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Table of Contents

Game Instructions Introduction Goal Participation Seed Capital & Financing Strategic Positioning Reading the Instruments Investment Budget Starting a Business Unit Upsizing a Business Unit Downsizing a Business Unit Relaunching a Business Unit Management Accounting Economy Share Price & Scoring

Economic Concepts Supply and Demand Perfect Competition Economies of Scale Economies of Scope Leverage Effect Recommended Literature

Glossary of terms Annual Report Balance Sheet Capital Invested Cash Cash Flow Cash Flow Statement Corporate Social Responsibility (CSR) Cost of Goods Sold (COGS) Credit Rating Current Assets Debt Debt Ratio EBIT Equity

Gross Profit Gross Profit Margin Interest Cost Interest Rate Long-Term Assets Net Income Profit & Loss Statement Profit Before Tax Return on Equity (ROE) Return on Investment (ROI) Sales (Revenues) Stock (Balance Sheet) Synergy Taxes Total Assets Total Equity & Debt

Game Instructions

Introduction

IndustryMasters is an immersive, web-based business game based on a simulation of real world economy.
Players take the role of an entrepreneur and compete against each other in real-time for market leadership and shareholder value. They experience the outcomes of their strategies in a situation of real competition.

Goal

The Goal is to maximize the share price while investing a variable amount of seed capital in a corporation with an unlimited number of Business Units. The simulation plays out dynamically, based on all participants decisions.
Every week a new IndustryMasters tournament starts. You begin at the Vice President level and will be promoted to the CEO career level after 6 rounds. With each promotion, the challenge gets increasingly intense and more rewarding.

Participation

On the My Account page your Seed Capital balance is shown. Seed Capital is used to fund your Corporation in each round. To actually start a holding please click on 'Participate' whenever a round is open in the 'My Account' menu. The duration of each round is 1 hour at a speed of 1 tick per minute. You can also purchase your Business Units before game start (it is highly recommended that you purchase atleast one company before round start).

Seed Capital & Financing

The minimum and maximum Seed Capital that can be invested varies with the general settings of the simulation round. You may increase your seed capital at any time up to tick 24. Be aware that higher amounts of seed capital still have to grow as fast as smaller amounts of starting capital which can be more difficult. An increased funding gets less atractive with each tick that has passed, but may enable additional strategical moves or even prevent Bankruptcy. The second source of capital is debt. The debt ratio shows the share of debt and is calculated as: Debt Ratio = Debt / (Debt + Equity). A higher debt ratio leads to higher interest rates and interest payments but is also the key to additional investments and growth. Bank credits are automatically taken as required and repaid as far as liquidity allows it at any time.

Strategic Positioning

The corporates Strategic Positioning is defined by adjusting five parameters. Which combination of choices is more successful depends on various factors like saturation, maturity and debt ratio which fluctuate during the simulation. The strategic positioning may only be changed every 6 month (Tick: 0,6,12,18,24,30,..).

Pricing Strategy:
With the pricing policy you determine the price-level at which your company offers the products.
The price level has a strong influence on the profit margins associated with the sale of products and on the demand for the products. Companies with a high-price strategy, should also consider the quality of their products and increase its R&D/Innovation budget. In order to sell products at premium prices, the products need to be premium too. If a company chooses the strategy to produce at the lowest possible cost (cost leadership), then it should also turn the price level of their products downward.

TQM/Product Quality:
If your products are of high quality, then they are more in demand.
The production of quality products is more complex and requires the fulfilment of higher industry standards, thus increasing production costs. A company, which positioned itself as a provider of quality products should also consider to adjust its pricing policy upwards. If a company chooses the strategy to produce at the lowest possible cost (cost leadership), then it should choose a lower quality budget.

R&D/Innovation:
With an increased budget for research and development (R&D) you can produce and offer more innovative products.
Innovative products will be more in demand than the standard product because they are more attractive to the buyer. The R&D department is located in the production, so get off at an increase of the budget, the production costs. A company, which positioned itself as a provider of innovative products should also consider to adjust its pricing policy upwards. If a company chooses the strategy to produce at the lowest possible cost (cost leadership), then it should choose a lower R&D budget.

HR/Training of staff:
With the budget for staff training the employee satisfaction can be increased.
Because the employees are more motivated, they work more efficiently. The employees in the administration learn to think more entrepreneurial. This has a strong effect on productivity in the administration and effect significant savings in fixed costs. In the production staff training incerases labour productivity. Overall, the production output increases while the staff costs rise.

