THE MANAGEMENT REPORT

YOUR COMPANY

The first part of this report contains information solely about your company.
It describes all the entries in your report and defines the arithmetic derivation of each number, where possible.

It consists of:

The second part gives information about all the companies in your group, plus information about the economy in which you operate.

On receipt of your management report, check that -

If any of these are incorrect please contact the simulation controller as quickly as possible.

DECISIONS

The first section of your report shows the decisions which were actually used (or in effect) last quarter. Normally these numbers are the same as the decisions you made, or tried to enter, but there are three ways in which they might differ. Any such difference will be marked by an appropriate symbol -

If a number is different, and there is no error indicator, you should contact the simulation controller immediately so that a check can be made against the decisions which you sent. If the number turns out to have been wrongly entered into the computer, then the appropriate action can be taken.

Note that it can only be corrected within an appropriate period, which will be communicated in advance by the simulation controller.

The rest of the report gives you information about the state of your company and the simulation. It will either tell you what happened last quarter, the state of some parameters of your company now, or say something about next quarter. It also gives you information about your competitors and the economic environment.

The remainder of this part of the manual examines each of the headings of the report in turn and explains how the corresponding figure was obtained.

RESOURCES EMPLOYED

PHYSICAL RESOURCES (availability and usage)

Space

This section shows the utilisation of your land (in square metres) at the end of last quarter.

It also shows the size of your factory (in square metres) at the end of last quarter, and how the space available for production will be used at the start of next quarter.

If you ordered components last quarter, an allowance is made for the the space required for their initial delivery (assumed to be one sixth of your total order).

For component and material stocks, it shows the storage area required even if you do not have the space to store them in your factory (see below).

Available space (overflow if negative): shows the unused space (in square metres) available in your factory at the beginning of next quarter. If negative, it implies that you will have to use external storage for at least some of your material or component stocks.

MACHINES

Number decommissioned at the beginning of last quarter, and sold during last quarter.

Machines in use last quarter: Machines available next quarter from the quarter before last, less the number you decommissioned.

Number bought and installed at the end of last quarter.

Machines available next quarter: the number of machines available for use next quarter. Machines in use last quarter, plus the number you installed last quarter.


Theoretical hours available: the number of machines available to you last quarter, multiplied by the maximum number of hours each could work under the shift system decided.

Breakdown time: the total number of hours during which machines were out of production due to breakdown and repair. Where breakdown time is partly due to catastrophic failure of a machine, you may be able to claim the cost of repair against your insurance. Look for the "!" sign to see if this is the case.

Used last quarter: the total number of hours of machine time used to produce products last quarter. The number of units of each product which were machined, multiplied by the machining time appropriate to each, extended by the effect of declining machine efficiency.

Maintenance hours: the number of hours of preventive maintenance given to your machines last quarter, outside of normal production time. The maintenance hours you decided multiplied by the number of machines in use, less breakdown time. If breakdown time exceeded the number of maintenance hours allocated, no maintenance will have been carried out.

Average machine efficiency %: the theoretical minimum number of hours which should have been taken to manufacture your products last quarter, compared with the actual time.

MATERIALS

A) Opening stock: the number of units of material available at the beginning of last quarter. Closing stock at the end of the quarter before last plus any material ordered in earlier quarters for delivery last quarter (see F & G below taken from the report for the quarter before last).

B) Bought spot: Material ordered at the beginning of last quarter for delivery last quarter. This figure includes any premium materials purchased last quarter.

C) Bought default: Material bought last quarter to make good any shortfall in material ordered. Materials used from D & E less the total of materials from A & B, if positive.

D) Lost or destroyed: The number of material units lost, stolen or spoiled in your own warehouse last quarter. (Look for the "!" sign).

E) Used last quarter: The total number of units of material used last quarter. The number of each product delivered, plus rejects last quarter, multiplied by the material content of each.

F) Closing stock: the number of units of material on hand at the end of last quarter, to be carried forward into next quarter. The sum of A, B & C, less D & E.

G) For delivery next quarter: the number of units of material ordered by you last quarter, and in the quarter before last, for delivery next quarter.

