This document analyzes the financial performance of a business compared to its competitors over 8 rounds of a simulation. Key metrics such as return on sales, return on assets, return on equity, leverage, sales, profits, cash flow, current ratio, and balance sheet equity are examined for the business and its top competitors at each round. Overall, the business improved its financial performance over the rounds by making strategic investments in automation, training, research and development, and marketing. However, one competitor, Digby, saw especially strong growth later in the simulation by introducing new product lines supported by leverage.

1. Running head: OVERALL PERFORMANCE OF BUSINESS 1
Overall Performance of Business Compared to Competitors
Benjamin B. Norton
Western Governors University

2. Running head: OVERALL PERFORMANCE OF BUSINESS 2
Analysis of Financial Statistics ............................................................................................................3
Return on sales (ROS) - Net profit, generated each year, divided by total sales for the same period. .........3
Return on assets (ROA) - Net profit, generated each year,divided by the value of total assets for the same
period. ...............................................................................................................................................3
Return on equity (ROE) - Net profit, generated each year,divided by the value of owners' equity for that
year. ..................................................................................................................................................4
Leverage - Total assets at the end of the period under review divided by owners' equity for the same
period. ...............................................................................................................................................5
Sales – Total revenue generated by the company through the sales of its product. ...................................5
Profits – Income left over after paying all expenses...............................................................................6
Cash Flow Statement – shows how changes in balance sheet accounts and income affect cash and cash
equivalents, and breaks the analysis down to operating, investing, and financing activities. .....................7
Current Ratio – Current assets divided by current liabilities...................................................................8
Balance Sheet - assets = liabilities + owners equity...............................................................................8
Income Statement – Shows revenue minus expenses with either a positive or negative amount (net
income) at the end...............................................................................................................................9
Ethical Decisions ..............................................................................................................................10
Ending Stock Price ...........................................................................................................................10
Dividends – sum paid regularly by a company to its shareholders out of its profits................................11
Earnings per Share – portion of a company’s profit allocated to each outstanding share of common stock.
........................................................................................................................................................12
Bond Rating.....................................................................................................................................12

3. Running head: OVERALL PERFORMANCE OF BUSINESS 3
Analysis of Financial Statistics
Return on sales (ROS) - Net profit, generated each year, divided by total sales for the same
period.
Round 1 - -3.2%, Baldwin 6.7%
Round 2 – 5.2% Ferris 5.7%
Round 3 – 6.7% Baldwin 5.8%
Round 4 – 8.3% Chester 6.3%
Round 5 – 14.1% Erie 8.3%
Round 6 – 13.5% Erie 12.2%
Round 7 -13.8% Baldwin 8.1%
Round 8 - 20.2% next competitor was 15.2% (Erie)
The trend started out with negative ROS and with good repositioning of product lines and
marketing spend were able to improve ROS. Starting in year 6 we had excess inventory, which
resulted from over forecasting production when in reality we lost sales due to positioning, which
affected overall sales negatively. Once identified and corrected the ROS trend improved. Many
of our competitors improved too as a result of strengthening their plant and production positions.
Some of our competition focused more on marketing and product positioning within the
segments and some opted to introduce a new product line while others tried to undercut on price.
Return on assets (ROA) - Net profit, generated each year, divided by the value of total assets for
the same period.
Round 1 - -3.0%, Baldwin & Ferris 7.6%
Round 2 -6.2 % Ferris 7.0%
Round 3 – 6.7% Baldwin 7.8%
Round 4 – 9.8% Chester 6.7%
Round 5 – 16.5% Baldwin 6.9%
Round 6 – 15% Erie 11%
Round 7 – 16% Chester 10.7%

