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BSAD 102 Mike’s Bikes Business Simulation

BSAD 102 Mike’s Bikes Business Simulation. St. Francis Xavier University. Directions. Get in Groups Find a computer Login with one St. FX login / password Access one Mike’s Bikes login / password from your email

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BSAD 102 Mike’s Bikes Business Simulation

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  1. BSAD 102Mike’s BikesBusiness Simulation St. Francis Xavier University

  2. Directions • Get in Groups • Find a computer • Login with one St. FX login / password • Access one Mike’s Bikes login / password from your email • WebFX Apps on Desktop  Mikes Bikes Advanced folder  Double click Intro Multi Player • Review results St. Francis Xavier University

  3. Results • World results • Review your firm’s / competitors’ results • Reports • Strengths? Weaknesses? Key determinants? • Examples St. Francis Xavier University

  4. Mike’s Bikes Report I • Your major assignment and presentation for this course will be based on an online business simulation called Mike's Bikes.  In groups of three, you will take on the role of managers of a firm that produces bikes in a competitive industry.  You are responsible for assessing information about the industry and making financial, marketing and operations decisions to maximize your firm's performance.  • Web Link: http://people.stfx.ca/mmoxner/BSAD102MBSimulationReport.htm

  5. Mike’s Bikes Report I • Copy, save and update the following reports to separate worksheets in MS Excel • Income Statement • Balance Sheet • Financial Management Overview • Product Marketing Report Overview (for future report) • Factory Report (for future report) • Industry Benchmark Report • All Product Details Report (for future report)

  6. Analyzing Financial Statements • Analysis requires 1) calculation and 2) interpretation • Types of Analysis: • Vertical and Horizontal Analysis • Ratios are classified into three groups • Solvency ratios • Short-term and long-term • Profitability ratios • Activity ratios

  7. Horizontal and Vertical Analysis • a) Vertical Analysis - Common-size financial statements express each item on the balance sheet as a % of total assets and on income statement as a % of total sales • b) Horizontal Analysis – Calculate the % change of each line item on the balance sheet and income statement (current year – past year)/past year

  8. Horizontal Analysis - SDM

  9. Vertical Analysis - SDM

  10. Planning • Your task • Analyze consumer information • Select a product strategy (price/volume) • Decide on • Product price given strategy • sales forecast (market size, product strategy, competition) • promotional spending (funds available, consumer sensitivities) • production required (sales forecast, inventory, capacity) • What will you do the same? Different? You can’t be everything to everyone – how will you compete? St. Francis Xavier University

  11. Ratio Analysis • Financial ratios are used to analyze and evaluate the operating performance of the firm • Ratios based on past performance are often used to determine expectations of the future • Ratios are used in trend analysis (period to period) and in comparative analysis (company to company)

  12. Short-Term Solvency Ratios • Measure the company’s liquidity • The higher the ratio, the lower the risk of an inability to pay Quick Ratio Current Ratio Quick Assets Current Liabilities Current Assets Current Liabilities

  13. Long-Term Solvency Ratios • Measure the company’s ability to pay long-term debts • the higher the ratio, the greater the risk of aninability to pay • also known as a Debt Ratio Debt-to-Owners’ Equity Ratio: Debt Owners’ Equity

  14. Profitability Ratios • Measures overall company profitability for potential investors • the higher the ratio, the more profitable the firm Earnings per Share Return on Equity Net Income # Outstanding Common Shares Net Income Total Owner’s Equity

  15. Activity Ratios • Measure how efficiently the company uses its resources • Measures the average number of times inventory is sold and restocked during the year • the higher the ratio, the more products that get sold Inventory Turnover Ratio Cost of Goods Sold Average Inventory

  16. Ratio Analysis - SDM

  17. Interpreting Financial Ratios • a)Trend analysis consists of computing the financial ratios of a firm at various points in time to determine if the firm is improving or deteriorating • b) Comparisons of ratios to other company’s, divisions, industry(s)

  18. Ratio Analysis - Industry

  19. Mike’s Bikes Report I • Title page (1 page, MS Word) • Names and ID #’s of group members • Company Logo and Company Name • Analysis of Results (5 pages, MS Excel and MS Word) • Financial statement analysis of your company (3 pages, MS Excel) • Vertical Analysis of Income Statement • Horizontal Analysis of Income Statement • Ratio Analysis of Balance Sheet • Financial statement analysis of your direct competitor(s) • Comparison to industry norms and averages • Summarize your findings (2 pages, MS Word) • Provide an overview of results your firm’s price strategy • 2-3 key points from your Vertical Analysis • 2-3 key points from your Horizontal Analysis • 2-3 key points from your Ratio Analysis • Sales, cost and profit findings • Appendix with Industry Benchmark report (1 page, MS Excel)

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