CSR/Sustainability:
With your CSR budget you can find a voluntary contribution to sustainable development. The Company may, for example, to convert solar energy to contribute to climate change.
CSR (Corporate Social Responsibility) stands for responsible corporate action and combines environmental, social and economic business objectives. By CSR action can we the reputation of our company. This causes a greater demand for our products, but increased by CSR spending our production costs. The main effect, however, is a tax advantage. Companies that promote sustainable development are rewarded a 40% tax reduction. CSR therefore particularly worthwhile for companies that make profits.

Reading the Instruments

The Instruments on the My Corporation page show important key ratios that are required to manage the corporation and take investment decisions. For each ratio the corporates current value is shown next to the ratio name and is also shown on the scale by the main indicator. The grey solid line on the scale indicates where the corporates value was last tick. The dotted line with the little triangle indicates the current benchmark for this ratio, based on all players values.

Revenues Growth reflects the change of Revenues from the last tick to the current tick. In the example shown the current Revenues Growth (-1.17%) is below the average Revenues Growth of all Players and in the red (negative) range. A negative revenues growth indicates investments in new or existing Business Units.

The EBIT (Earnings before Interest and Taxes) Margin is a measure for the profitability of the companies operations and is calculated as: EBIT Margin = EBIT / Revenues. In the example shown the current EBIT Margin (33.25%) is slightly below the average EBIT Margin of all Players but still in the green (good) range.

The Debt Ratio indicates how much the company relies on debt to finance assets and is calculated as: Debt Ratio = Debt / (Equity + Debt). In the example shown the Debt Ratio (44.55%) is well above average and in the yellow range, close to the green. Further Investments should be made as soon as the Indicater reaches the green range. The red range indicates a very risky situation where high interest rates are to be paid.

Profitability is based on the ROE (Return on Equity) and is a measure of how well a corporation used its seed capital and reinvested earnings to generate additional earnings. This measure is also the underlying driver for the share price!

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Investment Budget

At any time during a simulation your current available Investment Budget is shown. The Investment Budget can be used for starting new Business Unit as well as for Upsizing or Re-Launching existing Business Units. As long as profits are made; existing credits are paid back and the Investment Budget rises with every tick. The more profitable a corporation runs, the faster the Investment Budget rises.

Starting a Business Unit Goto to Industry Info page and select an industrial sector and then a specific license in that sector, finally click 'Start New Business Unit' where it appears. The new Business Unit will be installed and automatically start producing and selling the products. Caution: With each installed Business Unit the corporation's overhead costs rise. If you operate seveal Business Units within the same sector, your corporation has synergy effects that can result in up significantly lower production costs.

Upsizing a Business Unit Goto to My Corporation page, click 'Upsize' where it appears. The capacity increases by 1x at a time and the Maturity (see Product Life Cycle) decreases according to the mixture of existing and new capacities with their respective age. When upsizing a Business Unit beyond 1x, the amount of the corporate's overhead cost do not rise. Accordingly the ratio of overhead costs to revenue decline. At the same time, the supply ratio of the industry rises and the market price level may decline when the supply level gets over 70%. Before turn 30 you can only upsize if maturity is over 66%, after turn 30 you can upsize at 40% maturity. Before upsizing work out whether that upsize will take the supply ratio over the crucial level of 70% or 100%. If you get near these boundaries it may be beneficial to relaunch instead.

Downsizing a Business Unit Goto to My Corporation page, click 'Downsize' where it appears. The capacity decreases by 1x at a time while the Maturity (see Product Life Cycle) stays the same. When downsizing a business unit, the supply ratio of the industry decresases and the market price level rises. You can only downsize if the Supply in the industry is over 100%.

Relaunching a Business Unit Goto to My Corporation page, click 'Relaunch' where it appears. Maturity (life cycle) is set back to 80% while capacity remains the same. The Relaunch button gets visible when there is sufficient budget and the Maturity is 120% or higher. Relaunching a Business Unit is the alternative to upsizing when product supply is close or exceeds 100%. You may also want to relaunch at 1x in a fast cycle license as relaunching gets more expensive with the size of the company. If you are going to relaunch it’s often worth letting a licence reach 140% maturity or more before relaunching depending on number of turns left in the level.