4. Running head: OVERALL PERFORMANCE OF BUSINESS 4
Round 8 – 23.1% Chester 15.4%
ROA followed a similar trend as ROS. Starting in round 6 and 7 we started investing
more into automation, which improved our plant and equipment sections on the balance sheet
thus leading to improved ROA towards the end. Our profit increased slower than our
competitors by quite a bit as the ratio indicates. This would be because we were slower to
introduce automation and allocating a larger amount into TQM as perhaps our competition did.
We didn’t start to catch up in this regard until round 4, which is when we started and maintained
our advantage in this regard for the remainder of the competition. We saw a large jump in the
ratio in round 8 due to fully automating our plant and maximizing our TQM spend in comparison
to our competitors.
Return on equity (ROE) - Net profit, generated each year, divided by the value of owners' equity
for that year.
Round 1 - -6.4 %, Ferris 14.8%
Round 2 – 12.6% Ferris 14.3%
Round 3 – 14.3% Baldwin 15.5%
Round 4 – 16.5% Baldwin 12.1%
Round 5 – 26.5 % Erie 14.6%
Round 6 - 25.5% Erie 23%
Round 7 – 27.2% Chester 19.6%
Round 8 – 41.4% Chester 29.6%
We were able to utilize the retained earnings that the company had to invest in
automation, R&D, and gaining traction with customers via promotion and sales budget. This
strategic spending led to a steady increase in our ROE percentage throughout the simulation. We
issued large amounts of long-term debt at times throughout the competition which lowered the
denominator in the ratio, owner’s equity, and thus showed us lagging the competition for the first

5. Running head: OVERALL PERFORMANCE OF BUSINESS 5
several rounds. We did use the funds however to further invest in our staff and plant production
efficiency, which led to larger gains in owner’s equity in the later rounds with an almost 50%
turnaround from round one to eight.
Leverage - Total assets at the end of the period under review divided by owners' equity for the
same period.
Round 1 - 2.1, Chester & Erie 2, Baldwin Digby & Ferris 1.9
Round 2 - 2.0, Erie & Baldwin 2.1, Chester Digby & Ferris 2.0
Round 3 - 2.1, BCE&F 2.0, Digby 2.1
Round 4 - 1.7, Ferris 2.0, Erie 2.2
Round 5 - 1.6, CD&F 2.1, Erie 1.9
Round 6 - 1.7, Chester 2.4, D&E 2.1
Round 7 - 1.7, Erie 2.1, Chester 1.8
Round 8 - 1.8, B&F 2.0 CD&E 1.9
In the initial rounds we relied more heavily on cash on hand to buy automation and
capacity. Towards the end of the simulation however we started to issue more long term debt to
purchase automation, capacity, and R&D research. We realized that there is such a thing as
healthy leverage, which takes into account having sufficient cash on hand and at the same time
using leverage and thus we saw an increase in debt issues and increase to our leverage ratio
starting in round 6. We weren’t quite able to get to that ideal ratio by the end of the competition
unfortunately. The competition throughout obviously grasped this concept practically from the
beginning as they maintained the ideal leverage ratio of 2 amongst the various competitors
throughout all of the rounds.
Sales – Total revenue generated by the company through the sales of its product.
Round 1 - 116,174,375, Top - Baldwin 126,760,206, Bottom - Erie 112,956,836
Round 2 - 162,198,158, Top - Digby 142,967,621, Bottom - Baldwin 112,723,972
Round 3 - 160,066,522, Top - Ferris 163,187,571, Bottom - Erie 124,466,243

6. Running head: OVERALL PERFORMANCE OF BUSINESS 6
Round 4 - 174,812,992, Top - Baldwin 184,974,013, Bottom - Erie 134,922,742
Round 5 - 217,315,250, Top - Baldwin 208,347,932, Bottom - Erie 162,850,898
Round 6 - 244,431,671, Top - Digby 263,884,011, Bottom - Chester 135,951,104
Round 7 - 263,819,149, Top - Digby 320,947,537, Bottom - Erie 171,477,030
Round 8 -$279,859,418, top - Digby $364,192,789 Bottom - Ferris 199,618,300
We continuously increased our sales in all rounds except one round. We used our funds
better than the competition to get favorable financial statistics as the simulation progressed. It
can be safe to say that Digby certainly saw a huge increase in their sales due to effectively
utilizing the leverage they engaged in rounds 3, 5, and 6. Had we used a little more leverage it’d
be safe to assume that we may have seen such an explosive growth in our revenue numbers as
Digby. We however did not and so by round 6 we started to see a lag behind Digby. Digby also
had introduced another product and so their sales were being produced from at least one more
product line than we had.
Profits – Income left over after paying all expenses.
Round 1 - -3,695,098, Top - Baldwin 8,453,740, Bottom - Chester 4,380,809
Round 2 - 8,356,561, Top - Digby 8,020,210, Bottom - Baldwin 5,031,182
Round 3 - 10,751,950, Top - Baldwin 8,991,169, Bottom - Erie 3,336,809
Round 4 - 14,506,990, Top - Chester 9,967,292, Bottom - Erie 4,463,942
Round 5 - 30,596,034, Top - Baldwin 13,722,697, Bottom - Ferris 783,908
Round 6 - 32,968,167, Top - Erie 25,542,397, Bottom - Chester -3,988,950
Round 7 - 36,538,842, Top - Chester 21,055,181, Bottom - Ferris 4,338,049
Round 8 - $56,479,388, Top - Erie $34,218,404 Bottom - Ferris 8,561,725
Wise investment in HR, TQM, automation, and R&D led to record profits amongst all
competitors in the industry and great year over year growth for our own company. Not all of our
competitors engaged in as much automation and soft skills investment as we did. These
investments helped us lower our labor and material costs, which despite larger sales, did not
translate to an equal or bigger proportional increase in expenses, but instead led to lower costs

