In this single-player simulation, students act as the CEO of a small company, Sunflower Nutraceuticals, and decide whether to invest in growth and cash-flow improvement opportunities in three phases over 10 simulated years. Each opportunity has a unique financial profile and students must analyze effects on working capital. Examples of opportunities include taking on new customers, capitalizing on supplier discounts, and reducing inventory. Students must understand how the income statement, balance sheet, and statement of cash flows are interconnected and consider the 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. Students must optimize use of "internal" and external credit as they balance the desire for growth with the need for maintaining liquidity. The second release of this simulation adds an optional financing decision for students, a new metric tracking the firm's equity value, and a new optional problem set. This simulation is ideal for introductory courses in finance, accounting, small business management, and entrepreneurial finance.
Company: Harvard Business Publishing
Approximate price: $15.00
Playtime: 45 minutes
Learning objectives: Correlating the cash flow needs and strategic growth options of an organization to the most appropriate financing choice. Comparing and contrasting different equity and debt financing options and understanding the implications of each on equity ownership and degree of leverage. Developing intuition regarding a firm's cash conversion cycle and the associated operating ratios. Learning the trade-offs between managing revenue and EBIT growth while also managing net operating working capital. Understanding the consequences of investing too much or too little in net working capital as well as focusing excessively on the income statement over the balance sheet and statement of cash flows. Developing intuition for the relationships among the income statement, balance sheet, and statement of cash flows. Understanding the tightrope between growth and illiquidity Learning to maximize a firm's growth opportunities in a limited-credit environment.
Link to simulation home page: https://hbsp.harvard.edu/product/7070-HTM-ENG