Company 1 World 2 East International
Year 5 Quarter 1 CONSOLIDATED INCOME STATEMENT 09-26-2007
A BUSINESS POLICY GAME, 4TH EDITION 11:58:39
Copyright (c) 1995 by Richard V. Cotter and David J. Fritzsche
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Consoli- Merica Merica Merica
dated Area 1 Area 2 Area 3 Sereno
M$000s M$000s M$000s M$000s Ps000s
Net Sales:
to Customers 9092 1666 1400 1500 29055
to Affiliates (cost + 20%) -1 1620 0 0 0
to Liquidators (at cost) 0 0 0 0 0
Less Cost of Goods Sold 2490 2034 614 663 5135
Less Value Added Tax 453 0 0 0 2906
Gross Profit 6148 1252 786 837 21014
Selling Expense:
Advertising Expense 518 165 130 130 600
Sales Salaries 183 54 51 49 189
Sales Commissions 236 68 56 60 332
General Selling Expense 670 154 143 145 1466
Transportation Expense 292 16 94 105 492
Sales Office Depreciation 12 3 3 3 19
Other Selling Expense 0 0 0 0 0
Total Selling Expense 1912 460 477 492 3098
Admin and General Expense:
Research and Development 150 150 0 0 0
Total Training Expense 169 152 0 0 110
Storage Expense 32 22 7 3 0
Executive Compensation 252 87 29 29 685
Loan Interest 0 0 0 0 0
Bond Interest 50 50 0 0 0
Other Expense 0 0 0 0 0
Total Adm & Gen Expense 653 461 36 32 795
Total Operating Expense 2564 921 513 524 3893
Operating Profit (Loss) 3584 331 273 313 17121
Other Income:
CD Interest 73 73 0 0 0
Capital Gain (Loss) 0 0 0 0 0
Net Profit (Loss) Before Tax 3657 404 273 313 17121
Less Income Tax 1426 158 106 122 6677
Net Profit (Loss) After Tax 2231 246 167 191 10444
Dividend from Subsidiaries 0 1247 0 0 0
Dividends to Parent 0 0 228 218 5143
Dividends to Shareholders 0 0 0 0 0
Added to Retained Earnings 2231 1493 -61 -27 5301
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Notes: Translation Exchange Rate 1.00 1.00 1.00 6.42
Purchases from Affiliates is consolidated with Sales to Affiliates.
Dividends to Parent is consolidated with Dividends from Subsidiaries.
Minor differences in translation may be due to rounding errors.
Company 1 World 2 East International
Year 5 Quarter 1 CONSOLIDATED CASH FLOW ANALYSIS 09-26-2007
B BUSINESS POLICY GAME, 4TH EDITION 11:58:39
Copyright (c) 1995 by Richard V. Cotter and David J. Fritzsche
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Consoli- Merica Merica Merica
dated Area 1 Area 2 Area 3 Sereno
M$000s M$000s M$000s M$000s Ps000s
Operating Receipts:
Accounts Collected 9604 2070 1487 1581 28674
Net Sales to Affiliates -1 1620 0 0 0
Sales to Liquidators 0 0 0 0 0
Operating Expenditures:
Production Cost 1976 1305 0 0 4307
Purchases from Affiliates 0 0 643 720 1658
Operating Expense 2502 868 510 521 3874
Taxes Paid 1879 158 106 122 9583
Net Operating Cash Flow 3246 1359 228 218 9252
Investment Receipts:
CD Interest 73 73 0 0 0
CDs Matured 8000 8000 0 0 0
Subsidiary Dividends Rec'd 0 1247 0 0 0
Fixed Assets Sold 0 0 0 0 0
Investment Expenditures
CDs Purchased 6000 6000 0 0 0
New Equipment 0 0 0 0 0
Sales Office Investment 0 0 0 0 0
Plant Investment 640 0 0 0 4109
Subsidiary Stock Purchased 0 0 0 0 0
Net Investment Cash Flow 1433 3320 0 0 -4109
Financing Receipts:
Loans from Bank 0 0 0 0 0
Stock Sold to Parent 0 0 0 0 0
Bond Sale 0 0 0 0 0
Stock Sale 0 0 0 0 0
Financing Expenditures:
Interest Paid 50 50 0 0 0
Dividends Paid 0 0 0 0 0
Dividends to Parent 0 0 228 218 5143
Bank Loans Repaid 0 0 0 0 0
Bonds Repurchased 0 0 0 0 0
Stock Repurchased 0 0 0 0 0
Net Financing Cash Flow -50 -50 -228 -218 -5143
Beginning Cash Balance 6676 6320 100 100 1000
Net Cash Flow for Quarter 4629 4629 0 0 0
Cash Balance End of Quarter 11305 10949 100 100 1000
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Notes: Translation Exchange Rate 1.00 1.00 1.00 6.42
Purchases from Affiliates consolidated with Sales to Affiliates.
