Given your strategy, which performance measures are relevant and should be used by your stakeholders to assess your company$$s performance? What is their relative importance to each other? This is an essential determination as the simulation will score all teams to develop a winner$($s$)$ base on each team$$s selected criteria.

The simulation offers $8$ performance measures. You will find a brief explanation for each measure on the Capsim website under $$Homework$,$Success Measures$,$Criteria Definitions$$ links. Also read the Overview and review the lecture on financial ratios.

$1.$ Cumulative Profit

$2.$ Ending Market Share

$3.$ Average ROS

$4.$ Average Asset Turnover

$5.$ Average ROA

$6.$ Average ROE

$7.$ Ending Stock Price

$8.$ Ending Market Capitalization

To determine their importance relative to each other here, prioritize these measures by applying a weight between $0\%$ and $40\%$ to each of the $8$ performance measures. The percentages across all $8$ measures must add up to $100\%.$ For example, you might set Profit to $30\%,$ Market share to $20\%,$ ROS to $10\%,$ ROE to $10\%,$ Stock price to $10\%,$ and Market Capitalization to $20\%.$ Not all success measures are relevant to all strategies. The selection will depend on your strategy and must be consistent with your strategy.

Cumulative Profit at the end of $8$ Rounds Weight $=$

Question Blank $1$ of $8$

$30$

$\%$

Cumulative Profits is the total of all year's Net Profit. How Profitable the company has been over time.

Ending Market Share at the end of $8$ Rounds Weight $=$

Question Blank $2$ of $8$

$20$

$\%$

Percentage share of industry sales dollars. What portion of total industry sales a company has captured.

Average ROS for $8$ Rounds Weight $=$

Question Blank $3$ of $8$

$10$

$\%$

Since return on sales $($ROS$)$ gives the analyst an idea of the profit margin on a product, this ratio can reveal a great deal about product positioning and pricing policies. For example, a high ROS suggests premium pricing. This suggests the product will not be aimed at a commodity market. ROS is also a good indicator of demand and supply within the industry. The more competitive an industry, the more pressure there is on price and subsequently ROS falls. For example, the ROS of the airline industry has been low due to intense competition in the last few years.

Average Asset Turnover for $8$ Rounds Weight $=$

Question Blank $4$ of $8$

$5$

$\%$

Asset turnover tells an analyst more about volume of sales than it does about profitability $($the numerator is a top line number on the income statement, not a bottom line number$).$ Asset turnover $($T$/$O$)$ demonstrates how effective the asset base is in generating top line revenue. High T$/$O values have implications in terms of plant structure, level of backward integration, and aggressiveness of pricing policy.

Average ROA for $8$ Rounds Weight $=$

Question Blank $5$ of $8$

$15$

$\%$

Return on assets is an efficiency ratio. It compares the profits generated with the asset base required. It answers the question, how hard are you working your assets? There is an economic opportunity cost notion associated with this ratio. An operating manager may be challenged with how a dollar spent on assets might do compared with a dollar invested in some other area $($e$.$g$.,$ a bank account$),$ or how the ROA compares with the interest a firm is paying on the money borrowed to pay for the asset. ROA analysis can generate interesting discussions surrounding investment in more flexible manufacturing capabilities versus higher inventory levels.

Average ROE for $8$ Rounds Weight $=$

Question Blank $6$ of $8$

$10$

$\%$

Return on equity tells you how effectively a company is using the dollars invested in it by stockholders. According to Forbe's Magazine, ROE is the most often quoted single statistic when describing a firm's performance. It is also one of the statistics considered to be most useful by stockholders.

Ending Stock Price at the end of $8$ Rounds Weight $=$

Question Blank $7$ of $8$

$5$

$\%$

Stock Price is a function of book value. EPS and average dividend and investment.

Ending Market Capitalization at the end of $8$ Rounds Weight $=$

Question Blank $8$ of $8$

$5$

$\%$

Market Capitalization is calculated by determining the weighted average number of shares for a given period and then multiplying that number by the closing Stock Price. The recognition that Market Cap is a function of both share price and share volume is significant for this number tells you more about the real value of the company than just the share price alone. In the extreme a corporation could be trading at a huge P$/$E multiple but if it only had relatively few shares outstanding