Topaz-Vbe

User Manual

Part 3

THE MANAGEMENT REPORT

THE MANAGEMENT REPORT

The Management Report tells you what happened to your company last quarter.
It also has some information about your competitors, and economic data for next quarter.

The first four parts of this report only deal with information about your company.

It describes each entry in the report and defines, wherever possible, the arithmetic derivation of each number. It consists of:

This description of the report assumes that you have just received it. Therefore, in this manual, its contents are always referred to as last quarter's data.

On receipt of the Report, check that -

If not, please contact the simulation Controller immediately.


DECISIONS MADE

The first section of the Report reprints the decisions made for your company last quarter. Normally they will be the same as your own figures, but there are three ways in which they can differ. Symbols mark such changed decisions -

If a number is different, and there is no error indicator, you must contact the Controller immediately so that the Decision Form which you sent in can be checked.

If the number has been wrongly entered, then the appropriate action can be taken.

The rest of the Report provides information about the state of your company, your competitors and the economy. It either tells you what happened last quarter, the state of some parameters of your company now, or says something about next quarter. It also gives you information about your competitors and the economic environment.

The remainder of this part of the Manual describes each of the headings of the Report in turn and explains how the corresponding figure is derived.


RESOURCES EMPLOYED

MACHINES AND VEHICLES

Machines Available
'Machines Available Next Quarter' from the quarter before last.
Machines Decommissioned
the number of machines you decided to sell last quarter and were taken out of service at the start of the quarter.
Machines In Use
the number of machines which were available for production last quarter. 'Machines Available', less 'Machines Decommissioned' last quarter.
Machines Installed
the number of machines ordered in the quarter before last, and installed during last quarter, but not available for production until next quarter.
Machines Available Next Quarter
the number of machines available for use (or decommissioning) next quarter. 'Machines In Use' plus 'Machines Installed' last quarter.
Vehicles available last quarter
the number of vehicles available from the quarter before last, plus vehicles bought last quarter less vehicles sold last quarter.

ASSEMBLY WORKERS' HOURS

Assembly Hours, Available Last Quarter
the number of assembly workers you had available last quarter multiplied by 576 (the maximum number of hours that each can work), less 48 hours per worker for each strike week notified at the end of the quarter before last (see tables 15 and 16 and below).
Absenteeism
the number of assembly man-hours lost through sickness, or employees not turning up for work for other reasons.
Worked Last Quarter
the total number of paid hours worked by assembly workers last quarter. Defined as, the number of products you delivered last quarter, plus rejects, multiplied by the assembly time for each product, as decided by you last quarter.
Notice of Strike Weeks Next Quarter
the number of weeks' work that will be lost by each assembly worker next quarter, due to intended industrial action. This is irrevocable and amounts to 48 hours per employee per week (see table 16).

MACHINE HOURS

Machine Hours available Last Quarter
the number of 'Machines in Use' (i.e. available for production) last quarter, multiplied by the maximum number of hours that each could work under the shift system you decided, as shown in table 5.
Breakdown Time
the total number of hours during which machines were out of production due to breakdown and repair.
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 produced, multiplied by the machining time appropriate to each, extended by the effect of declining machine efficiency.
Maintenance Hours
the total number of hours of preventive maintenance given to your machines, outside normal production time.
Machine Efficiency
the theoretical minimum number of machine hours required to manufacture your products last quarter (see table 3), divided by the actual time 'Used Last Quarter', expressed as a percentage.

MATERIALS

Opening Stock Available
the number of units of material available in stock at the beginning of last quarter.
Delivered Last Quarter
the number of units of material delivered according to the order placed in the quarter before last, plus any deliveries from supplier '0' to make up any shortfall last quarter.
Used Last Quarter
the total number of units of material used last quarter. The number of each product made last quarter (including those rejected), multiplied by the material content of each (see table 3).
Closing Stock
the quantity of material left in stock at the end of last quarter.
On Order for Last Quarter
the quantity of material due to be delivered next quarter. This does not include units from closing stock.
Available Next Quarter
the total of 'Closing stock' and 'On Order'.