Dividends to Parent consolidated with Dividends from Subsidiaries.
Stock sold to Parent consolidated with Stock Purchased in Subsidiaries.
Minor differences in totals & translation may be due to rounding errors.
Company 1 World 2 East International
Year 5 Quarter 1 CONSOLIDATED BALANCE SHEET 09-26-2007
C BUSINESS POLICY GAME, 4TH EDITION 11:58:39
Copyright (c) 1995 by Richard V. Cotter and David J. Fritzsche
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Consoli- Merica Merica Merica
dated Area 1 Area 2 Area 3 Sereno
M$000s M$000s M$000s M$000s Ps000s
----- ASSETS -----
Cash Balance 11305 10949 100 100 1000
Time Certificates of Deposit 6000 6000 0 0 0
Accounts Receivable 4998 833 700 750 17433
Inventory 839 375 143 104 1396
Total Current Assets 23142 18157 943 954 19829
Net Sales Office 1369 349 349 349 2069
Net Manufacturing Plant 6140 3773 0 0 15194
Net Manufacturing Equipment 3439 1857 0 0 10155
Equity in Subsidiaries 0 10398 0 0 0
Total Fixed Assets 10948 16377 349 349 27418
Total Assets 34090 34534 1292 1303 47247
----- LIABILITIES -----
Bank Loans 0 0 0 0 0
Total Current Liabilities 0 0 0 0 0
Bonds Outstanding 2000 2000 0 0 0
Total Liabilities 2000 2000 0 0 0
Capital Stock 19350 19350 745 745 27394
Accumulated Earnings 13184 13184 548 559 19853
Cum. Translation Adjustment -444 0 0 0 0
Total Equity 32090 32534 1293 1304 47247
Total Liabilities & Equity 34090 34534 1293 1304 47247
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Notes: Translation Exchange Rate 1.00 1.00 1.00 6.42
Equity translated at historical exchange rates, others at current rates.
Total Equity accts of subs are consolidated with parent's Equity in Subs.
Minor differences in translation may be due to rounding errors.
Company 1 World 2 East International
Year 5 Quarter 1 OPERATING INFORMATION REPORT 09-26-2007
D BUSINESS POLICY GAME, 4TH EDITION 11:58:40
Copyright (c) 1995 by Richard V. Cotter and David J. Fritzsche
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PRODUCTION COST ANALYSIS
Consoli- Merica Merica Merica
dated Area 1 Area 2 Area 3 Sereno
M$000s M$000s M$000s M$000s Ps000s
Labor Cost 1139 801 0 0 2171
Materials Cost 673 414 0 0 1661
Maintenance Cost 164 90 0 0 475
Temporary Layoff Costs 0 0 0 0 0
Total Cash Expenditures 1976 1305 0 0 4307
Equipment Depreciation 217 143 0 0 472
Plant Depreciation 41 26 0 0 94
Total Production Cost 2233 1474 0 0 4873
Total Unit Production Cost 4.27 4.58 0.00 0.00 24
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OUTPUT, INVENTORY, AND SALES ANALYSIS
(in thousands of units)
Consoli- Merica Merica Merica
dated Area 1 Area 2 Area 3 Sereno
Beginning Inventory 220 191 21 8 0
Normal Capacity 520 312 0 0 208
Actual Output 523 322 0 0 201
Sales Office Orders 530 25 120 135 250
Sales Office Purchases 295 0 117 131 47
Sold to Affiliates 295 295 0 0 0
Sold from Area Production 331 136 0 0 195
Customer Orders 519 133 112 118 156
Total Sales 563 136 112 120 195
Sold to Liquidators 0 0 0 0 0
Ending Inventory 180 82 26 19 53
Total Industry Sales 1181 260 247 248 426
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PRODUCTION CAPACITY STATUS
Merica Merica Merica
Area 1 Area 2 Area 3 Sereno
Production Lines Currently Producing 6 0 0 4
Lines Reactivated for Next Quarter 1 0 0 0
Memo: Employee Training Expense 50 0 0 0
