Working Capital Management Simulation

Turn working capital calculations into a CFO decision

Students apply DSO, DIO, DPO and the Cash Conversion Cycle to manage receivables, inventory and payables across a 12-month business scenario.

2 - 3-hour single-player simulation
Real-life executive decisions
In-class, online or hybrid delivery

Is the company financially ready to expand?

The Working Capital Management Simulation is a two to three hour, single-player business simulation in which each student takes the role of CFO and manages the working capital of Northwood Furnishings across a simulated 12-month period. Students calculate and interpret DSO, DIO, DPO and the Cash Conversion Cycle, make decisions across receivables, inventory and payables, then recommend whether the company should expand, expand with caution or delay expansion.

Individual student evidence

Each participant submits their own calculations, policy choices, rationales and final recommendation.

Sequential working capital decisions

Students see how monthly receivables, inventory and payables choices accumulate over the year.

Comparable debrief outcomes

Scores, rationales and ending metrics support comparison and discussion across the cohort.

At a glance

Duration

2 - 3 hours

Run the complete activity in one session or divide it across teaching blocks.

Format

Single-player CFO simulation

Each participant independently manages Northwood Furnishings.

Level

UG, PG and MBA

Suitable for students developing applied working-capital and financial-management judgement.

Professor tools

Admin dashboard included

Manage participants, control the timeline, send alerts and review student activity and inputs.

Prerequisites

Beginner accessible

The simulation is suitable for beginners and includes guidance throughout the activity.

Delivery

In class, online or hybrid

The web-based simulation can be delivered through LMS/LTI or the Finsimco website.

Assessment

Optional evidence

Use calculations, decisions, rationales and results as supporting evidence or run the activity ungraded.

Course fit

Corporate finance and financial management

Fits working capital, cash flow, treasury and financial statement analysis teaching.

How working capital decisions affect cash

Accounts receivable, inventory and accounts payable determine how long cash remains tied up in the business. Managing DSO, DIO and DPO together helps improve liquidity while protecting sales, supplier relationships and day-to-day operations.

Working Capital Management simulation gameflow and stages

1. Intro | 7 minutes:

Students watch the introductory video and review the purpose of the simulation, the Northwood Furnishings context, their CFO role and the stages ahead.

Student activity: Watch the overview and review the mission.

Professor action: Confirm access and start automatic or manual progression.

2. WC Basics | 40 minutes:

Students review annual sales, cost of goods sold and starting DSO, DIO and DPO. They calculate receivables, inventory, payables, turnover ratios and the Cash Conversion Cycle for alternative Accounts Receivable, Accounts Payable and Inventory strategies.

Submission: Calculations, strategy choices and a rationale.

Professor action: Clarify requirements without revealing the balanced choices.

3. Reflection | 5 minutes:

Students review their score, cohort ranking and explanations of the balanced WC Basics choices.

Student activity: Compare calculations, choices and explanations.

Teaching focus: Examine why the lowest CCC may not be the strongest overall decision.

4. WC Management | 60 minutes:

Students manage Northwood Furnishings over 12 simulated months. Each month presents a working-capital or operating decision involving supplier relationships, payment terms, receivables, inventory, customer credit, collections, cash flow, capital expenditure or risk.

Dynamic output: Metrics and financial statements update after decisions are submitted.

Final submission: Expand, Expand with Caution or Delay Expansion, supported by a rationale.

5. Final Reflection | No time limit:

Students review the final leaderboard and performance Summary, comparing the initial and current position across working capital, liquidity, margins, risk and financial-statement outputs.

Student activity: Connect the decision sequence to the year-end financial profile.

Professor action: Compare approaches and facilitate the final debrief.

Why professors use it

It gives students a structured way to apply the operating-cycle measures, compare working capital policies and explain the resulting financial position.

Interpret the operating-cycle measures together

Students calculate DSO, DIO, DPO and the Cash Conversion Cycle, then explain what the combined result means for liquidity and cash flow.

Make working capital policy trade-offs concrete

Students compare customer credit, inventory and supplier-term choices rather than optimising one measure in isolation.

Create evidence for a focused debrief

Individual calculations, rationales, scores and ending metrics make it easier to compare decision paths across the cohort.

What the experience looks like

The Professor Admin Panel supports setup, timing, participant oversight and delivery. The Student Interface guides each participant from calculation and strategy selection to monthly decisions and final reflection.

Control stages and timing

The Timeline displays the complete simulation sequence and its stage durations. Professors can adjust timings, start automatic progression or move every participant manually to a selected stage.

Guidance in one place

The Admin Guide provides access to Setup & Facilitation, Teaching Notes and the Gameflow Diagram. Player Management allows professors to manage participants and open an individual student view when access needs to be checked.

Run and manage the session

Play starts automatic progression. Pause holds the timer in the current stage. Stop locks student screens.

Case materials students work with

Every participant receives the same case information because the simulation uses one individual CFO role. Students combine qualitative evidence about Northwood’s operating model with quantitative evidence about expansion funding, cash and readiness.

Financial conditions for expansion

Students receive financial information on Northwood’s current performance, funding requirements, cash targets and the conditions that will determine whether expansion is financially viable.