H) For delivery quarter after next: the number of units of material ordered last quarter for delivery in the quarter after next.

PRODUCTION EMPLOYEES

At start of last quarter: the number of skilled assembly workers and unskilled machine operators available to you at the beginning of last quarter. This is the number of skilled workers that worked for you throughout last quarter. For unskilled workers this is simply the number that were available to you at the start of last quarter.

Recruited: the number of each type of worker which you successfully recruited last quarter. Skilled workers were recruited at the end of last quarter, and hence did not work during that period. Unskilled workers were recruited automatically at the beginning of the quarter, to make up the number needed to operate your machines at the shift level decided (4 workers per machine, per shift).

Trained: the number of workers trained last quarter to be skilled assembly workers, after being recruited from the pool of unemployed unskilled labour. They can work for you next quarter.

Dismissed: the number of each type of worker which you decided to dismiss last quarter. Skilled workers were dismissed at the end of last quarter and hence worked for you during that period. Unskilled workers were dismissed at the beginning of last quarter. Unskilled workers are dismissed only as a result of a reduction in the number of machines, or a lowering of shift level, but as only half of any surplus labour can be dismissed in one quarter it is possible to have more unskilled workers than you need.

Left: the number of each type of worker who left because of retirement, sickness, or who went to work for rival companies. All of these would have left at the end of last quarter.

Available for next quarter: the number of each type of worker who will be available to you at the beginning of next quarter. The number of unskilled workers may then change immediately due to changes in the number of machines or in the level of shift working. This figure is the total of 'Personnel at start of quarter' plus 'Recruited' and 'Trained', less 'Dismissed' and 'Left'.

Assembly workers

Assembly hours available last quarter: the number of skilled workers you had available last quarter multiplied by the maximum number of hours that each could have worked, less a fixed number of hours per worker for each strike week notified at the end of the quarter before last (see below).

Absenteeism: the number of skilled man-hours lost through workers being sick, or not starting work for other reasons. Where part of absenteeism is due to serious illness or accident the cost of it may be covered by insurance. Look for "!" alongside to show that you have had a problem which may be claimed on insurance, if your cover is sufficient. The precise number of hours attributable to serious illness is not shown.

Hours worked: the total number of paid hours worked by skilled assembly workers last quarter. Defined as, the number of products you produced last quarter, multiplied by the assembly time for each product decided by you last quarter.

Notice of strike weeks next quarter: The number of weeks' work which will be lost by each skilled worker next quarter, due to intended industrial action. This is a fixed number of hours per person per week.

AGENTS and DISTRIBUTORS

Details of changes to your sales agents in the European market and distributors in Nafta.

Active last quarter: The number of agents and distributors who represented you last quarter. Equal to 'Active next quarter' from the quarter before last.

Resigned: The number of agents and distributors who decided to stop representing you. This is possibly because they felt that they were not making sufficient profit, or are not being supported sufficiently by your advertising or commission levels, compared to other companies.

Dismissed: The number of agents and distributors who you decided should stop representing you at the end of last quarter by a decision taken at the beginning of last quarter

Appointed: The number of new agents and distributors who have agreed to represent you from the beginning of next quarter. They were appointed last quarter to fulfill your decision on the target size of your network taken at the beginning of last quarter. You may not have attracted all the agents and distributors you were seeking. Agents and distributors are attracted to your network for broadly the opposite reasons that make them leave.

Active next quarter: The number of agents/distributors who will represent you next quarter.

TRANSPORT

Journey length (km): the average length of journey made when delivering your products to the agents and distributors. The trips to your internet distributor and to the port used for shipment to Nafta are of a fixed length. For Europe, the average number of days taken per journey will be the average journey distance divided by the daily distance limit. Part days will be rounded up, to cover maintenance, loading, etc.

Number of loads: The number of container loads of products sent to each area. Part loads are rounded up to full loads. This is equivalent to the number of journeys.

INTERNET STATISTICS

This section gives performance statistics relating to your internet operation. If you are not operating a web-site the statistics will show as 0.

Number of internet ports: The number of ports which you decided to operate last quarter. This determines the capacity of your web-site (see below).

