財(cái)務(wù)管理案例分析-英文版

1、背LAURENT頒IAN BAK疤ERIES壩The dec捌ision-m八aker mu俺st make巴 a reco巴mmendat邦ion on 昂a large頒 expans八ion pro昂ject. D搬iscount埃ed cash爸 flow a白nalysis拜 is req氨uired.霸In late按 May, 1熬995, Da稗nielle 疤Knowles礙, vice-愛(ài)preside翱nt of o扳peratio案ns for 佰Laurent皚ian Bak跋eries I唉nc., wa岸s prepa氨ring a 扮capital俺 expen

2、d搬iture p罷roposal阿 to exp跋and the鞍 compan凹ys fro般zen piz挨za plan挨t in 盎Winnipe案g佰 瓣Manitob埃a佰. If th版e oppor敖tunity 阿to expa岸nd into隘 the 骯U.S.吧 frozen盎 pizza 白market 哀was tak俺en, the拜 compan襖y would哀 need e矮xtra ca柏pacity.般 A deta稗iled an背alysis,背 includ班ing a n骯et pres啊ent val暗ue calc壩ulation辦, wa

3、s r板e(cuò)quired爸 by the吧 compan哀ys Cap拌ital Al八locatio吧n Polic叭y for a爸ll capi鞍tal exp絆enditur挨es in o爸rder to俺 ensure班 that p捌rojects盎 were b靶oth pro芭fitable背 and co班nsisten拌t with 百corpora般te stra熬tegies.辦COMPANY唉 BACKGR奧OUHD疤Establi挨shed in佰 1984, 盎Laurent襖ian Bak哎eries I壩nc. (La伴urentia哎n) manu拔fact

4、ure耙d a var澳iety of壩 frozen斑 baked 礙food pr拌oducts 哎at plan邦ts in 稗Winnipe白g挨 (pizza擺s), 敗Toronto愛(ài) (cakes愛(ài)) and 芭Montrea拔l澳 (pies)爸. While拔 each p啊lant op傲erated 壩as a pr氨ofit ce拔nter, t翱hey sha半red a c皚ommon s佰ales fo骯rce loc頒ated at翱 the co懊mpany 拌head of般fice in唉 唉Montrea疤l皚. Altho奧ugh the扒 巴Toro

5、nto鞍 plant 氨was res耙ponsibl矮e for o奧ver 40%爸 of cor懊porate 艾revenue敖s in fi叭scal 19骯94, and扒 the ot捌her pla芭nts was吧 accoun百ted for盎 about 按30% eac盎h, all 八three d疤ivision邦s contr扮ibuted 爸equally頒 to pro愛(ài)fits. T頒he comp靶any enj靶oyed st半rong co半mpetiti邦ve posi唉tions i扒n all t版hree ma礙rkets a伴nd it w伴

6、as the 壩low cos胺t produ壩cer in 胺the piz胺za mark敗et. Inc哎ome Sta胺tements哀 and Ba白lance S罷heets f罷or the 扒1993 to挨 1995 f傲iscal y疤ears ar挨e in Ex哀hibits 熬1 and 2八, respe挨ctively哎.柏Laurent懊ian sol扳d most 哎of its 吧product搬s to la敗rge gro笆cery ch懊ains, a斑nd in f鞍act, su巴pplying稗 severa俺l Canad挨ian cha挨in

7、s wit拜h priva笆te labe愛(ài)l brand盎 pizzas百 genera礙ted muc罷h of th拌e sales把 growth絆. Other壩 sales 敗were ma伴de to i巴nstitut斑ional f巴ood ser奧vices.案The com半panys 艾success疤 was, i捌n part,吧 the pr矮oduct o捌f its m扒anageme扳nts ph氨ilosoph藹ies. Th隘e corne百rstone 昂of Laur扳entian哀s opera搬t(yī)ions w熬as its 胺includi啊ng

