Simulating Scenarios for Finanacial Statement Analysis


 

Page 341 - Developments in Business Simulation and Experiential Learning, volume 39, 2012 

ABSTRACT 

 
A spreadsheet model is used to generate a number of sce-

narios for financial statements analysis purposes in a fi-

nancial management course. The model is capable of gen-

erating the three traditional financial statements character-

izing different scenarios in terms of liquidity, profitability, 

asset utilization, and debt. The instructor decides if the firm 

will have high, medium, or low liquidity, profitability, asset 

utilization, and debt and also the way in which the firm 

conducts its operations. At the beginning of the simulation, 

no items on the liability side of the balance sheet are in-

cluded and only cash and fixed assets are shown on the 

asset side. Everything is done on a cash basis and the firm 

has perfect knowledge of its sales volume which implies 

zero inventory. As the simulation progresses, the firm first 

offers credit to its customers, then requests credit from its 

suppliers, then creates inventory to account for imperfect 

knowledge of the market, and finally funds its operation 

with different sources of capital. Financial ratios are com-

puted at each stage. The advantage of this way of doing 

financial analysis is that as the scenario and the corre-

sponding financial statement increase their complexity, 

financial ratios also evolve, allowing for an interesting 

class discussion about the factors causing the difference in 

the financial ratios from stage to stage.  

SIMULATING SCENARIOS FOR FINANCIAL STATEMENT ANALYSIS 

 
Fernando Arellano 

University of Dallas 

farellano@udallas.edu  

 

Carlos Serrano 

EGADE Instituto Tecnológico y de Estudios Superiores de Monterrey, Mexico 

cserrano@itesm.mx  

 

mailto:farellano@udallas.edu
mailto:cserrano@itesm.mx

	Table of Contents
	Volume 39, 2012
	Designing the Training Challenge
	Follow The Leader: Are we Teaching our Students to be Thinkers or Followers?
	Two Free-Rider-Accepting Methods of Organizing Groups for a Business Game
	Additional Benefit Through Competency Models
	Assessing Brand Portfolio Normative Consistency & Trends With The Normative Position of Brands & Trends Package
	Modeling the Impact of Marketing Mix on the Diffusion of Innovation in the Generalized Bass Model of Firm Demand
	Play it Forward! The Design and Development of a Forward Contract Simulation
	Positioning the Company: Increasing Profits in Social Networks
	Merger of Companies in Business Game Exercise
	Towards a Knowledge-Based Approach for Autonomouse Trading Agent
	An Exploratory Study of the Impact of a Simulation Exercise on the Managerial and Personality Traits and the Decision Making Styles of Marketing Students
	Should the Concept of Potential Customers be the Foundation of Demand Theory in Business Simulations?
	Teaching Sustainability Experientially
	Drawing Upon Experience and Research to Improve Future Communications
	Improving Assessments of Student Learning Outcomes (SLO) Over Time
	The Effect of Affective Domain Characteristics on Behavioral or Psychomotor Outcomes
	Gossip?  No, Not Me!  An Experiential Exercise
	Student Advisement Using Gantt Charts: An Experiential Exercise in Management Theory
	Practicing Teachers as Digital Game Creators: A Study of the Design Considerations
	Designing and Solving Crossword Puzzles: Examining Efficacy in a Classroom Exercise
	Difficult Times Call for Innovative Measures: Microfinance as Experiential Learning in Higher Education
	Catalysts, Client Services, and Community Change: Interdisciplinary Collaboration in a Nascent Microfinance Initiative
	Build A Business . . . In An Hour or Less: Getting Closer to Reality into the Classroom
	Smart Goals: How the Application of SMART Goals can contribute to achievement of Student Learning Outcomes
	The Use of Data in "Live" Cases to Encourage Systems Thinking and Integrative Analysis: An Exercise Linking Human Resource Programs and Financial Outcomes in Real Organizations
	Experiential Education as a Process of Changing Mental Frames by Inducing Insight Learning
	Process and Content Integration in an Experiential Learning Guided Internship Program
	Good-bye Discussion Thread:  Creating a Community of Inquiry in an Online Master's Program
	Fiction as a Constructivist Tool for Learning Process Consultation in an Online Environment: Shaping the Context, Introducing the Dialogue
	Can Simulations Provide a Better Experience? A Capstone Application
	Modeling a Modest Proposal for Increasing the Efficiency of Academic Reserarch Dissemination
	Experience GEO: A Massively Multiplayer Game
	SysTeamsGames Three Games for Management Simulation
	SimVenture - A Start-Up Business Simulation
	Stellarbucks Simulation Developing Games Using Strategy Maps and Balanced Scorecards
	Strategy Dynamics Models - Powerful But Simple In-Class Games
	Simulating Scenarios for Financial Statement Analysis
	A Valuation Model of the Simulated Firm
	Writing the Land: An Interdisciplinary Experiential Approach
	On the Estimation of the Probability of Meeting Financial Commitments: A Behavioraial Finance Perspective Using Business Simulations