Management

Marketing: Marketing serves to increase the demand for a product. At an early stage of a product's life cycle, an increase of the Marketing Budget accelerates sales. Once a product reaches the stage of maturity and it's production lines run at maximum capacity (overtime) you may re-consider the product's Marketing Budget, since an additional demand cannot be supplied. The Marketing Budget is measured as % of Revenues and can be increased and decreased in steps of 1% for each Business Unit by clicking the + Marketing / - Marketing buttons on the My Corporation page.

Product Life Cycle Each industry sector has a specific Product Life Cycle that ranges from 12 to 27 month in length. During the PLC the Revenues and Profits start at a low level and then start rising until they reach the maximum. Thereafter Revenues and Profits start declining and finally remain on a low profitablity level.

To simplify the management of the PLC, the Maturity is displayed as the product age relative to the life cycle. A maturity of +100% means that the maximum point of the life cycle was reached and revenues/profits begin to decline unless the Business Unit is upsized or relaunched. Short cycle time licenses can quickly exceed 100% market demand as they will need to be upsized frequently.

Market Share: Market Share is measured each tick within each Industry. Each competitor within an industry gets price mark-ups depending the degree of his Market Leadership and the competition level (# of competitors) in that industry.

Supply: For each industry the supply is shown as a percentage of demand. A supply of 50% indicates that only 50% of the market demand is met by the current suppliers. When the supply rises well above 70% the industries overall price level starts to decline. A supply of +100% leads to low or even negative profit margins in the industry.

Overtime: When you see the overtime icon on a Business Unit, this indicates that your are producing at 120% output level. Due to wage premiums costs are higher but you will still make higher net profits in this situation.
Overhead Cost: With each installed Business Unit the corporates total overhead cost rise over proportionally but remain the same when upsizing (economies of scale). If the corporations weighted (by Assets) average Maturity rises over > 100% then the overhead cost start rising exponentially.
Liquidation: If a Business Unit reached +100% Maturity and an EBIT margin of less than 3% or if the Market Saturation is higher than 140%; it can be liquidated. In such a case 70% of the assets bookvalue will be credited and the Business Unit eliminated. Caution: Use this option with care as the equity and the share price drop after liquidation!
Bankruptcy: A Corporation gets bankrupted when the debt ratio rises above 70% (Bank is cutting credit lines) or the share price falls below 45$. In such a case all production lines are liquidated and all operations are stopped.

Accounting

On the My Corporation page the detailed Accounting data can be displayed by selecting the desired tick and clicking 'Show Accounting Data'.

The Profit & Loss (P&L) Statement is part of the financial documentation required by a public company and shows how well the company has performed in its business activities. It starts with the Revenues and then subtracts all the operative costs to come up with the EBIT. In the next step EBIT is reduced by Interest and Tax payments to calculate the Net Income.
The Cash Flow Statement shows the movement and availability of cash through and to the business over a given period. In IndustryMasters this is done by adding the Depreciation to the Net Income, as Depreciation is the only not Cash Flow relevant position.
The Balance Sheet is part of the financial documentation required by a public company and shows all assets a company owns (Long Term Assets, Cash, Finished Goods) and the capital (Equity, Debt) which is used to finance the assets.
Several Financial Ratios are shown (see also 'Reading the Instruments'). The Interst Rate changes with the debt ratio that indicates the grade of risk the bank takes when lending debt to the corporation.

Economy

The Economy Size is shown at any time in the economy menu as well as in the Economy Size Graph. The growth of the Economy is determined by the investments of all players and is overlayed by a randomized cycle. The demand for each product and thereby the Supply Level and the Market Price are directly derived from the Economy Size.

Share Price & Scoring

For every corporation the Share Price is calculated and displayed during the round. The final Share Price at the end of the round is taken as the round's result. The High Score in the weekly tournament is calculated as the share price of individual rounds weighted against the seed capital and multiplied by the number of rounds played.
Example for a Player who scored 2 rounds:
Round 1, 40M$ Seed Capital, Score 752
Round 2, 140M$ Seed Capital, Score 830
Total Score = 2 * (((40 * 752) + (140 * 830)) / 180) = 1545

Economic Concepts

Supply and Demand

The Supply and Demand model is a macroeconomic model that explains price level and output through the relationship of aggregate demand and aggregate supply.

Demand - Demand refers to the amount of goods and services that buyers are willing to purchase. Typically, demand decreases with increases in price; this trend can be graphically represented with a demand curve. Demand can be affected by changes in income, changes in price, and changes in relative price.