8、 a co奧mmitmen板t to a 斑busines絆s strat敗egy pro扒moting 捌continu熬ous imp爸rovemen礙t; for 敗example胺 all em背ployees敗 were e拜mpowere襖d to th扮ink abo佰ut and 疤make su奧ggestio邦ns for 盎ways of愛(ài) reduci隘ng wast阿e. As D搬anielle霸 Knowle八s saw i辦t: “Con擺tinuous版 improv拌ement i凹s a way笆 of lif挨e at La百u(mài)remtia八n.” Al

9、s澳o, the 安company唉 was kn疤own for澳 its ab扳ove a背verage 翱conside矮ration 背for the熬 human 頒resourc稗e and e班nvironm白ental i胺mpact o壩f its b八usiness捌 decisi跋ons. Th盎ese phi傲losophi絆es drov疤e all p埃olicy-m扳aking, 吧includi礙ng thos矮e polic傲ies gov背erning 藹capital耙 alloca愛(ài)tion.礙Daniell唉e Knowl八es耙Daniell拌e K

10、nowl百ess ca暗reer, w吧hich sp拔anned 1佰3 years八 in the凹 food i背ndustry叭, had i拔ncluded八 positi扳ons in 唉other f癌unction疤al area岸s such 按as mark挨eting a哀nd fina氨nce. Sh安e had r捌eceived矮 an und瓣ergradu霸ate deg傲ree in 岸mechani絆cal eng凹ineerin扮g from 隘Queens昂 Univer八sity in礙 搬Kingsto埃n懊, 拔Ontario班, and a瓣 m

11、aster愛(ài) of bus矮iness a絆dminist拌ration 案from th翱e 哎Western唉 愛(ài)Busines哎s拔 挨School擺.爸THE PIZ頒ZA INDU襖STRY阿Major s斑egments凹 in the暗 pizza 邦market 白were fr翱ozen pi哀zza, de啊li-fres班h chill愛(ài)ed pizz哀a, rest奧aurant 骯pizza a凹nd take拔-out pi巴zza. Of隘 these 爸four, r跋estaura骯nt and 敗take-ou板t were 傲the lar唉gest. W

12、罷hile th擺ese seg把ments c敖onsiste翱d of th把ousands斑 of sma百ll-owne皚d estab柏lishmen捌ts, a f礙ew larg昂e North拜 Americ頒an chai辦ns, whi伴ch incl叭uded Do稗minos,熬 Pizza 佰Hut and壩 Little班 Caesar氨s, dom柏inated.吧Althoug啊h 12 fi捌rms man岸ufactur拌ed froz氨en pizz傲as in 懊Canada按, the f拜ive lar安gest fi岸rms, in半cluding

13、哎 Lauren罷tian, a叭ccounte佰d for 9哀5% of p唉roducti搬on. McC爸ain Foo挨ds was 俺the mar岸ket lea翱der wit班h 44% m把a(bǔ)rket s耙hare, w爸hile La翱urentia矮n had 2跋1%. Per拜 capita拔 consum愛(ài)ption o熬f froze靶n produ佰cts in 拌Canada辦 was on爸e-third邦 of the唉 level 跋in 凹U.S.案 where 按retail 把prices 伴were lo搬wer.敗ECONOMI叭C COND

14、I襖TIONS矮The Nor百th Amer胺ican ec版onomy h拔ad enjo半yed str芭ong gro胺wth sin澳ce 1993耙, after艾 having伴 suffer骯ed a se笆vere re癌cession瓣 for th奧e two p頒revious班 years.哀 Intere霸st rate哀s botto瓣med-out辦 in mid氨-1994, 藹after w艾hich th挨e U.S. 盎Federal佰 Reserv扮e slowl翱y incre拔ased ra疤tes unt啊il earl吧y 1995 藹in a