Number of visits to your web-site: The number of successful visits made to your web-site last quarter. This shows the degree of interest in your web-site. Your success in converting these visits into orders for products will depend on the effectiveness of your web-site and on the marketing image of your products. This statistic is provided by your ISP.

Estimated level of failed visits (%): the number of failed attempts to visit your web-site last quarter divided by the total number of potential visits. This performance statistic is provided by your ISP.

Internet service complaints: The number of complaints received by your internet distributor because of poor packaging, incorrect addressing, or other delivery problems. It is an indication of the efficiency of your internet distributor's operation, and affects your marketing image.

CARBON FOOTPRINT

This shows your primary carbon footprint or CO2e (carbon dioxide equivalent). It is made up from your use of energy for factory heating and lighting, plus the energy used in your machining and assembly operations (see Table 27).

There is a cost for offsetting your primary footprint. This service is purchased from a charity who plant trees whose lives will offset the carbon footprint you generate. The cost (at a rate of €40 per tonne of CO2e) is included under 'other costs' in your administrative expenses.

Note: it does not show your secondary carbon footprint, which consists of the CO2e generated by other firms from whom you purchase products and services such as buildings, machines, materials, subcontracted components and hired transport. Even though you are responsible for it (because it is 'embodied' in your products) you do not offset this footprint.

PRODUCT DATA

Quantities scheduled: the number of each product scheduled for production last quarter as a result of your delivery decisions, summed across all market areas.

Produced: the number of products which were actually produced in your factory last quarter, including those which were rejected and those made again to replace rejects. This may be less than the number requested if you did not have sufficient production capacity to make the number you wanted.

Rejected: the number of each product rejected from those produced because they were found to be sub-standard by your Quality Control department. These rejects are sold at scrap value. If you have sufficient resources your production department will automatically produce more units to replace these rejects.

Lost or destroyed : the number of each product lost, stolen or destroyed within your distribution system, last quarter, for which insurance may pay if you are covered (Look for the "!" sign).

Delivered to: the number of each product made and actually delivered to each marketing area and to your internet distributor. This may be less than the number originally decided if your factory did not have sufficient production capacity, or if any products are lost or destroyed (see above). Products will not be sent to markets where you do not have an organisation.

Orders from: the number of orders received for each of your products from each area last quarter. These are new orders and do not include any backlog of orders waiting to be satisfied from the quarter before last.

Sold to: the number of each product sold to each area last quarter. Calculated as the lesser of: new orders plus any backlog from the quarter before last; or, deliveries last quarter plus any product stock carried forward for sale from the quarter before last.

Backlog of orders: the number of unsatisfied orders (backlog) for each product in Europe and Nafta brought forward from last quarter because of poor delivery. There can be no backlog of orders on the internet. Note that these quantities are only half of the actual number of dissatisfied orders, as the other half will have cancelled their order. These have not gone directly to your competitors, but are likely to do so indirectly at some time in the future. Your backlog of orders may fall still further at the beginning of next quarter if you decide to raise your price in the meantime, or reduce the assembly time for your products. (See next paragraph for method of calculation.).

Warehouse stocks: the number of each product warehoused in each area and available for sale next quarter. Redundant stocks of any product may be sold at the beginning of next quarter if you decide in the meantime to take up a reported major product improvement for that product. 'Product stocks' or 'Backlog' for each product in each area, is calculated as:

Product stocks from the quarter before last,
plus deliveries last quarter,
less backlog from the quarter before last,
less orders received last quarter.

If positive, then you have product stocks in that area available for sale next quarter. If negative, you had unsatisfied orders in that area, half of which will have been cancelled, so that the result will have been divided by two before being shown as backlog, to be carried forward. A negative result in the internet area will be ignored.

Guarantee services: The number of each product serviced to correct defects, under the company's one year guarantee, by local servicing agents. This may include products returned for repair resulting from poor design or inherent ecological problems in the products, and also similar repairs to product stock still in your distribution system (look for the "!" sign). The number of units returned for this reason is not given separately.

Product Improvements: three words can appear here, for each product, either:

A product improvement is only listed once, at the time it is reported, though it remains available until you decide to take it up. Indeed further major improvements may be notified before an earlier one has been implemented, and when this happens all available improvements are introduced at the same time, when you do make the decision.