PERSONNEL

Personnel at Start of Quarter
the number of salespeople, assembly workers and machinists available to you at the beginning of last quarter. This is the number of salespeople and assembly workers that worked for you throughout last quarter. For machinists this is the number that were available to you at the start of last quarter.
Recruited
the number of each type of employee that you successfully recruited last quarter. Salespeople and assembly workers were recruited at the end of last quarter, and hence did not work during that period. Machinists were recruited automatically at the beginning of the quarter, to make up the number required to operate your machines at the shift level decided (4 workers per machine, per shift).
Trained from Unemployed Last Quarter
the number of new workers taken on from the pool of unemployed labour and trained last quarter, as either salespeople or assembly workers. These will now be available to work for you next quarter.
Dismissed
the number of each type of employee that you decided to dismiss last quarter. Salespeople and assembly workers were dismissed at the end of last quarter, having worked for you during that period. Any machinists were dismissed at the beginning of last quarter, and only as a result of a reduction in the number of machines, or a lowering of shift level. As only half of any surplus machine operators can be dismissed in one quarter, it is possible to have more machinists than you need.
Leavers
the number of each type of employee who left because of retirement, or sickness, or 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 employee who are available at the start of next quarter.
'Personnel at Start of Last Quarter' plus 'Recruited', less 'Dismissed' and 'Leavers'.
(Note that the number of machinists may change immediately at the beginning of next quarter due to changes in the number of machines and/or level of shift working).

PRODUCT STATISTICS

Scheduled
the total number of each product requested in your delivery schedule last quarter, summed across all 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.
Rejected
the number of substandard products rejected by quality control from those produced. They are sold at their scrap value, as shown in table 6. If resources are sufficient, your production department automatically makes extra units to replace them.
Serviced under Guarantee
The number of each product serviced by local servicing agents to correct defects, under the company's one year guarantee.
Delivered
the number of each product actually delivered to each marketing area. This may be less than the number requested if you did not have sufficient production capacity.
Orders
the number of orders received for each of your products in each area last quarter. These are new orders and do not include any previous backlog of orders.
Sales
the number of each product sold in 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
the number of unsatisfied orders for each product in each market carried over from last quarter because of poor delivery. Note that these quantities are roughly half of the actual number of dissatisfied orders. The rest have been cancelled. Even if they have not gone directly to your competitors, they are likely to do so if deliveries remain poor. 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 fitting time for your products. (See next paragraph for method of calculation)
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.
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. When you do decide to take up a major improvement, all available improvements are introduced at the same time, .


ACCOUNTS

This part of the Management Report shows, in detail, your company accounts.


OVERHEAD COSTS ANALYSIS

The following items are for costs incurred last quarter.

Advertising
the total cost of advertising all products in all areas, as decided.
Sales Force
the total salaries, commissions and expenses paid to salespeople who worked for you.
Sales Office
Administration costs of 1% of the total value of orders taken in all areas.
Guarantee Servicing
the total cost of repairing products returned, under the company's one year guarantee. The number serviced last quarter multiplied by their respective costs (see table 7).
Transport Fleet
the cost of running your company's fleet of vehicles. The number of vehicles available to you last quarter multiplied by the fixed cost; plus the number of days when the vehicles were actually used to carry the company's products multiplied by the running cost. When the actual cost shown is higher than this theoretical figure, it will be because ageing vehicles are working less efficiently and breaking down. (see table 11)
Hired Transport
the cost of hired transport to deliver your company's products to each market when your own vehicle fleet is unable to do so. The number of vehicle-days needed in excess of the capacity of your fleet, multiplied by the daily hire rate. In all cases mixed product loads and part loads can be carried (see tables 9, 10 and 11).
Product Development
the total amount spent last quarter on product development, as decided.
Personnel
the total cost last quarter of trying to recruit, or dismissing personnel. The number decided in each category multiplied by the relevant cost rate (see table 15).
Maintenance
the cost of maintaining and repairing the company's machines. The number of machines in use, multiplied by the contracted hours per machine, multiplied by the hourly cost.
If breakdowns exceed the contracted hours per machine you decided, then the extra hours are charged at an increased cost. (see table 4).
Warehousing and Purchasing
the cost of operating your own factory storage area, plus purchasing administration costs, plus a cost for each of the average number of product units warehoused in the sales areas; plus a cost for each order of material placed, plus a cost for warehousing each unit of material over the capacity of your own storage space (see tables 12, 13 and 14).
Business Intelligence
the cost of information purchased, as decided (see table 2).
Management
the cost of your company's management, as decided.
Credit Control
the costs of collecting money from your company's debtors (see table 20).
Other Miscellaneous Costs
other overheads not yet included, plus a percentage of all costs included in Overheads so far, including the fixed cost (see table 20).

Total Overheads
the total of all the overhead items listed above.

