Compare expected performance to actual performance
In the case of negative deviations, be honest, but try to cast in a positive light – you’re trying to convince the BoD to not fire you
“An annual report is a comprehensive report on a company's activities throughout the preceding year. Annual reports are intended to give shareholders and other interested people information about the company's activities and financial performance.”
There are 2 main reasons teams get emergency loans. One is not selling as much as they predicted - this leads to lower-than-expected revenue as well as inventory carrying costs. The second reason is not adequately financing investments. Given that your team did not have excessive leftover inventory, I believe your emergency loan was due to the second reason. Confirming this I noticed that you issued and retired equal amounts of long-term debt, giving you net income from investing activities of $0. Basically, you were relying solely on revenue to fund your investments, and my guess would be that your proforma cash position was quite low. This means that even a small deviation from expected revenue was able to push you into emergency loan territory. Your emergency was small enough that it is unlikely to have a noticeable impact on your ability to make investments and raise capital. Nonetheless, you may want to be more generous in your proforma cash position going forward, because you definitely don't want another emergency loan. Please share this information with your group and let me know if you have any questions.
Amy also said that we just need to compare what we expected to what actually happened, talk about how we are positioned competitively for the next round (automation, awareness, position, etc.), how we would like to operate going forward, how we can avoid this. She said that we need to be a little more generous with our closing cash position going into the later rounds
Expectations
As a team, we expected to be profitable after the first round. It turns out that we were profitable, but we needed to get an emergency loan. This was not something that we expected based on prior experience with the simulation. We thought that paying off our outstanding bonds would leave us in a favourable position because we paid them off early.
Explanations
Reasons for any deviations from the executive summary was brought upon by the fact that we had decided to pay off long-term debt in the first round, whereas we did not do that in the practice round. The reason we got an emergency loan was because (insert reason here).
Production
Production went almost according to plan. In some areas we overproduced. In other areas we stocked out, which we did not expect based on the sales forecast. We didn’t expect to be carrying as much leftover stock as we actually did, we thought that aiming a little higher than the sales forecast would be best for all product lines. In the future, we think it would be best to aim higher in areas where we stocked out and to produce less in areas that we held more stock. We will not be producing any more product in the size segment and the low end segment because we would like to phase out of those segments gradually.
Financing-Devon
Cumulative Profit-Devin
Cash Reserves
Cash reserves refer to the highly liquidible assets and cash assets on hand. Our cash injections were both regular and substantial, however a high level of reinvestment largely depleted cash reserves. As such our 20116 cash reserve is at 0%, but should be expected to increase significantly during the year, and ended at a reasonable level in 2015. However, our current change in cash position is negative, and further losses in the cash flow could result in the need for emergency funding. In the future, the level of investment needs to be reduced in order to protect the total cash assets, and the amount of cash held available needs to be increased for maintain stability and ensure that there is substantial cash available to prevent the need to borrow emergency funding.
Stock
Shareholder investment provided significant income to the company in the previous year. Common stock, representing shareholder capital investment, totaled 18.2% for the year. It is recommended that a goal be set of maintain equal stock performance in the following year in order to ensure a steady inflow of funds through stockholder investment. Sale and purchase of common stock, however, has not generated a significant amount of cash flow activity in 2016 to date.
Market Share
Our projections for market share were on track with how much of the market we captured during this round. We wanted to capture a somewhat large portion of the market compared to our competitors, and we ended the round with a market share of 15.8% which gives us the fourth largest market share among our competitors. We also ended with $70 million in market cap putting us third among our competitors. Overall, we were happy with our reach over the market and feel we are sitting in a good place for next round. We are hoping that the introduction of our new traditional segment product Emu, that we will be able to increase our market share by having more products available to consumers in the market.