Product components: This section shows the numbers of components which were used in assembling your products last quarter. It also shows the numbers of components you decided to purchase and how many were held in stock at the end of last quarter and how many are available to be used for assembly next quarter.

FINANCIAL STATEMENTS

The final part of the management report shows your company accounts under the headings Administrative costs, Income statement, Balance sheet and Cash flow statement. These are dealt with in detail, below. All transactions are recorded in euros. Where payments are due in dollars these will have been converted to euros at the exchange rate in operation last quarter.

ADMINISTRATIVE EXPENSES

The following items are for costs incurred last quarter.

Advertising: the total cost of advertising all products in all areas, as decided.

Internet distributor: There can be only one agent. The total support payment and commission paid to your internet distributor for handling your products. The value of sales last quarter multiplied by the percentage rate decided; plus the lump sum support payment which you decided. In addition, there can be costs for opening, or closing, an Internet operation.

Internet service provider: the cost of operating your web-site. This depends on the number of ports you have installed, plus a variable charge for services such as security. This is a fixed percentage of the value of internet sales. In addition, there can be costs for opening, or closing, an internet operation.

Agents/distributors: the total cost of support payments and commission paid to EU agents and Nafta distributors last quarter; plus the cost associated with any agents and distributors who ceased to represent you at the end of last quarter; plus the cost of attempting to recruit new agents and distributors to bring the number up to your requirements. The number you tried to recruit (and hence had to pay recruitment charges for) was the target number you decided to try to obtain last quarter, less the number in your network at the end of the quarter before last (Table 3). Agents' commission is paid on the value of orders. Distributors' commission is paid on the value of sales.

Sales office: sales administration costs are 1% of the higher of sales income or total value of orders taken in all areas last quarter.

Guarantee servicing: the total cost of repairing products returned last quarter as faulty, under the company's guarantee. The number serviced last quarter multiplied by their respective costs. Products repaired as a result of a product re-call, are charged at 75% of the standard cost.

Product development: the total amount spent last quarter on product development to improve your products, as decided.

Website development: Each quarter you decide how much to invest in the development and maintenance of your web-site (if you have one). Money is spent on updating the information presented, and on software development to make the site more attractive. There is an in-built obsolescence factor which will tend to make the site look old fashioned and out of date. You should invest to overcome this tendency. The "Website Star Rating" depends on how much and how regularly you spend.

Personnel department: the cost last quarter of trying to recruit, dismissing and/or training personnel. The number decided in each category multiplied by the relevant cost rate.

Machine maintenance: the cost of maintaining and repairing the company's machines.
The number of contract hours decided, multiplied by the number of machines, multiplied by the hourly cost. If the number of breakdown hours exceeds the total contract hours decided, the difference will be paid for at a premium hourly rate.

Purchasing and warehousing: the administrative costs of your purchasing department, plus a cost for each of the average number of units of material held in commercial warehouses, due to lack of available space in your factory, plus a cost for each of the average number of product units warehoused in the sales areas at their respective costs (see Tables 13 and 14).

Business intelligence: the costs of buying information last quarter, as decided.

Management salaries: the cost of your company's management last quarter, as decided.

Credit control: the costs of collecting money from your company's debtors and for handling internet credit card payments.

Insurance premiums: the amount paid as a proportion of your insured risk to provide insurance cover. The total from the balance sheet in the quarter before last of non-current assets and inventories, all multiplied by the rate for insurance under the insurance plan which you decided. If you have not taken out insurance cover, then this will be zero.

Other costs: the total of other miscellaneous costs not included so far under other headings. These are mainly fixed (or semi-fixed) costs which depend on the size of your factory, such as building maintenance, heating and local taxation. They also include decommissioning charges incurred when selling machines and the cost of off-setting your primary carbon footprint.

Total administrative expenses: the total of all items listed above.

ACCUMULATED TAXABLE PROFIT

Profit/loss before tax: as shown in your income statement.

Previous taxable profit/loss: The amount of accumulated profit (or loss, if negative) from the quarter before last. This will be zero if any tax was assessed at the end of that quarter.