15、n a岸ttempt 斑to figh疤t infla靶tionary哀 pressu伴res. Ne扒verthel胺ess, No翱rth Ame啊rican i敗nflatio傲n was e案xpected熬 to ave岸rage 3%皚 to 5%a昂nnually疤 for th艾e fores安eeable 傲future.礙 The Ba敖nk of C扒anada f哎ollowed熬 the U.敖S. Fede癌ral Res懊erves 骯lead an骯d incre胺ased in笆terest 俺rates, 班in part藹 to pro扮tect th襖e

16、 Canad氨ian dol俺lars v艾alue re熬lative 敖to the 扒value o壩f the U癌.S. dol柏lar. Th皚e resul背t was a搬 North 扮America頒n growt案h rate 埃of gros凹s domes唉tic pro拌duct th澳at was 啊showing案 signs 艾of slow耙ing dow霸n.絆LAURREN壩TIANS 翱PROJECT柏 REVIEW敗 PROCES啊S礙Prior t暗o the a唉pproval阿 of any罷 capita盎l alloc阿ation, 疤ea

17、ch op斑erating癌 divisi隘on was 岸require癌d to de凹velop b白o(hù)th a S矮trategi頒c and a骯n Opera稗ting Pl傲an. The拔 Strate挨gic Pla扮n had t氨o ident氨ify and擺 quanti盎fy eith拜er inef懊ficienc扮ies or 艾lost op瓣portuni芭ties an按d estab阿lish ta百rgets f阿or thei霸r elimi鞍nation,耙 includ矮e a thr啊ee-year辦 plan o半f capit巴al req

18、u澳irement唉s, link疤 capita傲l spend襖ing to 矮busines擺s strat罷egies a瓣nd cont哎inuous 隘improve絆ment ef皚fort, a爸nd achi頒eve the辦 compan礙y-wide 巴hurdle 敗rates.岸The fir氨st year拌 of the唉 Strate礙gic Pla笆n becam背e the A岸nnual O爸peratin扒g Plan.俺 This w隘as supp安orted b稗y a det扒ailed l案ist of 癌propose版d capit哎al

19、proj搬ects wh埃ich bec拜ame the矮 basis 挨for cap愛(ài)ital al靶l(wèi)ocatio佰n. In a挨ddition瓣 to mee敗ting al扮l Strat耙egic Pl矮an crit鞍eria, t唉he Oper啊ating P佰lan had版 to ide皚ntify m挨ajor co敗ntinuou鞍s impro矮vement 爸initiat阿ives an扮d budge班t for t版he asso般ciated 擺benefit懊s, as w拌ell as 哎develop敖 a trai俺ning pl盎an iden

20、氨tifying霸 specif辦ic trai按ning ob拔jective佰s for t捌he year搬.骯These c半riteria按 were u芭sed by 阿head of壩fice to白 keep t叭he beha奧vior of頒 divisi耙onal ma跋nagers 邦consist叭ent wit瓣h corpo矮rate ob癌jective澳s. For 氨example哎, the r罷equirem哀ent to 襖develop翱 a trai辦ning pl絆an as p案art of 吧the ope澳rationa稗l plan 氨f

21、orced 背manager瓣s to be礙 effici熬ent wit八h emplo邦yee tra百ining a鞍nd to k艾eep con班tinuous斑 improv白ement a阿s the u奧ltimate安 object挨ive.壩All pro爸posed p辦rojects版 were s巴ubmitte疤d on an藹 Author拜ization阿 for Ex暗penditu盎re (AFE熬) Form 愛(ài)for rev搬iew and俺 approv按al (see佰 Exhibi跋t 3). T般he AFE 愛(ài)had to 扮present斑

22、 the pr藹ojects昂 linkag板e(cuò) to th吧e busin半ess str跋ategies愛(ài). In ad百dition,半 it had懊 to inc盎lude sp襖ecific 頒details岸 of eco柏nomics 半and eng熬ineerin搬g, invo俺lvement靶 and em骯powerme拌nt, hum笆an reso按urce, a爸nd the 班environ吧ment. T爸his req背uiremen疤t ensur拜ed that澳 projec艾ts had 扒been ca辦refully霸 though扳t thr

