The Industry Report

The Industry Report summarizes the condition of the Holo-Generator industry and compares the performance of each student company. The Industry Report also notes the percentage change from the previous period in four general categories: units, dollars, productivity, and economics.

UNITS

  • Total Orders. Total industry demand. The total number of Holo-Generators ordered in the period.
  • Total Produced. The total number of Holo-Generators produced in the period.
  • Total Sold. The total number of Holo-Generators sold by the industry in the period.
  • Total Capacity. The maximum number of Holo-Generators the industry’s plants could produce in the period.
  • Inventory. The number of Holo-Generators left unsold at the end of the period.

PRODUCTIVITY

  • Employment. The total number of people employed in the industry during the period.
  • Sales/Employee. Industry Sales¸ Employment.
  • Units/Employee. Total Produced¸ Employment. This number is a measure of industry productivity.
  • Capital Investment. The total amount of capital invested in the industry.
  • Capacity Utilization. Total Produced¸ Total Capacity. Eighty percent of capacity provides the minimum average production cost per unit.

DOLLARS

  • Industry Sales. Total revenues in the Holo-Generator industry in the period.
  • Average Price. The average price of all Holo-Generators sold in the period.
  • Total Production. The dollar value of all Holo-Generators produced in the last period.
  • Avg. Production Cost Production Cost. The weighted average production cost of all Holo-Generators produced in the period.
  • Avg. Total Cost - Total Industry Costs.

RANKING

  • Sales. Total Revenue of each company during the period.
  • Net Profit. Net Profit for each company during the period.
  • Unit Price. The amount each company charged its customers for one Holo-Generator.
  • Retained Earnings. Profit accumulated by each company since the beginning of the simulation.
  • Share Market Share. The percent of the total number of Holo-Generators sold by each Holo-Generator company.
  • PI. Performance Index. A measure of company performance reflecting a combination of retained earnings, growth, productivity, etc.

ECONOMICS

  • Prime Rate. The base interest rate in the economy. Holo-Generator companies pay Prime Rate + 1% interest on loans and receive Prime Rate – 2% on cash balances after loans are repaid.
  • Loan Limit. The maximum amount a company can borrow from a bank at any one time.
  • Tax Rate. The percentage of company profits paid to the government.
  • Tax Paid in Qtr. The dollar amount of taxes paid by the Holo-Generator industry in the quarter.
  • Tax Paid to Date. The total amount of taxes paid by the industry since the beginning of the simulation.

 

The Company Report

Each company receives a confidential report after each period of competition. The Company Report consists of an Operations Report covering Production, Marketing and Investment and a set of three financial reports: Income Statement, Cash Flow, and Balance Sheet.

 

INCOME STATEMENT

The income statement details the company’s income and expenses for the last period. It starts with company sales and deducts expenses and operating costs to determine net profit.

  • Sales. Total revenue. The number of Holo-Generators sold multiplied by the price per product ($28 x 585 = $16,660).
  • COGS. Cost of Goods Sold. The cost of materials and labor used to manufacture Holo-Generators. Cost of Goods Sold is the average of the production cost for all Holo-Generators in the warehouse times the number of Holo-Generators sold.
  • Gross Margin. Sales – COGS (Cost of Goods Sold).
  • Marketing. The amount of money spent to market the company’s Holo-Generators.
  • Depreciation. An expense representing wear and tear on factory and equipment. The depreciation rate is 5% of factory investment each period.
  • R & D. Research and Development. Expenditures that make a company’s product better and more appealing to customers than those of the competition.
  • Layoff Charge. A charge of $10 per employee for each employee laid off when employment is reduced from the level in the previous period.
  • Inventory Charge. A carrying charge of one dollar per unit of inventory. This charge is assessed on each unit of inventory that stays in the warehouse from the beginning of a period to the end of the period. The charge can be calculated by multiplying $1 by the lower of beginning or ending inventory.
  • Interest (Expense). The quarterly interest expense owed to the bank. It is calculated with the formula: Interest = Loan x [ (Prime Rate – 1%) / 4 ].
  • Interest (Income). If the company has money in the bank after all loans have been repaid, it receives interest on the amount at prime – 2%.
  • Profit Before Tax. Margin – Marketing, Depreciation, R & D, and Interest.
  • Tax. Tax on profits paid to the government.
  • Net Profit. Profit before tax– Tax.
  • % Sales. The percent of Sales of each item on the Income Statement.

