Corporate Finance – Working Capital Simulation: Managing Growth Assignment
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following scenario:
Acting as the CEO of a small company called Sunflower
Nutraceuticals (SNC), you will apply the principles of capital budgeting to
invest in growth and cash flow improvement opportunities in three phases over
10 simulated years. Each opportunity has a unique financial profile and you
must analyze the effects on working capital. Examples of opportunities include
taking on new customers, capitalizing on supplier discounts, and reducing
inventory.
You must understand how the income statement, balance sheet, and
statement of cash flows are interconnected and be able to analyze forecasted
financial information to consider 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. You must optimize use
of internal and external credit as you balance the desire for growth with the
need for maintaining liquidity.
Write a paper of no more
than 1,400 words that analyzes your decisions during each phase (1-3) and how
they influenced each of the following final outcomes (metrics) of SNC:
- Sales
- EBIT
- Net Income
- Free Cash Flow
- Total Firm Value
Address the following in
your paper:
- A summary of your decisions and
why you made them - How they affected SNC’s working
capital - What general effects are
associated with limited access to financing
