Internal Rate of Return

Guest · Post by **Guest** » 15.08.2007, 11:13

Hi, do you guys mind sharing your IRRs?
You dont have to mention the industry you are in, or your company name. Heck, if you want you can go higher or lower. This is just for comparision.

Anyway heres mine

Retail outlets 6/7% a day

Other 'CGUs' e.g factory and well, or mine and jewerly factory 6%

Thanks

Aplogises if this is the wrong forum to ask this.

Puzzman

Guest · Post by **Guest** » 16.08.2007, 03:02

When I was active (which I'm currently not) I think I tried to stay at least at 10%.

I expect you'll find that's around the long-term rate for anyone, which is why the game loans (once you hit manager) are at 10%.

Guest · Post by **Guest** » 16.08.2007, 10:40

Thanks You Knolls

I guess I'll be spending this some time this weekend try to work out where my industries went wrong.

Guest · Post by **Guest** » 16.08.2007, 11:14

I try to keep around 5-10% daily ROI.

This is pretty much as efficient/more efficient than a big business IRL is (No, corporations don't make as much as you think. They just make a lot because they have a lot invested in them).

Right now I'm making a lot more because i'm selling contest product.

My main business line is raw materials.

Guest · Post by **Guest** » 16.08.2007, 11:22

Thanks mate, I'm still at that stage where its cheaper(by 1/2%) to expand certain sales buildings then build new ones, but I'm only averaging 7% ROI on them, so I was wondering if expanding was worth it.

Guest · Post by **Guest** » 16.08.2007, 11:29

heh.

I actually sold most my steel for a quicker start so its just as expensive for me to build as it is to expand

Which really isn't that big of a deal with the contest going on right now.

Guest · Post by **Guest** » 16.08.2007, 11:36

That must be annoying.

My prime industry is in steel and Im hoarding the Q0 like crazy (I get my cash flow/growth from my secondary industries) up to the stage where 15% of my Value is in steel (but then again its only four days production).

Guest · Post by **Guest** » 16.08.2007, 11:46

Not so much now with a contest boosting my income by quite a lot.

Although I've played before so knew what I was getting into when I sold the newbie resources.

Doesn't matter so much now because I'm just now building a factory for steel production

Guest · Post by **Guest** » 17.08.2007, 16:34

well, saying that you IRR is 10%, 20% ... is good but it should be good to write down the general forlumas to compare our IRR

isn't it ?

Usally the IRR is used to get the NPV of a project ...for an investment for example.

You can talk about the EBIT (Eearning Before Income Taxes), NI (Net Income ratio) or Growth rate (g) but not a Internal Rate of Return (IRR)

How to calculate the growth :

(Most recent value / Most older value) ^(1/9)

(22378/17671)= 1,27^(1/9) = 1,0266 or 2,66%

Net income ratio or EBIT (because there is no taxe ingame):

Total / Income

5305 / 56966 = 9,31%

So, which one have you taken ?

Thanks, SPB

Guest · Post by **Guest** » 17.08.2007, 20:18

SPB i think you might be forgetting that work in process and other inventory is not included in those company value numbers and as such they are useless for calculating growth.

Guest · Post by **Guest** » 19.08.2007, 16:29

SPB i think you might be forgetting that work in process and other inventory is not included in those company value numbers and as such they are useless for calculating growth.

Do you mean that you need to include inventory in the following ratio ? (I am not sure about your meaning ...)

If so, I consider inventory as an asset and not Onwer's Equity.
Also, I concess that the company value included Cash but I consider it as "Contributed Surplus" or "Retained Earning".

So, there is not any need to include inventory at anytime.

Guest · Post by **Guest** » 19.08.2007, 21:38

Well fixed assets are not part of owner's equity either. *shrug* i'm not trying to pick a fight, it was just an observation.

Guest · Post by **Guest** » 20.08.2007, 09:58

For sure but those are financed by cash from shareholders in Owner's Equity. We are talking about company value and not company asset.

Asset are usally finance by : shares or bonds (=cash) , long term loans and sometimes even if it is not recommanded at all by short term loans.

Therefore, fixed asset are usally depreciated, that event is not made ingame at the moment.

We have to adapt ourselves to the current game and using IRL tools adapted to the ingame. After, I agree that we can discuss about the link's relevance between IRL and ingame.

I have not took any asset data for calculating those number. I have used Equity and a kind of Balance sheet.

PS: We don't fight we discuss

. I like to know people mind it is very important. This can improve the game and also in the future making some comparable ratio for all of us. In finance, criticizes are mostly constructives.

Guest · Post by **Guest** » 20.08.2007, 12:58

If all my product would sell I would have an income of 5-6 mln every day with company value 46 mln. That would give income of 11-13% every day.
But they don't all sell and my warehouse is slowly filling up with valuable products.
I would say that my income is at about 2-3 mln, that's 3-6% every day.

To calculate my growth I would need to know my fixed assets in last few days which I don't know. At the beggining you can easily count 1c FA=1c cash since you don't expand your buildings. When you start expanding it's more like 1c FA=3c cash.

Guest · Post by **Guest** » 20.08.2007, 13:21

Ah, but the question is also more complicated than it seems. Due to materials, the cost of construction is higher than just what your Fixed Assets say. So your return is lower than just income / FA.