Supply - Supply refers to the amount of goods and services that sellers are willing to sell. Typically, supply increases with increases in price, this trend can be graphically represented with a supply curve.

Equilibrium Price - The price of a good or service at which quantity supplied is equal to quantity demanded. Also called the market-clearing price. At the equilibrium price buyers want to buy exactly the same amount that sellers want to sell. If the price were higher, however, sellers would want to sell more than buyers would want to buy. Likewise, if the price were lower, quantity demanded would be greater than quantity supplied.

In the IndustryMasters simulation the Equilibrium Price is determined by the aggregate demand to aggregate Supply functions for each industry. The aggregate Demand is driven by the Economy Size and the aggregate Supply depends solely on the participants investment decisions.

Perfect Competition

A market operates under perfect competition if it satisfies the following conditions:

1. Numerous firms 2. Freedom of entry and exit 3. Homogeneous output 4. Perfect information

In a market economy, competition occurs between large numbers of buyers and sellers who vie for the opportunity to buy or sell goods and services. The competition among buyers means that prices will never fall very low, and the competition among sellers means that prices will never rise very high. This is only true if there are so many buyers and sellers that none of them has a significant impact on the market equilibrium.

Pure monopoly - A firm that satisfies the following conditions: 1. It is the only supplier in the market. 2. There is no close substitute to the output good. 3. There is no threat of competition.

Natural monopoly - A firm with such extreme economies of scale that once it begins creating a certain level of output, it can produce more at a lower cost than any smaller competitor. Generally characterized by a declining average cost curve.

Duopoly - A market dominated by two firms. Both firms are large enough to influence the market price.

Oligopoly - A market dominated by a small number of firms. At least several of these firms are large enough to influence the market price.

A monopoly differs from competitive firms in that it is not a price taker. Because it is the only supplier in the market, it faces a downward sloping demand curve, the market demand curve. As a result, the monopoly is free to choose its price and quantity according to market demand. Monopolies are still profit maximizing firms and are thus going to satisfy the profit maximizing condition that marginal cost equal marginal revenue. The key to understanding monopolies and monopoly power is the marginal revenue calculation. In a perfectly competitive market, there exists a market price. Marginal revenue is simply equal to price in this market; every additional unit that is sold brings the market price. In a monopoly, however, every quantity is associated with a different price.

In the IndustryMasters simulation the 3 main conditions (Freedom of entry and exit, Homogeneous output, Perfect information) of perfect competition are given. The number of competing firms depends on the participants investment decisions. All competition patterns, as Monopoly, Duopoly and Oligopoly may occur in IndustryMasters. In any case the Equilibrium Price is determined by the aggregate demand to aggregate Supply functions for each Industry.

Economies of Scale

Economies of scale, also called increasing returns to scale, refers to the situation in which the cost of producing an additional unit of output (i.e., the marginal cost) of a product decreases as the volume of output (i.e., the scale of production) increases.

It is important to understand the concept of economies of scale because they can be an important factor in determining the optimal and equilibrium size of firms and thus the structure of industries and their prices and output levels.

Oftentimes, large firms in industries with high fixed costs can take advantage of savings that smaller firms cannot. Economies of scale characterizes a production process in which an increase in the scale of the firm causes a decrease in the long run average cost of each unit. Economies of scale can be enjoyed by any size firm expanding its scale of operation.

Marginal cost can decrease as the volume of output increases for several reasons. One is that larger production volumes allow fixed costs to be spread over more units of output.

Fixed costs are costs that do not change regardless of the amount of use, or at least change relatively little as a function of use. That is, they are costs that must be incurred even if production were to drop to zero. Examples of fixed costs could include factories, warehouses, machinery, electrical transmission systems and railways.

In the IndustryMasters simulation the Economies of scale is implemented by Overhead Costs and the effects of Upsizing a Business unit. A 1x business unit (i.e. Small Cars) incurs the same amount of Overhead cost as a 2x business unit. When upsizing the business unit from 1x to 2x the Overhead cost per unit fall and therefore generate Economies of scale.

Economies of Scope

Economies of scope refer to efficiencies primarily associated with demand-side changes, such as increasing or decreasing the scope of marketing and distribution, of different types of products.