Lines Available for Reactivation 1 0 0 0
2nd Shift Lines Avail for Reactivation 3 0 0 0
Space Available for New Lines 2 0 0 2
New Addition Construction, Quarter 1 0 0 0 2
New Addition Construction, Quarter 2 0 0 0 0
Company 1 World 2 East International
Year 5 Quarter 1 OPERATING INFORMATION, Page 2 09-26-2007
E BUSINESS POLICY GAME, 4TH EDITION 11:58:40
Copyright (c) 1995 by Richard V. Cotter and David J. Fritzsche
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STANDARD COSTS PER UNIT
for Next Quarter
Merica Merica Merica
Area 1 Area 2 Area 3 Sereno
$ $ $ Ps
Model 4 Quality 2 Labor Cost 2.90 2.90 2.90 13.32
Savings Level 3 Material Cost 1.45 1.45 1.45 9.74
Model 3 Quality 2 Labor Cost 2.90 2.90 2.90 12.30
Savings Level 3 Material Cost 1.45 1.45 1.45 9.74
Note: For Quality 1 add 10%. For Quality 3 subtract 10%.
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SALES FORCE ANALYSIS
Merica Merica Merica
Area 1 Area 2 Area 3 Sereno
Active Salespeople (number of) 17 16 16 21
Salespeople in Training 1 0 0 2
Salespeople Resigned 0 0 0 0
Memo: Sales Training Expense 12 0 0 110
------CURRENT PERIOD DECISION SUMMARY------
| | | Salespeople | |
| | Price Adv | Hire Trans Comm Salary | Bank Loan 0 |
|Area 1 | 12.25 165 | 1 0 50 3200 | Bond Issue 0 |
|Area 2 | 12.50 130 | 0 0 50 3200 | Stock Issue 0 |
|Area 3 | 12.50 130 | 0 0 50 3060 | Dividends 0 |
|Sereno | 149 600 | 2 0 170 9000 | Time CDs 6000 |
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| | | | | | |
|R&D/Trng| | |Production | Capacity Adjustment| Construction |
|------| |Sales |------
|R&D 150| |Office| Schedule | Lay Deac- Reac-| New New New |
|Trng 90| |Orders|Lines Hours| Off tivate tivate| Lines Add Plant|
|------| Area 1 | 25 | 6 40 | 0 0 1 | 0 0 0 |
| Model | Area 2 | 120 | 0 0 | 0 0 0 | 0 0 0 |
|------| Area 3 | 135 | 0 0 | 0 0 0 | 0 0 0 |
|Model 3| Sereno | 250 | 4 40 | 0 0 0 | 0 2 0 |
|Qual 3| 2d Shft| | 0 0 | 0 0 0 | 0 |
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World 2 QUARTERLY INDUSTRY REPORT 09-26-2007
Year 5 Quarter 1 BUSINESS POLICY GAME, 4TH EDITION 11:58:40
F1 Copyright (c) 1995 by Richard V. Cotter and David J. Fritzsche
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FINANCIAL MARKET DATA
Merica Sereno | ---Credit Rating---
GDP Index (Nominal) 123.50 202.90 | Interest Rates: No. 1 No. 2 No. 3
Consumer Price Index 117.40 161.40 | Long-Term 8.40 9.50 10.30
Stock Market Index 117.40 | Short-Term 7.00 7.60 9.10
3-Month Time CD Rate 5.65 |
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REAL GROSS DOMESTIC PRODUCT FORECAST
Actual Values, Last 4 Quarters Forecast Values, Next 4 Quarters
Qtr 14 Qtr 15 Qtr 16 Qtr 17 Qtr 18 Qtr 19 Qtr 20 Qtr 21
Merica 100.44 103.78 104.58 105.20 105.41 106.56 109.08 107.76
Sereno 120.45 120.53 121.94 125.71 130.67 126.61 131.91 134.40
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EXCHANGE RATE FORECAST
Sereno 6.06 6.11 6.24 6.42 6.70 6.92 11.98 12.51
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Inves-
Stock Earn- Divi- tor Shares Bank Time Credit
Co. Price ings dends ROI Issued Bonds Loans Cash CDs Rating
1 12.27 0.203 0.000 49.2 11000 2000 0 11305 6000 1
2 1.24 0.083 0.000 -50.4 10000 2000 0 7842 5000 3
3 4.88 0.211 0.000 5.4 6000 3000 0 4907 4000 3
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Income Income Income Sales Bonds Int.