7. Running head: OVERALL PERFORMANCE OF BUSINESS 7
and hence why we started to see record profits and year 8 seeing 55% year over year growth in
our profit.
Cash Flow Statement – shows how changes in balance sheet accounts and income affect cash
and cash equivalents, and breaks the analysis down to operating, investing, and financing
activities.
Round 0 - Net Chg in CF - $2,434,000. Top competitor - $2,434,000.
Round 1 - Net Chg in CF - $40,192,000. Top competitor - $19,587,000 (Baldwin) Lowest -
$17,315,000 (Erie)
Round 2 - Net Chg in CF - ($13,379,000). Top competitor - $7,490,000 (Chester) Lowest -
$515,000
Round 3 - Net Chg in CF - ($26,247,000). Top competitor - ($5,848,000) (Baldwin) Lowest -
($10,519,000) (Chester)
Round 4 - Net Chg in CF - $31,448,000. Top competitor - $26,801,000 (Digby) Lowest -
$19,268,000 (Baldwin)
Round 5 - Net Chg in CF - $5,718,000. Top competitor - $69,000 (Baldwin) Lowest -
($16,286,000) (Chester)
Round 6 - Net Chg in CF - $16,683,000. Top competitor - $36,329,000 (Digby) Lowest -
$12,710,000 (Chester)
Round 7 - Net Chg in CF - ($35,049,000). Top competitor - $8,465,000 (Chester) Lowest -
($39,896,000) (Erie)
Round 8 - Net Chg in CF - $19,925,000. Top competitor - $26,085,000 (Erie) Lowest -
($9,185,000 (Baldwin)
Our company bounced around the middle of the pack throughout the years for net change
in cash flow. Round 3 is when we experienced the large emergency loan hence the large
negative change in cash flow. In round 7 we invested heavily into automation. Digby
introduced two new product lines throughout the simulation, which is part of they experienced a
large change in cash flow later on in the simulation.

8. Running head: OVERALL PERFORMANCE OF BUSINESS 8
Current Ratio – Current assets divided by current liabilities.
Round 1 - 9.38, highest competitor - 2.20 (Baldwin), lowest competitor - 2.02 (Chester)
Round 2 - 2.61, highest competitor - 1.91 (Chester), lowest competitor - 1.67 (Baldwin)
Round 3 - 1.28, highest competitor - 1.83 (Baldwin), lowest competitor - 1.50 (Digby)
Round 4 - 2.32, highest competitor - 1.78 (Ferris), lowest competitor - 1.56 (Baldwin)
Round 5 - 5.94, highest competitor - 2.11 (Erie), lowest competitor - 1.46 (Ferris)
Round 6 - 2.75, highest competitor - 1.72 (Erie), lowest competitor - 1.30 (Chester)
Round 7 - 4.91, highest competitor - 2.33 (Chester), lowest competitor - 1.49 (Erie)
Round 8 - 7.75, highest competitor - 2.43 (Erie), lowest competitor - 1.77 (Ferris)
Aside from round three, we had a better Current Ratio than all of our competitors, which
means we had more assets than liabilities and greater liquidity throughout the simulation, which
allowed for higher spending limits for automating and investing in our people throughout the
simulation. Through large sales and profit growth we saw large cash balances in the later rounds
and by coupling that with lower debt issuance in comparison to our competitors we saw a large
increase in our current ratio, which historically is a measure of whether or not a company has
enough resources to pay its debts over the next year.
Balance Sheet - assets = liabilities + owners equity
Round 1 - Highest equity at $57.947 million. Lowest equity competitor was Ferris at $47.217
million.
Round 2 - Highest equity at $66.303 million. Lowest equity competitor was Ferris at $51.339
million.
Round 3 -Highest equity at $75.375 million. Lowest equity competitor was Baldwin at $58.015
million.
Round 4 -Highest equity at $87.770 million. Lowest equity competitor was Chester at $69.771
million.
Round 5 - Highest equity at $115.246 million. Lowest equity competitor was Chester at $79.842
million.
Round 6 -Highest equity at $129.288 million. Lowest equity competitor was Chester at $79.284
million.
Round 7 - Our equity was 3rd at $134.125 million. The highest equity was Dibgy at $144.837
million. Lowest equity competitor was Ferris at $90.474 million.