23、ou半gh by f敖orcing 凹manager敖s to li盎st the 愛(ài)items p板urchase把d, the 頒employe把es invo敗lved in瓣 the pr佰oject, 矮the emp把loyees 耙adverse埃ly affe岸cted by哀 the pr絆oject, 白and the芭 effect案 of the半 projec八t on th哎e envir藹onment.唉Approva板l of a 佰capital礙 expend藹iture p拌roposal般 was co八ntingen絆t on th唉ree req哎u

24、iremen壩ts whic挨h are i佰llustra襖ted in 擺Exhibit按 4. The隘 first 岸of thes吧e requi伴rements稗 was th瓣e opera邦ting di矮vision挨s demon叭strated癌 commit矮ment to胺 contin靶uous im斑proveme扒nt (C.I頒.), the霸 criter板ia of w哎hich ar案e descr扮ibed in霸 Exhibi八t 5. Th班e secon板d requi骯rement 礙was tha搬t(yī) all p傲rojects敖 of mo

25、r鞍e than 鞍$300,00絆0 be in絆cluded 俺in the 皚Strateg擺ic Plan百. The f佰inal re班quireme澳nt was 阿that fo疤r proje翱cts gre盎ater th般an $1 m翱illion,安 the op芭erating芭 divisi皚on had 跋to achi瓣eve its安 profit礙 target叭. Howev靶er, if 壩a proje叭ct fail爸ed to m稗eet any拔 of the哎se requ哎irement叭s, ther捌e was a矮 mechan背is

26、m thr啊ough wh半ich eme骯rgency 佰funds m芭ight be邦 alloca吧ted sub挨ject to礙 the co艾rporate澳 execut敖ive com背mittee半s revie襖w and a芭pproval傲. If th白e proje爸ct was 癌less th絆an $1 m俺illion 埃and it 埃met all芭 three 鞍require斑ments, 絆only di唉visiona百l revie笆w and a斑pproval氨 was ne熬cessary愛(ài). Other板wise, a瓣pproval

27、吧 was ne胺eded fr靶om the 昂executi藹ve comm佰ittee.懊The pro罷posed 芭Winnipe骯g拌 plant 懊project絆 was co拌nsidere搬d a cla耙ss 2 pr矮oject a頒s the e辦xpendit鞍ures we凹re mean叭t to in辦crease 背capacit頒y for e版xisting辦 produc藹ts or t安o estab佰lish a 耙facilit笆y for n絆ew prod白u(yù)cts. C稗apital 吧project翱s could伴 fall i俺nto

28、 one安 of thr靶ee othe叭r class氨es: cos愛(ài)t reduc邦tion (C癌lass 1)艾; equip辦ment or巴 facili爸ty repl搬acement板 (Class叭 3); or唉 other 芭necessa絆ry expe奧nditure般s for R板&D, pro扮duct im藹proveme埃nts, qu愛(ài)ality c罷ontrol 扒and con扮currenc疤e with 藹legal, 板governm熬ent, he骯alth, s辦afety o百r insur澳ance re岸quireme搬nts inc

29、芭luding 翱polluti扳on cont百rol (Cl拜ass 4).哀 A proj礙ect spe翱nding a傲udit wa癌s requi傲red for笆 all ex搬penditu壩res; ho版wever, 白a savin板gs audi辦t was a爸lso nee版ded if 骯the pro罷ject wa巴s consi搬dered e扳ither 1拌 or 2. 埃Each cl百ass of 唉project俺 had a 邦differe伴nt hurd跋le rate岸 reflec靶ting di骯fferent八 levels擺 of

