Corporate Finance Simulation
In this simulation participants manage a simulated firm which executes
short and long term financial transactions related to time value of
money, working capital management, capital structure, and capital
budgeting. Funding is available through short and long term loans, bonds
and stock. On the investment side, the firm can invest in short-term
certificates of deposit of various denominations, in plant expansion,
and/or in equipment replacement. Firms also must choose between two
suppliers based on price, term conditions. They should also consider
extending three different cash discounts for the three products they
manufacture and sell. Furthermore, they have to forecast liquidity needs
and net income after taxes.
This simulation, in
addition to giving participants the opportunity to assess the relevance
of decisions in the funding and investment activities of a company,
allows them to apply time value of money concepts in operations (with
the selection of suppliers) and sales (with cash discounts).
Performance reports are comprised of financial
statements and corresponding footnotes. The report also details errors
in cash budgeting and in projecting income statements. Points to teams
are assigned based on firm ROE and financial forecasting errors.
The simulation is suggested for Corporate Finance
and Financial Management courses. It is also ideal for Bank Credit
Officers as it permits them to experience financial management from
their clients’ point of view.
Students can be grouped in teams of two to five
members. Up to sixteen groups can participate. The simulation can last
up to twelve weeks with each week simulating three months of operations.
Before the beginning of each simulation, the economic environment and
the degree of competition in which the companies will conduct their
operations can be modeled. The potential profitability and risk of the
company can also be modeled.
A manual and weekly instructions for students are
provided on this website before each round of decisions. After each
round, reports and financial statements in Excel format are made
available to students. The professor also receives a summary report.
Decisions are implemented in a progressive manner. The number and
complexity of the decisions increases as the simulation progresses. A
tentative decision schedule is available. After a simulation round is
processed, firm reports, including financial statements and footnotes,
are made available to participants and professors. Another report
includes a summary of performance variables and a ranking of the teams.
Depending on the preference of the instructor and the nature of the
course, an Excel template can be made available to aid the students in
forecasting financial statements. Students can also receive technical
support from ASD Business Simulations.
manual and weekly instructions for students are provided on this website
before each round of decisions. After each round, reports and financial
statements in Excel format are made available to students. The professor
also receives a summary report. All simulations are Internet based and
are entirely administered through the Web. There is no need for
professors to get involved in the operation of the simulation.