high), or Pricing (you cut the price too much). Emergency Loans Emergency Loans Points for SimID C129422 / Round 2 (By Team) Team Name: Andrews ActualPoints Earned $14,841,8500 How your score is calculated... Emergency Loans The Emergency Loan category is the one category for which you should always earn 100 points. 100 points No emergency loan 50 points Emergency loans to $5 million 20 points Emergency loans to $10 million In the real world emergency loans do not exist. When you run out of cash, you have "a liquidity crisis", "Chapter 11", or simply "Bankruptcy" on your hands. Capstone® gives you every benefit of a doubt, and every opportunity to come up with the money to pay your bills, but if you are out of cash on December 31st, "Big Al" arrives to give you just enough cash to bail you out and bring the Cash account to zero. Emergency loans are closely linked to your working capital policy and forecasting abilities. Most loans are rooted in two mistakes: 1. An unexpected and dramatic expansion in inventory; 2. Funding plant expansion with "excess" working capital. Or worse, forgetting to fund the plant improvements at all. One can argue that the Emergency Loan category should offer nothing for small emergency loans. After all, if your heart stops beating, blood stops flowing, and you are dead. If Cash no longer flows through your company, it is dead, too. Still, there are degrees of being dead, as when you compare, say, steak with hamburger. At $5 million, your corpse is still recognizable, and we award you 50 points. Up to $10 million, the odor is obnoxious, but we hold our noses and award you 20 points. Beyond $10 million you have achieved the status of a rotting corpse, and you are awarded no points. Working Capital Working Capital Points for SimID C129422 / Round 2 (By Team) Team Name: Andrews ActualPoints Earned Sales$82,040,502-- Emer. Loan$14,841,850-- Curr. Assets$60,950,646-- Curr. Liabilities$43,913,398-- Working Cap.$17,037,249-- Days W. Cap.75.80 Curr. Ratio1.40 Total0 How your score is calculated... Working Capital The Working Capital category examines your reserves. You do not want too much or too little working capital. There are three criteria: 1. You earn 50 points if your Current Ratio is greater than 2.0. 2. You earn another 50 points if your Days of Working Capital lies between 30 and 90 days. 3. You lose your Working Capital points if you had an Emergency Loan. Working Capital = Current Assets minus Current Liabilities. Current Ratio = Current Assets / Current Liabilities = (Cash + A/R + Inventory) / (A/P + Current Debt). Days of Working Capital = Working Capital / (Sales/365). For example, in the sample below, you would earn 50 points for a Current Ratio of 3.2, another 50 points for a Working Capital Days of 65, and you would keep the points because you avoided an Emergency Loan. ASSETS ($000)LIABILITIES & OWNER'S EQUITY Current AssetsLiabilities Cash$1,260Accts Payable$6,291 Accts Receivable$7,522Current Debt$3,500 Inventories$22,388Current Liabilities$9,791 Current Assets$31,170Long Term Debt$39,000 Total Liabilities$48,791 Fixed Assets Plant & Equip.$113,800Owner's Equity Accum. Deprec.($45,900)Common Stock$18,276 Total Fixed Assets$67,900Retained Earn.$32,003 Total Equity$50,279 TOTAL ASSETS$99,070TOTAL LIAB. & O.E.$99,070 Working Capital$21,378 Current Ratio3.2 Sales ($000)$120,000 Days of Working Capital65 Example Why should you be keenly concerned with Working Capital? Let's take a closer look at the dynamics. One needs to make a distinction between "The Company" and "The People That Have a Claim on the Company". The Balance Sheet makes this clear. The Assets are The Company, and they are listed on the left side. The Liabilities and Owner's Equity on the right side represent the people that paid for the Assets and their current stake. If a bulldozer scraped the Assets into a pile, it would consist of cash, invoices, inventory, bricks, and equipment. Next to the pile a row of