Ratio Analysis Simulation

In the simulation, participants will:

• Analyze real-world style income statements, balance sheets, and cash flow statements.

• Calculate a comprehensive suite of financial ratios across multiple periods.

• Interpret results to diagnose financial stability, operational efficiency, and profitability.

• Benchmark company performance against competitors and industry standards.

• Prepare and deliver clear, concise reports or presentations summarizing their findings and recommendations.

• Respond to new information and make forecasts about future company performance.

• Calculate and interpret the major financial ratios used in business analysis.

• Synthesize data from all three financial statements to form a coherent view of a company's health.

• Identify red flags and strengths within a business using quantitative evidence.

• Communicate complex financial insights effectively to non-financial stakeholders.

• Apply ratio analysis to support practical decisions in lending, investing, or management.

• Develop critical thinking and diagnostic skills for financial problem-solving.

1. Introduction and Company Assignment Participants receive a background briefing and are assigned to analyze one or more companies.

** 2. Financial Data Review** They access a dedicated dashboard containing several years of financial statements for their assigned companies.

3. Analysis and Calculation Phase Using provided tools, participants calculate key ratios and plot trends.

4. Scenario Injection A new round begins with market news (a recession, new competitor, supply chain issue) that impacts the next set of financials.

5. Strategic Decision and Reporting Based on their updated analysis, participants draft an analyst report, create a summary dashboard, or prepare a client presentation with recommendations.

6. Debrief and Feedback The facilitator leads a review session, comparing team insights, discussing correct interpretations, and linking outcomes to real-world consequences. Performance analytics from the simulation platform can highlight areas of strength and misunderstanding.

• Who is this Ratio Analysis Simulation designed for? It is designed for business students, finance trainees, early-career analysts, and any professional needing to understand or use financial statements to make decisions.

• Do I need advanced accounting knowledge to participate? No. A basic familiarity with financial statements (what an income statement and balance sheet are) is helpful, but the simulation includes refresher guides and contextual help to support all learners.

• How long does the simulation take to complete? A standard simulation runs for 2-3 hours, but it can be modularized into shorter sessions (focusing solely on liquidity one week, profitability the next) or extended for deeper analysis.

• Is this an individual or team-based activity? It works effectively both ways. Individuals can test their own skills, while teams can mimic the collaborative environment of an analyst desk or consulting firm.

• What industries do the simulated companies represent? The simulation can feature companies from various sectors (retail, manufacturing, tech) to demonstrate how ratios and benchmarks differ across industries.

• Can the simulation be customized for our specific course? Yes. Instructors can often adjust the companies used, the specific ratios emphasized, the complexity of the financials, and the final deliverable to align with course objectives.

• How does the simulation provide feedback? Participants receive immediate feedback on their calculated ratios (correct/incorrect). Post-simulation, they get a performance summary, and facilitators can access detailed analytics on cohort understanding.

• What roles does this simulation prepare participants for? It builds foundational skills for roles in equity research, credit analysis, corporate finance, investment banking, consulting, and any management position requiring financial literacy.

• Correct calculation of financial ratios.

• Quality of interpretation, trend identification, and benchmarking.

• Relevance and justification of recommendations based on the analysis.

• Clarity, structure, and persuasiveness of the final report or presentation.

• Using built-in tools for reflective learning and peer evaluation within teams.