BALANCE SHEET

The Balance Sheet lists assets and liabilities at the end of the period. Assets, which are everything the company owns, always balance with liabilities and equity, which are everything owed to others. The Balance Sheet provides a comprehensive picture of a company’s financial condition.

CASH FLOW

The Cash Flow details the sources and uses of cash during the period. It starts with cash available at the start of the period, adds the sources of cash, deducts the uses, and ends with the amount of cash available at the end of the period.

  • Beginning Cash. Cash available for company operations at the end of the last period.
  • Net Profit. Profit – Tax. Usually a company’s primary source of cash.
  • Depreciation. Depreciation represents wear and tear on equipment. It is not actually paid, but because it is deducted from Net Profit on the Income Statement, it is a source of cash.
  • Capital Investment. An expenditure of cash for new equipment or factory expansion.
  • Cash. Money available to make decisions in the current period without borrowing from the bank.
  • Inventory. The average production cost of unsold products stored in the company warehouse.
  • Capital Investment. The value of a company’s factory and equipment. Capital Investment¸ $40 = Factory Capacity.
  • Total Assets. Sum of Cash, Inventory, and Capital Investment.
  • Loans. Money a company has borrowed from the bank.
  • Retained Earnings. The profit a company has made since the beginning of the simulation.
  • Capital. The original money used to start the company. Capital is equity, a pool of money that provides funding for further operations.
  • Liabilities + Equity. The sum of Loans, Profit, and Capital. Liabilities + Equities always equals Total Assets.
  • % Total. The percent of either Total Assets or Liabilities + Equity represented by each item.
  • Inventory Change. This category can be either negative or positive. Decreasing inventory returns cash that was tied up in Holo-Generators in the warehouse. Increasing inventory uses cash to pay for producing Holo-Generators that are not sold.
  • Net Loan. This category can also be either negative or positive. Borrowing from a bank is a source of cash. Repayment of a loan is a use of cash.
  • Ending Cash. Cash balance at the end of the period. Beginning Cash plus sources of cash less uses of cash.

 

COMPANY REPORTS

The Company Reports summarize company operations for the period. This section contains a list of Decisions for the period plus a Production Report, Marketing Report, and Investment Report.

Decisions

  • Price. The price of the company’s Holo-Generators.

  • Production. The number of Holo-Generators produced.

  • Marketing. The total marketing expenditures.

  • Investment. The total amount invested in the company’s factory.

  • R & D. The total spent on research and development.

Production Report

  • Production. The number of Holo-Generators manufactured.

  • Factory Capacity. The maximum number of Holo-Generators a company’s factory could have produced.

  • Capacity Utilization. Total Produced¸ Total Capacity. (595 produced¸ 700 capacity x 2100 = 85% capacity utilized.)

  • Production Cost/Unit. The average production cost of all Holo-Generators manufactured in the period.

  • Inventory. The number of Holo-Generators left unsold at the end of the period.

  • Employees. The number of people employed during the period.

Marketing Report

  • Orders Received. The number of orders for the company’s Holo-Generators.

  • Sales Made. The number of Holo-Generators sold.

  • Unfilled Orders. The number of orders received for which there were no Holo-Generators available.

  • Price/Unit Sold. The price of the company’s Holo-Generators.

  • Total Cost/Unit Sold. The full cost of each Holo-Generator sold including production costs and overhead expenses. Sales – Profit before Tax¸ Sales Made.

  • Margin/Unit Sold. The difference between Price/Unit Sold and Total Cost/Unit Sold.

Investment Report

  • Factory Size. The size of the company’s factory in terms of dollars invested and units of production capacity.

  • Net Investment. The amount of capital invested in excess of depreciation expressed in terms of dollars and units of production capacity.

  • Size Next Period. The size of the company’s factory in the upcoming period in terms of dollars invested and units of production capacity.