PROCEDURE FOR A ONE-YEAR SIMULATION
A – Prepare the batch of budgeted documents (balance sheet, income statement, and cash flow forecast) to test the validity of your decisions (see Appendix 2).
B – Hand-in your decision sheet to the instructor.
C – The instructor will advise each firm of the volume of its actual sales for the period. This amount is a maximum figure. If a business has not planned to produce enough to meet the revealed demand, that firm’s sales will be limited to the quantities available for shipment (production of the period plus available beginning inventory). The calculation of the potential maximum sales available to any firm reflects the decisions taken by both the firm itself and its competitors.
D – Once each firm knows its actual demand, each management team will prepare the resulting definitive accounting documents (balance sheet, income statement (or P&L), statement of cash flows), which will be presented to the shareholders. These documents have to be certified by the statutory auditor.
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