Taxable profit/loss: The amount of accumulated profit (or loss, if negative) at the end of last quarter. This is the sum of the above two items.

Important detail

If this value is positive when tax is assessed in the fourth quarter of the year, then tax will be payable on that value, at the current rate. It will then be carried forward to the next quarter as zero.

If it is negative (a loss) when the tax assessment is made, no tax will be payable and the loss will be carried forward to the next quarter.

In the fourth quarter of each year the figure shown is its value immediately before tax is assessed.

Insurance claimed: the total assessed value of claims for losses incurred last quarter. If you did not take out insurance cover this will be zero.

Primary non-insured risk: the amount of risk which your company agreed to underwrite itself, before receiving payment from the insurers. By applying the percentage agreed under the insurance plan decided, it is possible to use this figure to work back to the value of the total insured risk.

INCOME STATEMENT

The first part of this account calculates the gross profit, the second gives the net profit.

Sales revenue: total revenue from all trading last quarter. The number of each product sold in the European, Nafta and Internet markets multiplied by the appropriate prices; plus the number of each product sold off at their valuation price after introducing a major product improvement; plus the sale of any product rejects at their scrap value.

Opening inventory values: the total value of product, component and material stocks held or on order at the beginning of last quarter. This is the same as the total value of closing inventories in the balance sheet for the quarter before last.

Components purchased: the cost of machined components ordered from subcontractors last quarter, for delivery next quarter. The cost per unit can be calculated from the price ranges announced in the quarter before last, by adjusting for premium material content.

Materials purchased: the cost of materials ordered last quarter, in the quantities decided, and at the prices announced in the quarter before last. Materials ordered for future quarters are included in this figure at the future prices quoted. Material units purchased to make up shortages last quarter are charged at last quarter's spot price plus a premium. Note that material is priced and paid for in US$, but appears in the accounts in euros, converted at the rate of exchange used last quarter.

Machine running costs: the costs of operating your machines last quarter. The number of machines available multiplied by the cost of machine overheads, plus the cost per shift for supervision, plus the number of machine hours used multiplied by the machine rate, plus a charge for each unit of product requested for production planning charges.

Machinists wages: the number of machine hours used last quarter plus breakdown time, at the basic rate, Saturday overtime rate and Sunday overtime rate, for the shift level being worked, multiplied by the appropriate wage rate, all enhanced by the shift premium, and multiplied by four workers per machine. If the number of unskilled workers employed was greater than the number needed to operate your company's machines at the shift level being worked, these surplus workers are paid at the same average rate as those manning the machines. Unskilled workers are paid for a minimum number of hours each, per quarter.

Assembly wages: the number of skilled hours used last quarter on basic working, Saturday overtime working and Sunday overtime working, all multiplied by the basic skilled wage rate, or increments of it, as appropriate. If this total, converted into the average wage per worker, per week worked, is less than a similar figure for unskilled workers, the unskilled rate of average weekly earnings is used instead, multiplied by the total number of weeks worked.

Quality control: The cost of your quality control department. The total number of products assembled last quarter multiplied by the cost per unit.

Hired transport: The cost last quarter of using hired transport to deliver your company's products to your agents and distributors:

The number of container-days can be calculated by dividing the distances by the daily maximum allowed (rounded up), multiplied by the number of loads. In all cases mixed product loads can be carried.

less Closing inventory values: the total value of product, work in progress and material stocks (both in hand and on order) at the end of last quarter.

Cost of sales: the cost of making and bringing your products to market last quarter. The sum of opening inventory values, components and materials purchased, machine running costs, machinists' and assembly wages, quality control and hired transport, less closing inventory values.

Gross profit: Sales revenue, less cost of sales.


Administrative expenses: the total as shown above.

Insurance receipts: the amount your insurance company paid to you in settlement of your claims last quarter. The total amount claimable less the percentage of the total insured risk that you agreed to meet under your chosen insurance plan.

Depreciation: the amount by which your machines depreciated last quarter. Calculated as a fixed percentage of the value of assets shown in the balance sheet for the quarter before last, less the value of any assets sold last quarter.

