financial report (must know perfect to do Capsim)

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yhi333

Business Finance

Description

Financial Reports

Even though you are working on Capsim individually, you can coordinate within your team to improve understanding of the system; in particular, how to interpret Capsim financial reports, and improve your individual performance. Learn from each other. In that spirit, discuss in your team how to read the Capsim reports, find specific metrics (ratios or measurements), to ascertain how to improve performance.

Therefore, imagine you are a product manager within your Capsim company. For the end of the year (end of this round), create a PRODUCT PERFORMANCE REPORT. (How would you report how each of your products are performing, to upper level management?) This report must show the most pertinent information in the most concise manner. Both form and substance are critical. What will this report show (what metrics and financial ratios will you include)? (The Capsim reports lecture in MediaSite will be particularly helpful). Decide what metrics to use, and be consistent between products. I only require the ratios, not necessarily the actual numbers, because of course your numbers will be different between individuals. The total report (with all products) should be about 2 pages.

For the second post, consider that you are a functional area manager for your Capsim company. For the end of the year (end of the round), create a FUNCTIONAL AREA PERFORMANCE REPORT. (How would you report how each functional area is performing?) This report must show the most pertinent information in the most concise manner. Both form and substance are critical. What will this report show (what metrics and financial ratios will you include)? (The Capsim reports lecture in MediaSite will be particularly helpful). Decide what metrics to use, showing all the functions’ performance. Just the metrics; not the actual numbers. The total report (with all functions) should be about 2 pages.

See if you can come to a single answer (report) within your team. But if you cannot, I have no problem with your team submitting several answers (by individuals) within your team report.




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Explanation & Answer

Attached.

Financial Reports
Institution:
Student's Name:
Instructor:
Due Date:

Financial Reports
Product performance report
The main aim of the production department is to ensure that competitive presence is maintained
and improved by making sure that our products are well-positioned in the market. The prices of
our goods should also be aligned with the prevailing average market prices as they are currently
while reducing the cost of production. Our aim is to become industry leaders in high, low and
traditional market segments. Currently, the traditional market share is at 16%, the low-end
segment enjoys 18.11% of the market segment and high-end 17.39%. The decision to shift the
performance and size products to low and high-end segments will improve in increasing the
market share, product specifications should also be altered to suit our customers' needs. This
revision won't allow our competitors in the industry to copy us if the decision to change
positioning and specifications became successful. The company also is striving to reach the ideal
positioning points for all the positions, the traditional segment should be at 21%, low end is an
ideal position performance and size should also be improved.
We also strive to provide the lowest prices of Able and Acre by $0.5 in the market in order to
improve our overall market share from the current percentage of 17.40% by 20%- 25% since
pricing goes a long way when it comes to increasing the overall market share. The research and
development budget and sales and marketing budget should also be increased in order to ensure
that potential customers are reached thus improving awareness; this will help in improving
potential market share.
The current plant utilization is at 109.73% for both of our products; this rate of plant utilization
is poor. It has been demonstrated that second shifts can generate more profits when compared to

the first shift and thus is not something to avoid since it pays 50% on of wage and labor premium
unlike when one shift is run. If the company runs one shift then the shift must cater for all the
company's fixed costs which include administration costs, sales budget costs, interest,
depreciation, promotion costs among others. If the company does away with the second shift
then there is a possibility that the company will be faced by stock-outs before the end of
production period and stock outs normally are too costly to the company. For instance, if the
demand for Acre is 100,000 units and the company produces 90,000units there will be a stock
out of 10,000 units. If contribution per unit is $6 then the company would have lost $60,000
which the company would have used to pay for its fixed costs. There the potential demand
forecast should be at 100% or more, if the potential demand forecast falls below 96% then it
means trouble to the company. The plant utilization, therefore, needs to be improved from
109.73% to a minimum of 130% by increasing the number of shifts for both Acre and Able.
The current sales are at 122M, the company seeks to improve awareness and accessibility in
order to increase the amount of sales. The increase in sales will help in increasing in contribution
per unit; the increase will help in offsetting the fixed costs incurred by the company. To improve
accessibility there is a plan to increase the number of products, despite the cost incurred in
research and development and in setting up the new production line the company will be able to
improve its accessibility since an extra product will be contributing to the company's sales
budget.

Functional Area Performance Report
The return on sales currently stands at -0.79%, return on assets -0.81 and return on equity at 2.05. The ratios denote a very poor rate of return which needs to be improved by the finance
function in order to be on track for the industry. The growth in the industry currently is roughly
15% annually; the industry, therefore, consumes about 15% extra capacity per year in form of
plant and production line expansion. The company should, therefore, come up with plans to cut
down the costs of labor, cost of materials, there should also be a better forecast of sales since this
helps in reducing expenses incurred in carrying inventory. The company can also sell plant and
machinery not being put into good use.
The leverage is at 2.5% currently; this level of leverage is poor and needs to be improved since a
lot of assets are being financed by debts. This rate of leverage can lead to problems with the
company since as the amounts of debts increase, the more expensive loans become the risk of
doing business increases and lenders begin avoiding the company in the long-run. The rate of
leverage should not be too low on the other hand since this will mean that the...


Anonymous
Just what I needed…Fantastic!

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