If a sales force is selling several products they can often do so more efficiently than if they are selling only one product. The cost of their travel time is distributed over a greater revenue base, so cost efficiency improves. There can also be synergies between products such that offering a complete range of products gives the consumer a more desirable product offering than a single product would. Economies of scope can also operate through distribution efficiencies. It can be more efficient to ship a range of products to any given location than to ship a single type of product to that location.

A company which sells many product lines, will benefit from reduced risk levels as a result of its economies of scope. If one of its products falls out of fashion or one country has an economic slowdown, the company will, most likely, be able to continue trading.

In the IndustryMasters simulation Economies of scope are implemented via the Synergy effects for maintaining multiple business units within the same industry sector. As a general rule one should start with 1-3 business units and add up to 1-3 more business units during the course of the simulation.

Leverage Effect

The leverage effect explains a company’s return on equity in terms of its return on capital employed and cost of debt. The leverage effect is the difference between return on equity and return on capital employed. Leverage effect explains how it is possible for a company to deliver a return on equity exceeding the rate of return on all the capital invested in the business, i.e. its return on capital employed.

When a company raises debt and invests the funds it has borrowed in its industrial and commercial activities, it generates operating profit that normally exceeds the interest expense due on its borrowings. The company generates a surplus consisting of the difference between the return on capital employed and the cost of debt related to the borrowing. This surplus is attributable to shareholders and is added to shareholders’ equity. The leverage effect of debt thus increases the return on equity.

If the return on capital employed falls below the cost of debt, then the leverage effect of debt shifts into reverse and reduces the return on equity, which in turn falls below return on capital employed.

In the IndustryMasters simulation the appropriate usage of the leverage effect is one of the main success factors for making top scores. As long as the sales margins remain high enough to repay the increased interest cost, it makes sense to invest as much capital as possible. But a highly leveraged company incurs a higher risk of being strongly hurt by a decrease in sales prices. As a general rule the average debt ratio should be kept between 20% and 40% to leverage the company while still not incurring too much risk.

Recommended Background Literature

Glossary of Financial Terms

Annual Report

An official quarterly or annual financial document published by a public company, showing Profit & Loss Statement, Balance Sheet and the Cash Flow Statement.

Balance Sheet

Quantitative summary of the financial condition of a company at a specific point in time, including assets, liabilities and net worth. The first part of a balance sheet shows all the productive assets a company owns, and the second part shows all the financing methods (such as liabilities and shareholders equity). also called statement of condition. The term balance sheet is derived from the simple purpose of detailing where the money came from, and where it is now. The balance sheet equation is fundamentally: (where the money came from) Capital + Liabilities = Assets (where the money is now). Hence the term double entry - for every change on one side of the balance sheet, so there must be a corresponding change on the other side - it must always balance.

Capital Invested

Money (borrowed or owned) invested in a company's operations. Calculated by: Total Assets less Excess Cash minus non-interest-bearing liabilities. The sum of a corporations long-term debt, stock and retained earnings. also called invested capital.

Cash

Currency and coins on hand, bank balances, and negotiable money orders and checks.

Cash Flow

A measure of a companys financial health. Equals cash receipts minus cash payments over a given period of time; or equivalently, net profit plus amounts charged off for depreciation, depletion, and amortization.

Cash Flow Statement

One of the three essential reporting and measurement systems for any company. The Cash Flow statement provides a third perspective alongside the Profit and Loss account and Balance Sheet. The Cash Flow statement shows the movement and availability of cash through and to the business over a given period, certainly for a trading year, and often also monthly and cumulatively. The availability of cash in a company that is necessary to meet payments to suppliers, staff and other creditors is essential for any business to survive, and so the reliable forecasting and reporting of cash movement and availability is crucial.

Corporate Social Responsibility (CSR)

Corporate Social Responsibility is a concept whereby companies integrate social and environmental concerns into their business operations and in their interaction with their stakeholders (employees, customers, shareholders, investors, local communities, government), on a voluntary basis.

Cost of Goods Sold (COGS)

The directly attributable costs of products or services sold, (usually materials, labour, and direct production costs). Sales less COGS = gross profit.

Credit Rating

A published ranking, based on detailed financial analysis by a credit bureau, of ones financial history, specifically as it relates to ones ability to meet debt obligations. The highest rating is usually AAA, and the lowest is D. Banks use this information to decide whether to approve a credit.