5 mins

Student Intro Video

A short video introducing the Northwood Furnishings case, the CFO role and the simulation’s key stages.

Assess the calculations, decisions and financial judgement behind the result

Assessment is optional. Professors may run the simulation as an ungraded applied activity or use platform data as supporting assessment evidence. The score, calculations, decisions, rationales and resulting financial profile can inform academic judgement, but the simulation score should not automatically replace it.

What professors can assess

• Calculation accuracy and metric interpretation
• Quality of working capital decisions

How to interpret the results

• Read the metrics as a balanced financial profile
• Use the leaderboard for cohort comparison, not automatic grading

What professors can assess:

Calculation accuracy and metric interpretation: Review whether the student correctly calculates and interprets DSO, DIO, DPO, receivables, inventory, payables, turnover ratios and the Cash Conversion Cycle.
Quality of working capital decisions: Assess how effectively the student balances liquidity, profitability, customer discipline, supplier continuity, inventory reliability and operating risk.
Optional individual assessment report: Students may be asked to submit a short written report outside the platform once they have reviewed and reflected on their scores. This is not automatically captured or graded by the simulation.

How to interpret the results:

Read the metrics as a balanced financial profile: Avoid interpreting DSO, DIO, DPO, CCC, cash or margins in isolation. Improvement in one area may create cost or risk elsewhere.
Use the leaderboard for cohort comparison, not automatic grading: The leaderboard shows relative performance within the cohort. Rank alone does not demonstrate complete understanding or determine an academic grade.

Professor setup and delivery

The simulation can progress automatically, but the professor retains control of participants, stage timings and session progression. Coaching is optional.

Step 1

Add individual participants

Set up participants through Player Management and confirm that each student can enter through LMS/LTI or the Finsimco website. Every student completes the simulation independently as CFO of Northwood Furnishings.

Step 2

Configure the stage timings

Review or adjust the standard timings: a 7-minute Intro, 40-minute WC Basics stage, 5-minute Reflection, 60-minute WC Management stage and a final Reflection with no time limit.

Step 3

Start and control the run

Press Play to begin automatic progression. Pause holds the timer. Stop holds the timer and locks student screens. Press Play again to resume after either action. Submitted data is not reset.

Step 4

Monitor and prepare the debrief

Use Live Monitoring to review student activity and inputs. Intervene where students need clarification about the task, calculations or interface, without directing them towards a preferred strategy.

Professor Resources

Everything needed to prepare, run and debrief the Working Capital Management simulation is organised within the resources below.

Working capital management
Cash Conversion Cycle
Accounts Receivable management
Accounts Payable management
Inventory management
Liquidity management
Customer credit policy
Expansion-readiness assessment
DSO, DIO and DPO
Receivables, inventory and payables turnover
Quick ratio
Cash balance
Receivables ageing
Obsolete inventory
Supplier continuity
Shareholder Value
Financial and operational risk

Creators of the Working Capital Management Simulation

These industry professionals were involved in the inception, creation, development, testing and optimisation of the simulation.

Investment banking, capital markets, PE, and corporate ratings experience at Morgan Stanley, S&P, and HPS Investment Partners. Holds a PhD in Quantitative Finance.

Gerhard Wörtche

Corporate finance experience across M&A, structured finance, credit risk, and leveraged finance at Morgan Stanley, SMBC, and Citi. Holds a BSc in Economics.

Georgi Naydenov

Structured finance, credit, credit derivatives, and NPL expertise. Portfolio Director at a private equity impact fund and active VC investor. Holds CFA and FRM qualifications.

Raushan Kretschmar

Worked in the finance department of Precomp Tools. Studied Engineering and holds an MSc in Corporate Finance from Bayes.

Aatmay Upponi

FAQs

Working Capital Basics establishes whether the student can calculate and interpret the core measures and make initial choices with clear rationales. Working Capital Management then places those concepts into a sequence of connected monthly decisions for Northwood. The second stage shows how receivables, inventory and payables policies accumulate over time and shape the final expansion verdict. This progression allows professors to separate foundational calculation skill from executive judgement.

Growth can require the company to buy more inventory and extend more credit to customers before the related cash is collected. If receivables and inventory rise faster than payables or operating cash generation, the business can become more profitable on paper while needing additional short-term funding. Northwood’s 12-month scenario allows students to see this accumulation through monthly decisions. Professors can use the final expansion recommendation to test whether students distinguish commercial growth from financial readiness.

The Cash Conversion Cycle combines DSO, DIO and DPO to show how long cash is tied up between paying suppliers and collecting from customers. Reducing DSO or DIO can release cash, while extending DPO can delay cash outflow, but each policy can also affect customers, operations or supplier relationships. Because students make sequential choices across all three areas, they can see why improving one measure in isolation does not guarantee a sustainable working-capital policy.

Expansion may offer strategic and revenue benefits, but the company must be able to fund the additional working-capital requirement. A student who recommends expansion without considering ending liquidity, DSO, DIO, DPO, the Cash Conversion Cycle and the cumulative effect of earlier policy choices may be overlooking the main risk in the case. “Expand with Caution” or “Delay” can be stronger recommendations when they are supported by the student’s calculations and a coherent plan for improving cash conversion.