BA 411
Structured Approach
to the
Simulation Analysis Report
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Created by Nancy L. McClure for classroom use only.
Do not distribute, photocopy, or reprint without permission.
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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 Name
 Your ANGEL ID

Go to Poverty Resolutions Facebook group to
document your fundraiser

First SWAP Deadline is Tuesday, March 15th

Raise $50 per student for Poverty Resolutions by
this date and earn 2% extra credit
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)
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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
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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?
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How to Prepare your
Simulation Analysis Report
 Analysis – The “Big” Picture:
 Should focus on answering:
 Why you made key decisions
 Impact of decisions on operations and profitability
 Consider your strategy and the competitive environment
when analyzing these decisions
 Provide quantitative analysis (including charts and graphs
you construct) to:
 support these decisions, and
 explain their impact on your company’s profitability
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How to Prepare your
Simulation Analysis Report
Key Functional Areas
R&D
Production
Strategy
Finance
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Marketing
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&D
 Marketing
 Production
 Finance
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Linking Strategy and Operations and ROI
For Each Functional Area, consider expected ROI for
potential investments:
 Marketing
 ROI for investments in Awareness and Accessibility
 R&D
 ROI for investments to update current products or
introduce new products
 Production
 ROI for investments in capacity
 Finance
 ROI for debt (leverage)
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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
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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?
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?
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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
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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?
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
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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?
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 paper
 You can identify the key issues by asking yourself what are they
three most important points you need to communicate to your
audience
 Then, you can provide the background analysis for the key
issues and link them to your:
 strategy,
 competitive environment,
 profitability, and
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 planned improvements for the future
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.
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Financial Analysis - Brief Tutorial
A “Road Map” for Performance Measurement
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 Financial Analysis Measures Company’s:
 Ability to pay debt as it comes due
 Effectiveness and efficiency of operations
 Profitability
Financial Analysis: Overview
Financial Information useful when
company compared to:
 Itself over time (longitudinal analysis),
 Industry measures of performance
(horizontal analysis, benchmarking), and
 Economy-wide measures of performance.
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Financial Analysis: Overview
Performance Analysis – Two Approaches:
 Common-Size Analysis
 Ratio Analysis
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Common Size Analysis:
Overview
Compares:
 firms of differing sizes, or
 year-to-year results for a single
firm
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Common Size Analysis:
Computation
Common Size:
Built by dividing each number on a statement by
the largest number on that statement
 Balance Sheet - Items are stated as a
percentage of Total Assets
 Income Statement - Items are stated as a
percentage of Total Revenues
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Sample Common Size Balance Sheet and Income Statement
Balance Sheet - Items are stated
as a percentage of Total Assets
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Income Statement - Items are stated
as a percentage of Total Revenues
Source: Investopedia.com
Ratio Analysis:
Overview
Ratio Analysis:
 Converts financial data to percentages
 Allows comparison of:
 Same firm over time – trends
 Different firms at the same time – benchmarks
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Ratio Analysis:
Categories
Major Categories:
 Liquidity – Cash to pay debt on time
 Activity – Efficiency of company’s operations
 Leverage – Mix of equity and debt
 Profitability – Earnings achieved
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Ratio Analysis:
Liquidity
Current
Ratio
Liquidity
Quick Ratio
Able to pay
short-term
debt?
Current Assets
Current Liabilities
(Cash+Mkt.
Secs.+Receivables)
Current Liabilities
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Do our Assets Convert Easily to Cash?
Ratio Analysis:
Activity
Accounts
Receivable
Turnover
Activity
Net Sales
Ave. A/R
Inventory
CGS
Turnover
Ave. Inventory
Accounts
Payable
Turnover
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Effective at
Collecting Debt?
Times Inventory
Sold
Rate Pay
Suppliers
Inventory Purchs.
Ave. A/P
Do We Use Assets Efficiently?
Ratio Analysis:
Leverage
What % assets financed
by debt?
Debt to
Total Debt
Leverage &
Assets
Total Assets
Solvency
Interest
Op. Income before
Coverage
Interest Expense
Interest & Taxes
How many times
can we pay interest?
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Can we Pay our Long-Term Obligations?
Ratio Analysis:
Profitability
Profitability
% of Inc. available
to pay Op. Costs
Contribution
Sales – V.C.
Margin
Sales
Return on
Assets
Net Income
Return on
Equity
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Assets
Inc. Earned per
Dollar of Assets
Income per
Dollar of
Equity
Net Income
Total Equity
Have we covered our costs
and earned sufficient returns?
Financial Statement Analysis:
Caution
Remember when using Ratio Analysis:
 Financial ratios merely compare one value to another
 Deemphasize relative size of firms
 No absolute answers
 Can help you ask the right questions
 GIGO Rule Applies - Garbage In, Garbage Out
 No single “correct” way to compute ratios
 Must understand structure and interpretation of ratios
 Watch out for accounting distortions
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