Taxable Profit/Loss Accumulated
the amount of accumulated profit (or loss, if negative) up to the end of last quarter. This is calculated as taxable profit/loss from the quarter before last, plus gross profit and interest received; less interest paid, overheads and depreciation from last quarter.

More detail about company tax

If this value is positive when tax is assessed in the fourth quarter of the year, then tax is payable on that value at the rate shown in table 20. 'Taxable Profit / Loss Accumulated' is then carried forward as zero.

If it is negative when the tax assessment is made (i.e. you have made net losses since tax was last paid), no tax is due and the loss is carried forward to the next quarter.

Note that in the fourth quarter of each year the figure shown is the value immediately before tax is assessed.



PROFIT AND LOSS STATEMENT

The profit and loss account is set out in two parts. The first part calculates the gross profit, the second gives the net profit.

Sales Revenue
total revenue from all trading last quarter. The numbers of each product sold in the market areas multiplied by the appropriate prices; plus the number of each product sold off at their valuation price (see table 21) after introducing a major product improvement; plus the sale of any product rejects at their scrap value (table 6).

Opening Stock Value
the total value of material and product stocks held at the beginning of last quarter. (ie Closing Stock Value for the quarter before last).
Materials Bought
the cost of materials bought last quarter in the quantity decided in the quarter before last and at the price quoted at the end of the quarter before last; plus the cost of any materials purchased last quarter to make up a shortage.
Assembly Wages
the number of assembly hours used last quarter on basic working, plus Saturday overtime working and Sunday overtime working, all multiplied by the basic assembly wage rate, or increments of it, as appropriate. If this total, converted into the average wage per worker, per week, is less than a similar figure for machinists, then the machinists' average weekly earnings is used instead, multiplied by the total number of weeks worked by assembly workers.
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 machinists 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. Machinists are paid for a minimum of 400 hours each (see table 17).
Machine Running Costs
the costs of running your machines last quarter (see table 8). 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.
Closing Stock Value
the total value of material and product stocks as given in the balance sheet.
Cost of Sales
the cost of producing the products sold last quarter. The total of Opening Stock Value, Materials Bought, Assembly Wages, Machinists' Wages, Machine Running Costs, less Closing Stock Value.
Gross Profit / Loss
Sales Revenue, less Cost of Sales.
Overheads
Total Overheads (as shown above).
EBIDT
Earnings before interest, depreciation and tax = Gross Profit - Overheads.
Interest Received
interest earned on (surplus cash) deposits during the quarter. 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.
Interest Paid
interest paid by the company on bank overdraft and unsecured loans (see method of interest calculation)
Depreciation
the total amount by which your machines and vehicles depreciated last quarter. Calculated (see table 18) as 2.5% of the value of machines plus 6.25% of the value of vehicles, both as shown in the balance sheet for the quarter before last; plus the second payment on any machines installed last quarter, less the value of any assets sold last quarter.
Tax Assessed
the amount of tax on profits which your company must pay is assessed at the end of the fourth quarter each year. It is calculated at the rate of tax given in table 20. Tax assessed is immediately deducted from the profit and loss account, and carried forward as a liability in the balance sheet until it is paid in the second quarter of the next year. It is calculated as shown above under Taxable Profit.
Net Profit
gross profit, plus interest received; less interest paid, overheads, depreciation and tax assessed.
Dividend Paid
dividends paid, as decided, at the beginning of last quarter.
Retained Profit
Net Profit less Dividends Paid. This is transferred to Reserves.

BALANCE SHEET

This is in three parts -

  1. Assets
  2. Liabilities
  3. a reconciliation of Net Assets with Shareholders' Funds (Net Worth).

ASSETS

Property
the fixed value of the company's land, factory building and other fixtures.
Machines
the current depreciated value of your company's machines.

Vehicles
the current depreciated value of your company's vehicle fleet. The value of vehicles shown in the balance sheet for the quarter before last; plus the value of new vehicles bought at the beginning of last quarter; less the depreciated value of vehicles sold last quarter; all reduced by the 6.25% quarterly rate of depreciation.
Fixed Assets
the total value of Property and Machines.

Product Stocks
the value of product stocks held in all sales areas at the end of last quarter. The numbers of each product in stock multiplied by the appropriate valuations (table 21).