Net Fixed Total Total to to to to to Cover-
Co. Income Assets Assets Equity Assets Equity Sales Assets Equity age
1 2231 10948 34090 32090 6.5 7.0 24.5 26.7 6.2 74.1
2 835 6666 23131 21131 3.6 4.0 14.2 25.4 9.5 25.5
3 1264 5665 17332 14332 7.3 8.8 25.8 28.3 20.9 29.7
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Key: Company 1 East International
Company 2 Dinamo Co
Company 3 Vision
World 2 QUARTERLY INDUSTRY REPORT, Page 2 09-26-2007
Year 5 Quarter 1 BUSINESS POLICY GAME, 4TH EDITION 11:58:40
F2 Copyright (c) 1995 by Richard V. Cotter and David J. Fritzsche
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Sales Market ----Sales (in 000s)------Sales Office Orders---
Co. $000s Share Tot M1 M2 M3 S Tot M1 M2 M3 S
1 9092 47.7 563 136 112 120 195 530 25 120 135 250
2 5886 37.0 437 97 108 101 131 416 120 60 100 136
3 4897 15.3 181 27 27 27 100 205 35 35 35 100
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------Product Price------No. of Salespeople Estimated Advertising
Co. M1($) M2($) M3($) S(Ps) M1 M2 M3 S M1 M2 M3 S(Ps)
1 12.25 12.50 12.50 149 17 16 16 21 170 120 140 550
2 11.90 11.90 11.90 110 14 15 15 11 210 190 180 460
3 22.00 22.00 22.00 200 7 6 7 12 120 120 120 220
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------Production------Inventory------Plant Expansion
Co. Tot M1 M2 M3 S Tot M1 M2 M3 S M1 M2 M3 S
1 523 322 0 0 201 180 82 26 19 53 0 0 0 2
2 404 0 404 0 0 82 18 45 19 0 0 2 0 0
3 181 0 0 0 181 0 0 0 0 0 0 0 0 0
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Unit Unit Unit Product Total
Model Qual. Model New Prod Sell Admin R&D Training
Co. No. No. Avail Lines Cost Exp Exp Exp Expense
1 3 3 4 0 4.27 3.40 1.16 150 169
2 3 3 3 0 5.08 4.14 1.17 100 138
3 4 1 5 0 4.70 5.76 3.12 180 114
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Key: Company 1 East International
Company 2 Dinamo Co
Company 3 Vision
World 2 PRO-SCORE EVALUATION REPORT 09-26-2007
Year 5 Quarter 1 BUSINESS POLICY GAME, 4TH EDITION 11:58:40
I Copyright (c) 1995 by Richard V. Cotter and David J. Fritzsche
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Performance
measures Co. 1 Co. 2 Co. 3
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Total assets 1.00 0.72 0.50
weight 10 10 10
Total equity 1.00 0.69 0.45
weight 10 10 10
Dollar sales 1.00 0.76 0.65
weight 10 10 10
Net income 1.00 0.32 0.42
weight 10 10 10
Income/equity 1.00 0.49 0.90
weight 10 10 10
Income/sales 1.00 0.48 0.68
weight 10 10 10
Stock price 1.00 0.28 0.39
weight 10 10 10
Earnings/shr 1.00 0.42 0.76
weight 10 10 10
Market share 1.00 0.85 0.46
weight 10 10 10
Investor ROI 1.00 0.00 0.56
weight 10 10 10
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WEIGHTED TOTAL 1.00 0.50 0.58
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Key: Company 1 East International
Company 2 Dinamo Co
Company 3 Vision