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Complete simulation exercise at
https://forio.com/simulate/harvard/working-capital-growth/simulation/
Assignment Overview
A company that can effectively manage its working capital is one that can self-sustain during the ebbs and flows of business cycles and changes in consumer demand, interest rates, and access to external funds. In terms of the balance sheet, working capital is the difference between current assets and current liabilities. Working capital management focuses on maximizing a company’s free-cash-flow and maintaining its liquidity to support the company’s day-to-day operations and invest in long-term capital projects.
Managing growth is a key concern. If a company experiences a sudden upward spike in demand but does not have the financial resources to purchase or produce inventory to satisfy the demand, a customer will quickly look for the product from a competitor. Short-term financial management decisions will impact long-term financial decisions, and ultimately the value of the firm as you will discover as the CEO of Sunflower Nutraceuticals (SNC).
Assignment Instructions
Complete the Working Capital Simulation: Managing Growth V2 [approx. 45 minutes] (opens in a new window)
Part 1: Simulation Setup
Download and read the primer PDF which will include terms and explanations related to the cash conversion cycle.
Read the financing options decision memo
Once you have accessed the simulation, select the “Prepare” tab in order to read background information on Sunflower Nutraceuticals (SNC) and learn about how the simulation works.
Select the “How to Play Video” button to learn more about how to interact with the simulation
Part 2: Play the Simulation
Select the “Analyze” tab to review the background data for each phase of the simulation.
Note: You can copy and paste financial data into Excel for further analysis before playing the game, but this is not a requirement.
To begin playing the simulation, simply select the “Decide” tab to enter your investment decisions for phase 1.
Accept or reject any or all opportunities.
You will complete this step for phases 1,2, and 3.
Once you select the “Submit” button for your decisions, you will be advanced to the next phase.
Each time that you select and submit your investment decisions, you can review your results to see the impact that your decisions had on SNC’s performance.
Part 3: Analysis of Simulation Results:
You are the CEO of SNC. In preparation for your presentation to the board of directors of SNC, you will write a memo describing and justifying your investment choices.
Include the following in your memo:
Rationale for the investment decision(s) that you made
Rationale for the chosen financing option
Discussion of your results
Were you focused on value creation, maximizing profit, or sales?
Why is this the best metric to use?
Participate in corresponding discussion questions.
Assignment Requirements
Citation Requirements: 3-5 scholarly or authoritative sources for Part 3, Analysis of Simulation Results.
Word Count: 500-750 words (each part)
APA Formatting (Part 3)
Title Page
Reference Page
Part 3 – Analysis of Simulation Results:
Explanation of rationale for the investment decision(s) made
Explanation of rationale for the financing option chosen
Explanation of results, including whether focused on value creation, maximizing profit, or sales and why the metric is the best to use
Note: This assignment will be checked for plagiarism.