2. “Today I will let you play a little game, to try it out and experience what our trainings are all about.
While I’m working setting it up maybe you could complete this puzzle?”
Set up the board up as in slide 5, hand out the cow puzzle. If you don’t have the puzzle, show this slide and have the participants think about and discuss what it is.
When you’re done setting up, ask what they see in the picture. After letting them guess [Click] to briefly show the cow.
“Now you’ve seen the big picture. It’s kind of hard to not see it now, right?
This is what Apples & Oranges is about, seeing the big picture of a company from a financial perspective.
Let’s start with a really easy example” [Click] 7

3. A few simple rules Add value Suppliers Customers Purchase Sell
The cost of your goods and services sold equals what you spent to produce them.
A few simple rules
Add value
Suppliers
Customers
Purchase
Sell
Rule #2:
If a customer is willing to pay more than the cost, then you are in business. 10 8 18 18 22
Say you wanted to run a bakery.
What is the first thing you need to do?
[Click]
Purchase supplies
– for example flour, eggs, milk, yeast
And what do you do with your supplies?
Add value to it by baking bread
Rule #1:
The cost of your goods and services sold equals what you spent to produce them.
What do you do then?
Sell it
Rule #2:
If a customer is willing to pay more than the cost, then you are in business.
Then you harvest the profit
Rule #3:
The idea is to have more cash coming in than going out. Ask the participants what the profit would be in the bakery illustration. (4)
This is the basic framework when it comes to business finance, where we are using money as a yardstick for value.
In front of you is another, similar model of a company operating by the same basic logic.
This is a manufacturing company (like yours?)
Go through the areas on the board as you would in a normal seminar and make sure participants understand the model.
Before continuing, it’s a good idea to secure that participants have a reasonable understanding of what these values stand for.
Ask a series of questions determining where each value carrier is, how much it contains, and what it means, for example:
▪ You have sent invoices to your customers, and some of them have not paid yet. How much do customers owe you? (20M)
▪ How many batches* do you have ready for delivery? (5)
▪ What is the current value of one batch* that is currently in the process of being assembled? (4)
▪ What is the current value of all machinery used in the company? (16)
▪ How much cash does the company have on hand? (17)
* Note: Clarify that the value carriers in the Production (blue line) each represent one “batch” of material / work in progress / finished products.
Ok, so as you can see we are not starting from scratch. I’ve set up the board for you according to the end of period 2 out of 3 in a year. Take out the Learning guide that I gave you, and turn it to page 8 where you will find this checklist [Click]
“Harvest”
Rule #3:
The idea is to have more cash coming in than going out. 5

4. Do period 3 only
As you can see in the slide I’ve already played the first two periods. So now it’s your task to play the third period. Don’t forget to move the coins according to the checklist. So for example, when payment arrives and accounts receivable are turned into cash what do you do?
Move the coins on the board
If you don’t have any questions I’ll leave you to it…
Stay in the room, observe and listen, but do not disturb the customer while playing, and give them plenty of time to finalize period 3. If you notice they’re making mistakes ask questions to get them back on course. Also, what you can do is, ask questions about their reality (i.e. does this reflect your reality? What would this and that be in your world?) to help them make the connections between the A&O model and their business reality.
When they reach the end of the check list they will probably see the ”End of year” checklist on the next page and ask if they should do that to.
Let them do that if they want to and then check the board according to the coming two slides. 8

6. End of year 1 Close the books at the end of the year 4x2 2x3 + 2x4 5x412 12
6x4 20 20 5 18 14 20
Once you have checked that their board set up corresponds to the picture, ask them ”So, was this a good year?”
Let them discuss, they will probably say it was an ok year.
To be honest, we don’t really know until we’ve seen the Profit and loss statement and the Balance sheet on the next page.If you have the time have them fill P&L and BS out themselves. If not show them the next page. 4 6 2

7. Financial Statements Year 124 36 27 9 4 5 18 6 3 1 2 60 61 37 39
100 14 20 76 12 8
Do you think it was a good year now?
Half the profit of last year etc
To get an ever better overview of how the year was you can turn the page again and calculate two basic key performance indicators (KPIs).
[Click] 10

8. Business Review Year 1
How well have the assets been used? Industry benchmark: 15 %
How much has the owners value grown? Expectations: %
____
_____
Return On Equity
Total equity M %
Net profit
Operating profit
Return On Assets
Total assets 9
100 2 5 39
What can be done to improve profitability?
Well it looks like this wasn’t such a good year after all.
So, what would happen now in real life (in your company?)
Spark a discussion about impacts of bad numbers, for example that the freedom to act is gone in a situation like this
What can be done to improve profitability?
Have the participants discuss and come up with ideas for improvement like in a real seminar.
Help them if needed and write down on white board/flip chart if possible. When they are done you say
In a real seminar the participants get to implement a lot of these good suggestions. Then they recalculate the financial statements and KPI’s and realise that working in a smart sufficient way, doing these small initiatives we can improve profitability.
Let the client ask whatever questions they have.
If they want to see the improvement, show the 3 next slides with Working capital, the changes actually made and the Financial statements after changes.
If the client wants to know more about the full seminar show them slide 17 with the layout of the seminar. Slides are if you want to go even more in-depth on the seminar. In slides you can show different A&O version and have participants guess which version they are. This way you get to show 1) that we have different versions, and 2) show that basic financial understanding is not so different in different industries. 11

9. The challenges – year by year
1. Take over a company
Year 1: Learn how to run the business.
2. Focus on working capital Year 1: Turn dead wood into cash.
3. Go for profitable growth Year 2: Choose your strategy for growth.
4. Focus on cash Year 2: Profit is an opinion.
Cash flow is a fact.
The full Apples & Oranges experience is a one day training.
[Click]
What you tried out here is step 1 and a small part of step 2, where participants learn about working capital and how it works while improving the profitability of A&O Inc.
In year 2 it gets more competitive and they get to choose one out of four growth strategies.
In year 2 they also learn more about cash flow and how that differs from profit.
In year 3 we turn focus back into internal efficiency, and it gets even more competitive as they choose between a number of internal improvement projects with the aim to find synergies.
We have an alternative year 3 focusing on sales that can also be played as year 4 if you have extra time. Here participants task is to try to balance short-term profit and long-term value of the company by choosing the right customer orders.
5. Many small wins
Year 3: Pulling the right levers. A competition between the teams!
6. Target the right customers
Year 4: Balance short-term profit and long-term value. A competition between the teams!

10. So, to bring this back where we started Apples & Oranges is really about getting the big picture understanding of business finance.
Having seen the big picture participants are better equipped to understand how to help run the business successfully. 22

11. Thank You
Any questions or thoughts?