How to Play Working Capital Simulation: Managing Growth Video Transcript This short video will explain how to play the Working Capital Simulation: Managing Growth. You are the CEO of Sunflower Nutraceuticals. You are responsible for deciding whether to invest in a variety of growth and cash-flow improvement opportunities during three phases, spanning nine simulated years. You have access to a comprehensive set of financial statements as you make your decisions. Your task is to evaluate potential opportunities using the information provided and to select projects for each phase in the company s life cycle using the criteria you deem most appropriate. Prepare Begin the simulation by clicking on the Prepare tab. Here you can read a summary of the simulation and review background information about the firm Sunflower Nutraceuticals, or SNC.
You can learn more about how to play the simulation by visiting the How to Play section, which contains a high-level overview of the steps you ll need to follow, as well as a more detailed, downloadable How to Play presentation. Download the Terminology Primer PDF, linked in Step 1, to review definitions for selected terms used in the simulation. After you complete the Prepare section, move onto the Analyze tab. Analyze Dashboard Begin familiarizing yourself with the dashboard. Here you will find an overview of your company s current financial status. The timeline on the right of the screen keeps track of your progress in the simulation. You begin in Phase 1, but the simulation is pre-populated with historical data for fiscal years 2010-2012 to help you better understand the current financial condition of SNC. Graphs include Sales, EBIT, Net Income, Annual Free Cash Flow, Cumulative Free Cash Flow, Cash Surplus or Shortfall (if beyond the firm s $300,000 minimum cash requirement), and Total Current Assets. Review the Available Credit graph to understand the firm s available credit. Copyright 2012 Harvard Business School Publishing. Page 2
Your firm s Total Value is available at a glance. The Total Value Created will be updated based on decisions made in each phase. You can review the comprehensive financial statements on the other Analyze screens. Balance Sheet On the Balance Sheet screen, you can review your firm s assets and liabilities. Graphs illustrate any change to the Cash and Cash Equivalents beyond the minimum cash requirement that SNC holds at all times, as well as Total Current Assets, and SNC s Credit Line Utilization in the previous phase. This screen is pre-populated with historical data. As you proceed through the simulation, this screen will update based on your decisions, but you can always toggle back to review that from a previous phase. On this screen, as is the case on all financial statement screens, data can be copied to your computer s clipboard and pasted into the spreadsheet program of your choice for further analysis. Copyright 2012 Harvard Business School Publishing. Page 3
Income Statement The Income Statement provides further insight into the firm s sales, earnings, and income. Graphs illustrate Sales, EBIT, and Net Income for the most recently completed phase. Copyright 2012 Harvard Business School Publishing. Page 4
Cash Flow The Cash Flow statement shows the firm s cash position. Graphs illustrate both the Cash Flow from Operations and Ending Cash and Equivalents, which exceed the minimum on-hand cash requirement of $300,000. Copyright 2012 Harvard Business School Publishing. Page 5
Cash Cycle The Cash Cycle screen depicts how opportunity investments affect the firm s cash conversion cycle. The graphic at the top of the screen updates based on opportunities selected. Copyright 2012 Harvard Business School Publishing. Page 6
Synopsis The Synopsis page will be blank when the simulation begins, but will update based on decisions submitted on the Decide tab. Decide Once you are ready to select your projects, click on the Decide tab. In Phase 1, you ll have 4 opportunities to evaluate. Click the name of the opportunity on the left to read a description of each proposal as well as associated financial assumptions. When you are ready, click either Accept or Decline for each project. The Opportunities Selected list will update based on your selections. When you have made all of your final selections, click Submit Decisions to advance to the next phase of the simulation. Do not click Submit Decisions until you have made all of the accept or decline decisions for each opportunity. You ll be brought back to the dashboard and will see updated financial results. For more information, navigate to the Synopsis page. You can review your results and then continue to evaluate and select opportunities for 2 additional simulated phases. Copyright 2012 Harvard Business School Publishing. Page 7
Run Archive Note that if you do not complete the simulation in one session and want to resume the run at a later time, you can do so from the Run Archive link at the bottom of the screen. Click on Resume in the pop-up window to begin where you left off. This concludes our video on how to play the simulation. Good luck! Copyright 2012 Harvard Business School Publishing. Page 8