Experiential Learning - Accounting

Virtual business environments

Business Acumen - Understanding Company Accounts

Many people are unable to read company accounts with any degree of confidence, and yet understanding accounts is essential for any manager.

Edit 515 simulations provide a complete set of business accounts after each decision period. These accounts follow closely the format and terminology recommended by the current International Financial Reporting Standards (IFRS).

This provides an excellent opportunity to learn (or be taught) the meaning of, and the relationships between, the Income statement, the Balance Sheet and the Cash Flow statement, and what a manager should consider when analysing the accounts.

In Topaz-Vbe and Emerald-Vbe simulations the criterion for success is usually a notional share price calculated by the model subject to the simulated company remaining a viable trading enterprise. This allows participants to understand the role of the share price in reflecting not only the company's success to date, but also how well it is placed to face the future.

In the Global Management Challenge (GMC), because of its increased complexity (companies can buy and sell their own shares), then share price is not the most equatable criterion to determine the 'winning' team. The criterion in the latest version of GMC, introduced in 2013, is defined as the company with the best Investment Performance. The company must still remaining viable, but Share Price, although still an important indicator of success, cannot, on its own, be used in the Global Management Challenge (GMC) as the sole determinant that decides the 'winning' team.