9. Running head: OVERALL PERFORMANCE OF BUSINESS 9
Round 8 -Our equity was 3rd at $136.521 million. The highest equity was Dibgy at $157.495
million. Lowest equity competitor was Ferris at $85.939 million.
We maintained the healthiest balance sheet through the first 6 rounds and then
experienced slightly lower growth rates, which resulted in lower overall equity that placed us in
the top 3 amongst the competition for maintaining a healthy balance sheet. Through our
aggressive automation and TQM spending we were able to grow our equity side of the balance
sheet rapidly with a slight taper. Digby may have seen a large increase in its equity through its
higher leverage, which resulted in the introduction of another product line and higher revenues,
which also contributed to greater profits and owner’s equity in the later rounds.
Income Statement – Shows revenue minus expenses with either a positive or negative amount
(net income) at the end.
Round 1 - Highest net income was Baldwin at $8.454 million. The lowest net income was ours
at ($3.695) million.
Round 2 - Highest net income was ours at $8.357 million. The lowest net income was Baldwin
at $5.031 million.
Round 3 - Highest net income was ours at $10.752 million. The lowest net income was Erie at
$3.337 million.
Round 4 - Highest net income was ours at $14.507 million. The lowest net income was Erie at
$4.464 million.
Round 5 - Highest net income was ours at $30.596 million. The lowest net income was Ferris at
$.784 million.
Round 6 - Highest net income was ours at $32.968 million. The lowest net income was Chester
at ($3.989) million.
Round 7 - Highest net income was ours at $36.539 million. The lowest net income was Ferris at
$4.338 million.
Round 8 - Highest net income was ours at $56.479 million. The lowest net income was Ferris at
$8.562 million.
After initial investments in the early rounds we were able to show record net income
levels throughout the rest of the simulation ending with a reported net income of $56.479 million
in round/year 8. We were able to almost quintuple our net income in comparison to companies

10. Running head: OVERALL PERFORMANCE OF BUSINESS 10
like Chester and Ferris due to healthy rebalancing of product lines via R&D and a substantial
investment into our plant production and automation, which led to larger and larger contribution
margins on each of our product lines.
Ethical Decisions
Round 3 - We chose to discard the green message altogether and launch a campaign that focuses
on changes that have made the company more energy efficient. Our decision increased demand
by 1% for the remaining rounds. Competition mentioned some green measures in their
campaign, which took away from some of our sales.
Round 5 - We chose to provide the vice president of production with marketing’s sales forecast
so he can continue working on the ISO certification, but say nothing further about the solvent
issue. At the golf outing, casually mention your concerns to the senior vice president of
production. Demand initially grew by 5% during rounds 5 and 6, but tapered to 4% for rounds 7
and 8. Our material and admin costs increased significantly and we saw a 10% increase in
customer awareness for rounds 6, 7, and 8.
Round 6 - We chose to notify senior management of the tainted contract and let the General
Counsel attempt to renegotiate it, despite the potential loss of wide margins built into the initial
contract. Terminate the sales rep. Institute departmental training sessions, which underscores
your company’s code of conduct. We were able to renegotiate the contract, but with smaller
margins, which lead to increased demand and productivity. The extra trainings however
increased our admin costs by 50% for rounds 7 and 8.
Ending Stock Price
Round 1 - $25.71, Baldwin $46.92 - Every team was at least $13 more than us
Round 2 - $34.99, Digby $49.74 - Every team was at least $7 more than us
Round 3 - $43.75, Baldwin $51.91 (highest)
Round 4 - $65.25, Baldwin $58.24 (next highest)
Round 5 - $100.54, Baldwin $67.25 (next highest)
Round 6 - $129.89, Erie $90.49 (next highest)
Round 7 - $152.26, Erie $90.51 (next highest)
Round 8 - $208.50, Digby $117.99 (next highest)208.
Stock price is indicative of overall health and performance of a company. This is readily
apparent in our stock price throughout the years. Digby was able to approach about 50% of our

