Working Capital Simulation Managing Growth

1335 Words Feb 26th, 2015 6 Pages
Working Capital Simulation: Managing Growth
Gregory Smith
FIN/571
March 10, 2015
Mrs. Debra Hartsfield

Working Capital Simulation: Managing Growth
The Harvard Business Simulation asked that one act as the C.E.O. of Sunflower Nutraceuticals (which will be referred to as SNC throughout this paper). Within the simulation there were phase in which decisions were made to help SNC with the growth of the company. This paper will explain the decisions made will influence SNC to estimate the value of the company, the working capital of the company, and evaluate the general affects associated with the limited access of financial mix.
Sunflower Nutraceuticals Background
SNC is a privately owned organization that is a large distributor and
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Phase II. SNC Simulation (2016-2018)
In phase 2 there are 3 opportunities presented, these opportunities are:
Pursue Big-Box distribution – SNC established a partnership with Mega-Mart, the organization saw an increase in sales during 2016-2018. This did come with a reduction in EBIT as a result of the decision. The partnership will still prove beneficial in the long-term.
Expanding Online Presence- By expanding online presents SNC will have the opportunity to expand into new retail markets. SNC’s partnership with Golden Years Nutraceuticals has enabled the organization to attain a larger more diverse market. Between 2016 and 2018 there is an increase in sales and no negative impact to working capital.
Developing a Private Label Product- Making an agreement to develop a private label product with Fountain of Youth Spas modestly increased EBIT margin modestly resulting in an increase in accounts receivable and inventory balance (Harvard Business Simulation, 2013).
Phase III. SNC Simulation (2019-2021)
Like phase 2 there are 3 opportunities presented in phase 3. These opportunities consist of:
Acquiring a high risk customer- Midwest Miracles is a potential high-risk acquisition with excessive debt and presents a risky financial situation for SNC. Taking on Midwest Miracles will increase future sales in 2019, but will increase accounts receivable by 190 days and create a longer invoice pay out. The

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