Business Finance for Everyone Manufacturing

Business finance… isn’t that why we have a finance department! KPIs who needs them?!? Why are they always going on about cash flow… we are making money aren’t we? Business finance… isn’t that why we have a finance department! Profitable growth… that is something for the managers to figure out, right? What does ROI really mean? Top-line vs. Bottom-line? Is there a Middle-line…? What’s the difference between operating profit and net profit? Which is more important, to grow or to make money? Value added services, we don’t have those… do we? Working capital… is it really working? What is a Balance Sheet?

Why a Finance for Non-financials program A good understanding of financial information, particularly the profit and loss statement, balance sheet and cash flow statement empowers employees to make sound decision to contribute to the business profit and the shareholders’ funds. Without an understanding of how it all fits together, good intentions might end up having no effect on the profitability… or, in worse case, hurt the business. By raising financial awareness, participants are more confident and better suited to manage businesses’ revenues, costs, profits and cash. Participants will also be more aware of how their decision impact the business, both in short and long terms. It is not about what you know… it is about how you use your knowledge.

Apples & Oranges – The Simulation Where and how is value created in a company Purchasing Production Sales Accounts receivable Cash

Apples & Oranges – The Simulation How do we monitor the performance Purchasing Production Sales Accounts receivable Cash

The Simulation How do we measure profitability and identify what drives the results The products The operation Borrowed money Year 1: Before Year 1: After Contribution Margin Contribution 36 Sales 60 Profit Margin Operating profit 9 Debt-Equity Ratio Liabilities 61 Equity 39 = 1.6 15% % 60% 11 18 43 23 0.5 Y1 Before Y1 After Balance Sheet Profit & Loss Statement 24 Liabilities 61 23 39 43 Fixed assets 100 66 76 42 TOTAL ASSETS Plus Return On Assets Current assets 5% 14% Equity 9% 17% Operating profit 9 11 60 Common costs Cost of goods sold 36 Sales Minus 25 Contribution 27 Interest & Taxes 7 5 Net profit 2 6 Return On Equity

”Invite people to think like business owners… … so they can base their future decisions on sound business thinking.”

Apples & Oranges - How Business Finance Comes to Life The company’s finances are represented by value markers and value carriers. Using these allow the teams to imitate the circulation of capital during the financial year.

The Seminar at a Glance: the Flow Opening – Setting the Scene Your own organization What are we up against? The Simulation experience Scenario ”From mediocrity to excellence in 3 years” Next Steps – the Way Forward Back to your own real world What is our potential for improvements? What can we do to tap them?

The Scenario Year 1: Focus on Working capital – ”Turning Dead wood into Cash“ Run a year in Apples & Oranges Inc’s business to learn the flow of cash within the organization, then discuss the possible improvements, and see how results can be significantly improved by putting focus on working capital. Before After Accounts receivable Inventory

The Scenario Where are we heading… and how do we get there? Year 2: Going for profitable growth – ”Choose your strategy for growth” In year 2 the competition gets tougher and you have to choose a strategy for growth based on the Ansoff growth matrix. Where are we heading… and how do we get there?

The Scenario Year 2: Focus on cash – “Profit is an opinion. Cash flow is a fact.” Having gone through Year 2 you will have noticed that you almost ran out of cash during the year. Now it’s time to learn more about cash flow and the difference between cash flow and profit. € ¥ £ $

The Scenario Year 3: Many Small Wins – ”a Competition Between the Teams!” You will now learn about eight suggested projects and explore potential for improvements. You then get to determine which levers to prioritize and suggest which projects to go for and experience the effect on you result. Who is the winner? Net Sales Quality Support Functions Productivity Purchase Price

Secure that the learning leads to useful knowledge – that sticks. The Next Steps Activity Link to your own area of responsibility – ”How can you make a difference?” Identify what levers to pull “What can I do differently – to contribute to the companies performance” Share conclusions and discuss the way forward Secure that the learning leads to useful knowledge – that sticks.

Apples & Oranges - The Seminar in a Nutshell Simulation Board-based business simulation Number of participants Typically 12-24 participants 3-6 teams of 3-4 participants Facilitation Trainers certified by Celemi Time 4 to 16 hours Corresponding to 3-4 simulated fiscal years Methodology Highly interactive, competitive and participant driven Target groups Anybody who will gain from learning about business finance Employees at all levels

Apples & Oranges - The Seminar in a Nutshell Key concepts covered: Business finance KPI´s Balance sheet Profit and loss statement Cash flow Working capital Value drivers Profitable growth Value added services Operations efficiency Continuous improvements

What our clients say “People actually begin to apply their new knowledge on the job, which helps them remember it. Months later retention is still high.”  People from different parts of the organization become sensitive to each other’s needs and understand how the operation works.” Manager, Sales & marketing learning programs, 3M “Pursuing the Value Management program has saved the Group around €1 billion in costs... we could not have accomplished this without Celemi Apples & Oranges.” Jürgen Hambrecht, CEO, BASF

A few client references › 75 000 employees › 32 000 employees › 30 000 employees › 12 000 employees › 3 000 employees

The Guiding Principles You can’t absorb other people’s knowledge… … you have to create your own!