FINANCIAL PERFORMANCE MEASUREMENT REPORT TO THE BOARD OF DIRECTORS OF ISCALL ARNO

EXECUTIVE SUMMARY

Iskall Arno called a capital-budgeting meeting in January 1987. Certain business drivers were identified during and before this meeting and it was also noted that sales had reached a plato. The reason for meeting was to discuss possible business expansion projects as well as deciding how much of the capital budget to allocate to preventative maintenance, equipment replacement, safety enhancement, pollution control and efficiency improvements. Eleven projects were presented to the Board of Directors, however it was decided that only $80 million dollars would be made available for the capital budget. The projects presented totalled $ 208 million. There was uncertainty regarding which projects to accept and further analysis is required to determine the relative urgency of the projects and the likelihood of success of each project. Each project is financially viable and whilst most can be quantified, there are also certain qualitative factors that needs to be con...