Capssim Case Study

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The stock price of a company is one way to gauge the relative health of the company. The stock market, which includes the buyers, sellers, and investors, is always looking for ways to measure one company against another. By using stock price, dividends, earning per share, and bond rating, outsiders are able to gauge the overall health of a company against another one. In this method of looking at the trends of these indicators, comparisons can be made between Team Andrews and Team Baldwin over the course of rounds 4-6 in the Capsim simulation. The first statistic that will be discussed is stock price. According to the Capsim Student Guide, stock price is determined by book value, the last two years’ earnings per share (EPS),…show more content…
A company’s dividend policy is a major driver behind investors’ willingness to buy into the company. When a company has a consistent dividend policy, investors are more likely to want to invest in a company. This is the case when considering Team Baldwin. The dividends that were paid out were $1.75, $2.75, and $4.00. Andrews’ dividends were $5.66, $0, and $2.08. Baldwin’s consistently increasing dividends were very attractive to shareholders which helped to boost stock price. The fluctuating and sometimes nonexistent dividends of Team Andrews was a contributing factor of why their stock price declined each…show more content…
This credit rating is determined at the conclusion of each year or round. It is determined by comparing the current debt interest rates with the prime rate. In general, it determines the company’s ability to pay off its long term debt. This rating is a good indicator to the overall health of the company. Each round, with the exception of round 6, both Andrews and Baldwin had the same credit rating. The reason for this change was due to the fact that Andrews issued more long term debt that round. Baldwin did not incur any additional long term debt from round 5 to 6. Baldwin had an increase in assets and a decrease in debt during that round. This ratio caused the interest rates being charged to the company to decrease which caused the credit rating to increase. Andrews had increasing debt and a growth of assets equal to Baldwin. This increase in debt was the largest factor when assessing the credit rating of each of these
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