1. Structured Approach to the Simulation Analysis Report
BA 411
Structured Approach
to the
Simulation Analysis Report
Created 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 Sessions
Get help with your Capsim and
Breakout Assignment questions
Two sessions available every week:
6:00 – 7:15 p.m. Tuesday – 69 Willard
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Sessions 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 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

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 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

8. How to Prepare your Simulation Analysis Report
Key Functional Areas
Strategy
R & D
Marketing
Finance
Production

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&D
Marketing
Production
Finance

10. 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)

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 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
planned 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 due
Effectiveness and efficiency of operations
Profitability

18. 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.

19. Financial Analysis: Overview
Performance Analysis – Two Approaches:
Common-Size Analysis
Ratio Analysis

20. Common Size Analysis: Overview
Compares:
firms of differing sizes, or
year-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 statement
Balance Sheet - Items are stated as a percentage of Total Assets
Income Statement - Items are stated as a percentage of Total Revenues

22. Sample Common Size Balance Sheet and Income Statement
Balance Sheet - Items are stated
as a percentage of Total Assets
Income Statement - Items are stated as a percentage of Total Revenues
Source: Investopedia.com

23. Ratio Analysis: Overview
Converts financial data to percentages
Allows comparison of:
Same firm over time – trends
Different firms at the same time – benchmarks

24. 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

25. Ratio Analysis: Liquidity
Able to pay
short-term
debt?
Liquidity
Current Ratio
Current Liabilities
Current Assets
Quick Ratio
(Cash+Mkt. Secs.+Receivables)
Do our Assets Convert Easily to Cash?

26. Ratio Analysis: Activity
Effective at
Collecting Debt?
Activity
Accounts Receivable Turnover
Net Sales
Ave. A/R
Inventory
Turnover
CGS
Ave. Inventory
Accounts Payable
Inventory Purchs.
Ave. A/P
Times Inventory Sold
Rate Pay Suppliers
Do We Use Assets Efficiently?

27. Ratio Analysis: Leverage
Solvency
Debt to
Assets
Total Assets
Total Debt
Interest
Coverage
Op. Income before
Interest Expense
Interest & Taxes
What % assets financed
by 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. Costs
Profitability
Contribution
Margin
Sales – V.C.
Sales
Return on Assets
Net Income
Assets
Return on Equity
Total Equity
Inc. Earned per Dollar of Assets
Income per Dollar of Equity
Have we covered our costs
and earned sufficient returns?

29. 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