FinGame Report CEO Group: TN(T)

MAKE OUR SHAREHOLDERS HAPPY!● Boost sales through advertising● Produce enough units to meet

market demand and avoid stockouts

Overall Goals and Strategies

● In an attempt to save money, we cut dividends. This ended up backfiring and our share price was severely affected

Performance Evaluation

Performance Evaluation

Performance Evaluation cont.

Accumulated wealth, like many other indicators of performance peak in quarter six, then enter a period of decline. While accumulated wealth continued to decline, net income and ROE both picked up from quarter nine to ten.

As is common with a perfectly competitive market structure, all groups had very similar patterns of earnings.

Performance Evaluation cont.

● Our high production costs combined with our large production scale drove up expenses

● We weren’t able to reap the kinds of benefits from advertising that we had hoped. Downfalls of a perfectly competitive market

● There were misunderstandings regarding the investor perceptions of dividend

Why didn’t our strategy work?

Cash Management

● Q4: Penalty loan:Reason: did not finance enough while purchased a lot of plant and machinery

● From Q6 to Q7, our cash balance dropped a lot.

Reasons:+ A lot of interest payments

from quarter 6’s debt+ Did not finance enough in

quarter 7

Cash Management

1. Calculate each period’s free cash flows:(Overhead + Labor savings - Dep.) x (1-Tax rate) +Depreciation

2. Calculate the present value of all the future cash flows

3. Calculate NPV of the project

4. Use NPV Decision Rule: accept NPV-positive projects

Capital Budgeting Analysis:

● NPV of project A and B:

● Investment Decisions:

Capital Budgeting Analysis

Capital Structure

● Maintaining a healthy ratio of debt to assets is something that every company would like to do.

● As we got into the later quarters, we wanted to change our capital structure so that it would be more evenly distributed between debt and equity. This coupled with retirement of stock contributed to the sharp increase in debt/equity ratio in quarters nine and ten.

Capital Structure

Capital Structure

● Our relative stability of WACC through the first six quarters is an instance of low-risk policies. After round six, our corporation is viewed by investors as risky. As a result, investors will demand a higher premium on returns.

If we could do everything again, we would:● Increase leverage up to the point

where we see WACC start increasing● After the optimal debt level has been

reached, issue more shares if we still need money.

Capital Structure

Why should you trust us in the future?

● Only incurred a penalty loan once, and always maintained a sufficient balance of cash and marketable securities

● Despite bad showings in quarters eight and nine, we were able to turn things around in quarter ten

● Showed the consistent ability to mass produce units