Operating profit/loss: Gross profit less administrative expenses and depreciation, plus any insurance receipts.

Finance income: interest earned on deposits during last quarter.

Finance costs: interest and other charges, paid last quarter on any bank overdraft and medium term loans. The interest calculation assumes an initial re-organisation of cash and borrowings from the balance sheet position at the end of the quarter before last, due to decisions made at the beginning of last quarter.

Profit/loss before tax: Operating profit plus finance income, less finance expense.

Taxation: the amount of tax on profits which your company must pay is assessed at the end of the fourth quarter each year. This is calculated on any positive value of accumulated taxable profit at the current rate of tax. Tax assessed is carried forward as a liability in the balance sheet until it is paid in the second quarter of the next year.

Profit for the period: Profit before tax, less taxation.


Dividend: the amount paid to your shareholders following your decision to pay a dividend.
Your share capital multiplied by the percentage dividend decided.

Transferred to retained earnings: Profit for the period less dividend.

Previous retained earnings: Retained earnings at the end of quarter before last.

Share repurchase adjustment: If the loss incurred on repurchasing shares exceeds your Share Premium Account then some, or all of it is deducted from Retained Earnings.

Retained earnings: The sum of the above three items (see also below under balance sheet).

BALANCE SHEET

This shows your company's non-current (long term) and current (short term) assets and liabilities plus a reconciliation of its net assets with shareholders' equity.

NON-CURRENT ASSETS

Land: the value, at original cost, of the company's land.

Buildings: the value, at cost, of the company's factory building.

Machinery: the current depreciated value of your company's machines.

Property, plant and equipment: The total value of land, buildings and machinery.

CURRENT ASSETS

Product inventories: the value of product stocks held in all the sales areas.

Component inventories: the value of any stocks of bought-in components that were delivered last quarter (or previously), but not yet assembled.

Materials inventory: the value of material stocks held in or near your factory at the end of last quarter, plus units already ordered for next quarter and the quarter after next.

Trade receivables: money owed to your company by its customers. Trade receivables for the quarter before last, plus sales revenue last quarter, less trading receipts.

Cash and cash equivalents: your bank account balance, if positive, plus any term deposit.

Current assets: the sum of the above inventories, trade receivables, and cash.

LIABILITIES

Tax due: the tax assessed in the fourth quarter of the year and due for payment next year. Note that a figure appears here only in the fourth and first quarters of each year.

Trade payables: money owed by the company for goods and services bought last quarter.

Bank overdraft: the balance of your bank account, if negative. It is the amount of money loaned by the bank on variable interest secured against the company's short term assets.

Current liabilities: the sum of the above tax payable, trade payables and overdraft.


Term loans: the total of long term loans which you have received.

Net assets: the above non-current and current assets, less current liabilities and term loans.

EQUITY

Share capital: the original shareholders' funds, or starting capital for the company, in the form of €1 shares, modified by any further issues of shares, less any share repurchases.

Share premium account: undistributable profits from the issue of shares at a price above the par value of €1, less any reduction through repurchases of shares.

Retained earnings: undistributed profits (or losses) accumulated during the lifetime of the company. These reserves are usually equal to previous retained earnings (from the quarter before last) plus transferred to retained earnings last quarter. However, if a share repurchase exhausts your share premium account, then any excess will be deducted from these reserves.

Total equity: Share capital plus share premium account and retained earnings. The total shareholders' equity interest in your company is equal to net assets (as defined above).


More (on balance sheet definitions)

CASH FLOW STATEMENT

This account shows how funds flowed into and out of the company during the last quarter.

OPERATING ACTIVITIES

Trading receipts: payments made to the company by its customers. A proportion of trade receivables from the quarter before last and sales last quarter. The receipt of sales revenue is subject to target credit periods. These targets are never met in full, and outstanding debts are carried forward to next quarter as trade receivables on the balance sheet.

Insurance received: see Income statement above.

Trading payments: payments made for salaries and wages, and goods and services supplied to the company. Trade payables from the quarter before last, plus administrative expenses, materials and components purchased, total wages, machine running costs, quality control and hired transport costs, less trade payables last quarter.

