Business Simulation Lab 4

Business Simulation Lab — Level 2

Business Simulation Lab

Executive Decision-Making & Financial Management Simulation

SIMULATION LEVEL 2
Management Simulation

Run the company.
Make the decisions.

You are now acting as the management team of a fictional company. Every decision affects profitability, liquidity, working capital, financing and shareholder value. Your objective is not simply to increase profit — it is to build a financially sustainable business.

Simulation Progress Decision 1 of 8
Simulation Company

Vertex Consumer Products Ltd.

A fictional mid-sized consumer products company entering a period of expansion. Management must balance growth, profitability, liquidity and shareholder expectations.

Opening Equity
$500,000
Revenue
$0
Current period
Net Profit
$0
After tax
Cash
$180,000
Available liquidity
Debt
$150,000
Interest-bearing
Management Score
50 / 100
Current assessment

Management Decision Center

Awaiting decision
Decision 01 / 08

Set Your Pricing Strategy

Vertex currently sells its core product at $100 per unit. You must decide how aggressively the company should position its price in the market.

Premium Pricing — $115
Higher margin, but expected demand falls by approximately 10%.
Market Pricing — $100
Balanced approach with stable demand and margins.
Penetration Pricing — $90
Lower margin but expected demand increases by approximately 20%.
Decision 02 / 08

Determine Inventory Strategy

Management expects stronger demand. How much inventory should the company maintain?

Lean Inventory
Lower carrying cost and stronger cash position, but higher stock-out risk.
Balanced Inventory
Maintain sufficient stock while controlling working capital.
High Inventory Buffer
Strong availability but ties up significant cash.
Decision 03 / 08

Choose Your Credit Policy

Customers are requesting longer payment terms. Decide how aggressively Vertex should extend credit.

Strict Credit — 15 Days
Strong cash conversion with potentially slower sales growth.
Standard Credit — 30 Days
Balanced relationship between sales and liquidity.
Aggressive Credit — 60 Days
Higher sales potential but substantially more receivables.
Decision 04 / 08

Financing & Borrowing

Vertex requires additional capital to support expansion. Choose how much debt the company should take on.

No Additional Borrowing
Protect the balance sheet but limit expansion capacity.
Moderate Borrowing — $100,000
Provides growth capital with manageable leverage.
Aggressive Borrowing — $250,000
Maximum expansion capacity but increases financial risk.
Decision 05 / 08

Capital Expenditure

Management can invest in production capacity. The investment may increase future efficiency but consumes cash today.

Maintain Current Capacity
Preserve cash and avoid additional depreciation.
Moderate Expansion — $100,000
Adds capacity and improves operating efficiency.
Major Expansion — $200,000
Significant growth opportunity with major cash investment.
Decision 06 / 08

Marketing Investment

Management must decide how much to invest in brand awareness and customer acquisition.

Defensive Marketing — $20,000
Protect the current customer base while preserving profit.
Growth Marketing — $50,000
Balanced investment in customer acquisition.
Aggressive Marketing — $90,000
High growth potential but significant immediate expense.
Decision 07 / 08

Dividend Policy

Shareholders expect a return on their investment. Decide how much profit should be distributed versus retained.

Retain All Profit
Maximum internal financing for future expansion.
Moderate Dividend — 30%
Balanced shareholder return and reinvestment.
High Dividend — 60%
Attractive shareholder return but reduces retained capital.
Decision 08 / 08

Final Management Strategy

You have one final decision. What should management prioritize during the next stage of the company’s development?

Profitability First
Focus on margins, cost control and cash generation.
Growth First
Accept greater short-term risk to build market share.
Balanced Strategy
Maintain equilibrium between growth, profit and liquidity.

Financial Statements

Live Simulation

Income Statement

Revenue $0
Cost of Sales $0
Gross Profit $0
Operating Expenses $0
Interest Expense $0
Tax $0
Net Profit $0

Statement of Financial Position

Cash $180,000
Receivables $100,000
Inventory $120,000
Property & Equipment $250,000
Total Assets $650,000
Debt $150,000
Equity $500,000

Cash Flow Statement

Operating Cash Flow $0
Investing Cash Flow $0
Financing Cash Flow $0
Net Cash Movement $0

Key Ratios

Gross Margin
0%
Net Margin
0%
Debt / Equity
0.30x
ROE
0%

Management Score

100 points
50
CURRENT MANAGEMENT PERFORMANCE
Make your first strategic decision to begin the assessment.

Decision Log

Management history
Simulation Status In Progress
LearnWithQazi™ Business Simulation Lab · Simulation Level 2

Designed for practical business, accounting and financial decision-making.