Technology

Resources:

 Harvard Business Publishing: Working Capital Simulation: Managing Growth Assignment

Ch. 1 - 21 ofFundamentals of Corporate Finance

WileyPLUS Assignments

All additional resources from each week 

Review the following scenario:

Acting as the CEO of a small company, you will apply the principles of capital budgeting to invest in growth and cash flow improvement opportunities in three phases over 10 simulated years. Each opportunity has a unique financial profile and you must analyze the effects on working capital. Examples of opportunities include taking on new customers, capitalizing on supplier discounts, and reducing inventory.

 You must understand how the income statement, balance sheet, and statement of cash flows are interconnected and be able to analyze forecasted financial information to consider possible effects of each opportunity on the firm's financial position. The company operates on thin margins with a constrained cash position and limited available credit. You must optimize use of internal and external credit as you balance the desire for growth with the need for maintaining liquidity.

Sign-in to the simulation and review each of the following:

· Welcome Statement

· How to Play

· Terminology Primer

· More Details (this includes information to help you understand how to play the simulation)

Write a paper of no more than 1,400 words that analyzes your decisions during each phase (1-3) and how they influenced each of the following final outcomes (metrics) of SNC

· EBIT

· Sales

· Net Income

· Free Cash Flow

· Total Firm Value

Address the following in your paper:

· A summary of your decisions and why you made them

· How they affected SNC's working capital

· What general effects are associated with limited access to financing 

Include scholarly references (in addition to your course textbook and simulation materials) to support your positions.

Format your paper consistent with APA guidelines. Click the Assignment Files tab to submit your assignment.

· A summary of your decisions and why you made them

Phase 3: 2019 - 2021 Synopsis

You selected Renegotiate Supplier Credit Terms, and Adopt a Global Expansion Strategy and declined Acquire a High-Risk Customer . Below is a synopsis of how each opportunity affected your Working Capital and Cash Flow.

Renegotiate Supplier Credit Terms

SNC's ability to renegotiate payment terms with Dynasty Enterprises resulted in a significantly lower accounts payable balance and improved margin. Taking on Viva Familia as a new customer helped SNC grow its top line with a very modest increase in cash tied up in inventory.

Phase 2: 2016 - 2018 Synopsis

You selected Pursue Big-Box Distribution, Expand Online Presence, and Develop a Private-Label Product and declined no opportunities . Below is a synopsis of how each opportunity affected your Working Capital and Cash Flow.

Pursue Big-Box Distribution

Taking on Mega- Mart Inc. as a customer resulted in impressive top-line growth but the company's EBIT margin declined.

Expand Online Presence

Expanding SNC's presence in online retail increased sales with little negative impact on working capital balances.

Develop a Private-Label Product

Selling the private label product to Fountain of Youth Spas increased SNC's EBIT margin, only modestly resulting in increased accounts receivable and inventory balances.

Phase 1: 2013 - 2015 Synopsis

You selected Acquire a New Customer, Leverage Supplier Discount, and Tighten Accounts Receivable and declined Drop Poorly Selling Products  Below is a synopsis of how each opportunity affected your Working Capital and Cash Flow.

Acquire a New Customer

Taking on Atlantic Wellness as a new customer increased sales significantly but resulted in higher accounts receivable and inventory balances.

Leverage Supplier Discount

Selling its herbal nutraceutical line to Nutrilife enabled meaningful top-line growth. While this growth increased both the accounts receivable and inventory balances, the drain on cash flow was partially offset by increased EBIT due to the favorable contract negotiated with Ayurveda Naturals.

Tighten Accounts Receivable

Although sales declined as a result of SNC's decision to drop Super Sports Centers, the company's accounts receivable picture improved dramatically, freeing up cash.

Working Capital

· How they affected SNC's working capital

Financing

· What general effects are associated with limited access to financing 

Conclusion