Material Stocks
the value of materials held in or near your factory at the end of last quarter. The number of units held multiplied by 50% of the material price announced at the end of the quarter before last.
Debtors
the value of money owed to your company by its customers. Debtors in the balance sheet for the quarter before last, plus sales last quarter, less Trading Receipts.
Cash Invested
the balance of your bank account, if positive. This is automatically invested.
Total Assets
the sum of the above fixed assets, stocks, debtors and cash invested.

LIABILITIES

Tax Assessed and Due
the amount of tax assessed in the fourth quarter of the year, and due for payment in the following second quarter. If due, a figure only appears here in the fourth and first quarter of each year.
Creditors
the amount owed for goods and services purchased last quarter.
Some items of expenditure are paid partly, or fully, in arrears (see table 22).
Others (eg wages) are paid for immediately last quarter and do not give rise to creditors.
Bank Overdraft
the amount of money loaned by the bank on variable interest and secured against the company's assets. It includes the interest charged. Consequently, it can be slightly higher than your previous stated limit, after the interest has been added.
Unsecured Loans
the amount of money loaned to your company for a short or medium term, without security, to fund its operations over, and above, any funding by overdraft. It includes the interest charged on the loan.
Current Liabilities
the sum of the above tax assessed, creditors and short term loans.
Net Assets
the above total assets, less current liabilities.

NET WORTH

Share Capital
the original shareholders' funds, in the form of £1 shares, used to provide starting capital for the company.
Reserves
undistributed profits (or losses) accumulated during the lifetime of the company. Reserves are equal to reserves from the quarter before last plus Retained Profit transferred to reserves last quarter.
Net Worth
Also known as shareholders' funds: issued share capital plus reserves.

CASH FLOW STATEMENT

The final part of the accounts shows how the company's funds flowed into and out of its operation during the last quarter.

Trading Receipts
payments made to the company by its debtors last quarter. A proportion of the total of Debtors from the quarter before last and Sales Revenue last quarter. The receipt of sales revenue from the various areas last quarter is subject to a target credit period of 30 days. This target is never met in full, and outstanding debts are carried forward to next quarter as debtors on the balance sheet.
Trading Payments
payments for salaries and wages, plus goods and services supplied to the company.
Creditors from the quarter before last, plus Total Overheads, 50% of Materials Purchased, Assembly and Machinists' Wages and Machine Running Costs, less Creditors from last quarter.
Tax Paid
in the second quarter only, Tax Assessed from the balance sheet for the quarter before last.
Net cash from operating activities
trading receipts, less trading payments and tax paid.
Interest Received
interest earned from deposits last quarter.
Capital Receipts
the value of machines sold at the beginning of last quarter.
Capital Payments
part payments for machines ordered and/or installed last quarter plus sums paid for new vehicles (see table 18).
Net cash from investing activities
interest received, plus income from assets sold, less payments for assets acquired.
Interest Paid
the cost of borrowing last quarter, from any overdraft and unsecured loans.
Note that different interest rates apply - see table 20 and Borrowing (see Finance).
Dividends paid
see Profit and Loss
Net cash from financing activities
interest and dividends paid
Net Cash Flow
the sum of operating, investing and financing cash flows.
This equals the change in the total balance of your bank accounts (cash and deposits, less overdraft and unsecured loans) compared with the quarter before last.

Overdraft Limit for Next Quarter
the maximum level of overdraft that your bank is prepared to lend you next quarter. It is calculated from your balance sheet at the end of last quarter, as shown in table 19.
Material price
The price of material for next quarter (per 1000 units) which will be charged next quarter for material ordered last quarter. Material stocks held at the end of next quarter will be valued at 50% of this price.


THE MANAGEMENT REPORT - YOUR GROUP

The final part of the management report gives information about all the companies in your group (your competitors), plus information about the economy in which you operate.

This description of the contents of the Management Report assumes that you have just received it. What follows, therefore, refers to the contents of the latest Report as being last quarter's data. This information should help you make decisions for next quarter.


INFORMATION ABOUT ALL COMPANIES

BUSINESS INTELLIGENCE

This information is provided free of charge.

BUSINESS ACTIVITY (OPTIONAL)

The following information incurs a fixed quarterly charge (see table 2).

MARKET SHARES (OPTIONAL)

This information incurs a fixed quarterly charge (see table 2).


BUSINESS ACTIVITY (FREE INFORMATION)

Other information, relating to last quarter about each of the companies in your Group, and which you would tend to know in the normal course of events, is provided free of charge:


ECONOMIC INFORMATION

Various official statistics are given to you free of charge each quarter. These give an indication of the performance of the economy, and hence where market growth is likely.