11. Running head: OVERALL PERFORMANCE OF BUSINESS 11
stock price through the use of leverage that was previously talked about, which allowed them to
introduce a new product line, which may have enticed investors due to them showing the
marketplace that they were capable of diversifying and staying relevant in a changing
marketplace with changing consumer preferences. It is believed though that all competitor stock
prices paled in comparison to ours due to our manufacturing and marketing prowess as well as
the aggressive dividend that we offered to our investors, which was a gesture of gratitude and
thanks for their investment. We also spent a fair amount to repurchase shares, which reduced the
supply out there thus enhancing the value of each remaining share.
Dividends – sum paid regularly by a company to its shareholders out of its profits.
Round 1 - $0, Ferris $3.45 (highest)
Round 2 - $0, Baldwin $3.84 (highest)
Round 3 - $0.70 (2%), Baldwin $3.00 (highest)
Round 4 - $0.88 (2%), Chester $1.72 (highest)
Round 5 - $1.30 (2%), No other company gave out a dividend this year
Round 6 - $3.01 (3%), Erie $2.64 (next highest)
Round 7 - $7.80 (6%), Ferris $1.82 - Ferris is the only other company who gave a dividend
Round 8 - $18.27 (12%), Chester $14.60 (next highest)
We increased dividends to lower our days of working capital and to reward investors in
the company. This may have contributed to almost doubling the next closest competitor’s stock
price at the end of year 8. In the beginning rounds we opted against a dividend and kept them as
retained earnings, which we used to invest in plant, production, and human resource
development. Once we had sufficiently invested and were seeing the results we wanted we then
opted to disburse excess profits to our investors in the form of higher dividends. Our
competitors followed this same path and logic it seems throughout much of the competition.

12. Running head: OVERALL PERFORMANCE OF BUSINESS 12
Earnings per Share – portion of a company’s profit allocated to each outstanding share of
common stock.
Round 1 - -$1.54, Baldwin $4.13 (highest)
Round 2 - $3.48, Digby $3.88 (highest)
Round 3 - $4.48, Baldwin $4.39 (next highest)
Round 4 - $6.04, Chester $4.82 (next highest)
Round 5 - $12.75, Erie $5.51 (next highest)
Round 6 - $14.46, Erie $10.45 (next highest)
Round 7 - $16.87, Chester $8.91 (next highest)
Round 8 - $27.45, Erie $13.71 (next highest)
EPS was aided by company performance mixed with the fact that we retired large
numbers of shares towards the end of the competition starting in round six. The last several
rounds we opted to retire as many shares as possible. Our competition EPS amount was roughly
50-100% less than what ours was. This measure is directly related to our net income, which our
company also had the highest amount in comparison to any of our competitors. Our initiatives
of investing in plant and production automation as well as TQM and HR led to a much higher
EPS in comparison to our competitors who didn’t invest as much in these areas as we did.
Bond Rating
Round 1 - CCC - Every other company was at a B rating, we took the max stock & bond issue
Round 2 - B - Most companies were also at a B, Baldwin had CCC
Round 3 - CCC - This is the round we had the emergency loan, every other company had a B
rating
Round 4 - BBB - Ferris had a B rating, all other companies had a CCC rating
Round 5 - A - Ferris had a CCC rating, all other companies had a B rating
Round 6 - BBB - Chester had CC rating, all other companies had a CCC rating
Round 7 - BBB - Erie had a CCC rating, Chester had BB, Baldwin, Digby and Ferris all had a B
rating
Round 8 - BB - Erie had a BB rating, all other companies had a B rating
We were able to improve our rating throughout the competition by increasing the
effectiveness of our asset allocation within the company, i.e. investing more heavily in R&D,

13. Running head: OVERALL PERFORMANCE OF BUSINESS 13
automation, HR, and TQM versus what our competition did in said categories. While we did
issue long-term debt throughout the competition we were able to utilize our company strategy to
synergize and multiply our asset’s effectiveness. Our competition had seemingly erratic bond
ratings throughout the competition, which is indicative of not issuing the appropriate amount of
debts for their respective company’s needs. This is further validated by the fact that no
competitor managed to achieve an “A” rating, while we were able to do so in round 5.