Current Assets

A balance sheet item which equals the sum of cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that could be converted to cash in less than one year. A companys creditors will often be interested in how much that company has in current assets, since these assets can be easily liquidated in case the company goes bankrupt. In addition, current assets are important to most companies as a source of funds for day-to-day operations.

Debt

A liability or obligation in the form of bonds, loan notes, or mortgages, owed to another person or persons and required to be paid by a specified date (maturity).

Debt Ratio

Debt capital divided by total assets. This will tell you how much the company relies on debt to finance assets. When calculating this ratio, it is conventional to consider both current and non-current debt and assets. In general, the lower the companys reliance on debt for asset formation, the less risky the company is since excessive debt can lead to a very heavy interest and principal repayment burden. However, when a company chooses to forgo debt and rely largely on equity, they are also giving up the tax reduction effect of interest payments. Thus, a company will have to consider both risk and tax issues when deciding on an optimal debt ratio.

EBIT

A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes.

Equity

Ownership interest in a corporation in the form of common stock or preferred stock. It is the risk-bearing part of the companys capital and contrasts with debt capital which is usually secured and has priority over shareholders if the company becomes insolvent and its assets are distributed.

Gross Profit

Pre-tax net sales minus cost of sales. also called gross income.

Gross Profit Margin

Gross profit divided by sales, expressed as a percentage.

Interest Cost

The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the principal; the rate is dependent upon the time value of money, the credit risk of the borrower, and the inflation rate. Here, interest per year divided by principal amount, expressed as a percentage. also called interest rate.

Interest Rate

A rate which is charged or paid for the use of money. An interest rate is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal. Interest rates often change as a result of inflation and Federal Reserve policies. For example, if a bank charges a customer M$90 in a year on a credit of M$1000, then the interest rate would be 90/1000 *100% = 9%.

Long-Term Assets

On a balance sheet, the value of a companys property, equipment and other capital assets expected to be useable for more than one year, minus depreciation.

Net Income

Sales minus taxes, interest, depreciation, and other expenses. Net Income is one of the most important measures of a companys performance, since the pursuit of income is the primary reason companies exist. Sometimes Net Income includes one-time and extraordinary items, and sometimes it does not. Also called net earnings or bottom line.

Profit & Loss Statement

An official quarterly or annual financial document published by a public company, showing earnings, expenses, and net profit. also called income statement or earnings report. The P&L typically shows sales revenues, cost of sales/cost of goods sold, generally a gross profit margin (sometimes called contribution), fixed overheads and or operating expenses, and then a profit before tax figure (PBT). Basically the P&L shows how well the company has performed in its business activities.

Profit Before Tax

P&L position that shows the profit on ordinary activities before taxation.

Return on Equity (ROE)

Return on Equity. A measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal years Net Income divided by Equity, expressed as a percentage. It is used as a general indication of the companys efficiency; in other words, how much profit it is able to generate given the resources provided by its stockholders. investors usually look for companies with returns on equity that are high and growing.

Return on Investment (ROI)

A measure of a corporations profitability, equal to a fiscal years income divided by Long-Term Assets. ROI measures how effectively the firm uses its capital to generate profit; the higher the ROI, the better.

Sales (Revenues)

The final amount of sales, determined by subtracting the amount of sales returns and allowances and sales discount from the total amount of sales, for a fiscal period.

Stock (Balance Sheet)

A companys merchandise, raw materials, and finished and unfinished products which have not yet been sold. These are considered liquid assets, since they can be converted into cash quite easily. There are various means of valuing these assets, but to be conservative the lowest value is usually used in financial statements.

Synergy

Arrangements which are mutually beneficial to the parties involved. Corporate synergy occurs when corporations interact congruently. A cost synergy refers to the opportunity of a combined corporate entity to reduce or eliminate expenses associated with running a business. Cost synergies are realized by eliminating positions that are viewed as duplicate within the merged entity. Examples include the head quarters office of one of the predecessor companies, certain executives, the human resources department, or other employees of the predecessor companies.

Taxes

Taxes are compulsory, unrequited payments, in cash or in kind, made by institutional units to government units; they are described as unrequited because the government provides nothing in return to the individual unit making the payment, although governments may use the funds raised in taxes to provide goods or services to other units, either individually or collectively, or to the community as a whole.

Total Assets

The sum of current and long-term assets owned by a person, company, or other entity.

Total Equity & Debt

The sum of Equity and Liabilities owned by a person, company, or other entity.