Tax paid: in the second quarter only, tax payable from the balance sheet in the quarter before last.

Net cash from operations: trading receipts less trading payments and tax paid

INVESTING ACTIVITIES

Interest received: interest received from your term deposit account.

Asset sales: the value of machines sold last quarter (excluding decommissioning charges).

Assets purchased: capital expenditure last quarter on any factory building extension, and payments for machines ordered and installed.

Net cash from investing: interest received less net capital expenditure

FINANCING ACTIVITIES

Shares issued: funds received from issuing new shares (number x price).

Share repurchases: payments made for any repurchases of the company's shares.

Dividends paid: see Income statement above.

Additional loans: funds from additional long term loans.

Interest paid: the cost of borrowing last quarter. Different interest rates apply to term loans, agreed overdrafts and unauthorised overdrafts.

Net cash from financing: income from shares and loans, less dividends and interest paid


Net cash flow: Net cash from operations, investing and financing.

Previous cash balance: Cash and cash equivalents, less any bank overdraft, at the end of quarter before last.

Cash balance: The sum of the above two items. Cash and cash equivalents, less any bank overdraft, at the end of last quarter (see balance sheet).


Overdraft limit next quarter: Your authorised overdraft limit for next quarter. This depends on the assets and liabilities in your balance sheet at the end of last quarter.

Borrowing power: the maximum additional long term loan that you can raise next quarter. This is determined by

THE MANAGEMENT REPORT - GROUP INFORMATION

This part of the report gives information about all the companies in your group, and about the economy in which you all operate.

This description of the contents of the management report assumes that you have just received it. It therefore refers mainly to last quarter's data, except where specifically noted. This information can help you make decisions for next quarter.

Balance sheets for all companies in your Group are supplied free of charge at the end of every quarter

BUSINESS INTELLIGENCE

This part of the management report is concerned with general information, either given to you free, or which you requested and paid for (see Table 2).

Information about every company in your group last quarter which would, in the normal course of events, be available to you free of charge:

Business Activity: this information is paid for (Table 2).

In all cases star ratings range from one to five, where one is poor and five is excellent.


% Market share of sales: Market shares are calculated on the number of sales, and not on orders. The information is given in three parts, for each product.

  1. Each company's share of the total European retail shop market. Apart from you and your direct competitors there is also other competition selling imported products, hence the total may be less than 100%.
  2. Each company's share of the total Nafta retail shop market. Again, these will sum to less than 100%.
  3. Each company's share of the internet market. Again, the total will be considerably less than 100% because of the existence of other competitors, world-wide.

ECONOMIC INTELLIGENCE

Various official statistics covering both the European market and Nafta are given to you free of charge each quarter. These give an indication of the relative performance of the European and export economies, and hence where market growth is likely. These statistics are:

BUSINESS REPORT

Finally, you may receive brief extracts of current economic information extracted from the financial press which may help you to forecast economic trends and warn of business problems ahead.

All companies can be affected by significant 'world events'. These events may be the result of political upheaval, economic or environmental developments, wars, physical disasters such as volcanic eruptions or earthquakes, epidemic diseases, etc. They can have a serious effect on companies' operations, and also affect the product markets. For example, an outbreak of an infectious disease that has a global impact could not only affect the markets for your products, but also significantly upset your ability to make products because your labour force is unable to get to work.

Externally, the level of disruption should affect all companies equally, but the level of internal disruption will depend on how well the company is able to cope with what happens. For example, where adequate reserve stocks of material and finished products are held by a company, it may be able to continue to trade, whereas another company with inadequate stocks may find itself in difficulty.

These events may occur suddenly, without warning, giving you little chance to take action. It is more likely, however, that at least some information taken from the press and appearing in the Business Report ahead of an event will give a hint that it may happen. The effect of world events on a company's operations will be indicated by a '!' sign on the management report, except where markets and the economy are concerned.

It is important that you read all sections of the business report since they may contain important information which can affect calculations in the management report - for example, changes in costs or decommissioning charges.

You should bear in mind that, although this kind of physical disruption might not affect the consumer market directly, there may be an indirect effect on consumer confidence.

Note: although such world events may happen, it does not mean that they will happen.