30、 ris般k. Clas班s 1 pro拌jects w捌ere con盎sidered挨 the mo百st risk翱y and h埃ad a hu扮rdle ra皚te of 2熬0%. Cla隘ss 2 an白d Class熬 3 proj板e(cuò)cts ha哀d hurdl哎e rates白 of 18%敖 and 15澳%, resp靶ectivel版y.背Knowles暗 was re岸sponsib背le for 澳develop芭ing the唉 按Winnipe邦g皚 divisi拜ons Ca隘pital P伴lan and澳 comple半ting al霸l AFE f扮o

31、rms.翱WINNIPE岸G襖 PLANT艾S EXPAN柏SION OP安TIONS懊Laurent霸ian had埃 manufa吧ctured 安frozen 柏pizzas 敖at the 阿Toronto辦 plant 昂until 1跋992. Ho百wever, 稗after t骯he comp案any bec疤ame the襖 sole s愛(ài)upplier澳 of pri敖vate-la挨bel fro瓣zen piz敗zas for拌 a larg班e groce瓣ry chai熬n and w巴as forc挨ed to s昂ecure a氨ddition白al capa愛(ài)

32、city, i暗t acqui耙red the埃 笆Winnipe拜g皚 frozen伴 pizza 隘plant f柏rom a c伴ompetit熬or. A p愛(ài)rogram 哎of regu靶l(wèi)ar mai絆ntenanc癌e and e跋quipmen骯t repla挨cement 八made th拌e new p俺lant th哎e low c白o(hù)st pro疤ducer i岸n the i骯ndustry把, with 八an oper擺ating m板argin t柏hat ave敗raged 1稗5%.頒The pla氨n, with跋 its pr扒oven co吧mmit

33、men翱t to co邦ntinuou絆s impro伴vement,盎 had su笆ccessfu耙lly met半 its pr敗ofit ob胺jective扒 for th藹e past 伴three y哎ears. A礙fter th骯e short按age of 八capacit凹y had b絆een ide百ntified昂 as the芭 plant癌s large百st sour敗ce of l啊ost opp傲ortunit盎y, mana靶g(shù)ement 把was eag唉er to r扒ectify 癌this pr版oblem a胺s targe柏ted for罷

34、in the氨 Strate埃gic Pla敖n. Beca版use the癌 facili澳ty had 扒also in骯cluded 擺the pro絆posed p敖lant ex伴pansion芭 in its搬 Strate罷gic Pla邦n, it m把et all 暗three r暗equirem爸ents fo跋r consi八deratio疤n of ap背proval 扳for a c頒apital 佰project絆.愛(ài)Annual 鞍sales h靶ad matc扳hed pla熬nt capa邦city of暗 10.9 m靶illion 俺frozen 哀piz

35、zas 班when La叭uentian柏 conclu爸ded tha頒t oppor芭tunitie佰s simil安ar to t斑h(yuǎn)ose in拜 按Canada壩 existe矮d in th頒e 唉U.S.伴 An opp矮ortunit爸y surfa扮ced whe愛(ài)reby La巴urentia唉n could扒 have a扮n exclu爸sive ar吧rangeme斑nt to s搬upply a壩 large 巴U.S.-ba藹sed gro頒cery ch吧ain wit岸h its p哀rivate-頒label-b伴rand fr扮ozen pi澳zzas b

36、e骯ginning伴 in Apr昂il, 199搬6. As a藹 result稗 of thi頒s arran百gement,翱 frozen壩 pizza 阿sales w疤ould in熬crease 澳rapidly敗, addin敖g 2.2 m版illion 敖units i耙n fisca巴l 1996,案 anothe拜r 1.8 m霸illion 八units i把n fisca扮l 1997,埃 and th扒en 1.3 頒million按 additi百onal un瓣its to 爸reach a挨 total 凹o(jì)f 5.3 瓣million伴 additi辦on

37、al un般its by 吧fiscal 按1998. H搬owever,疤 the te芭rms of 隘the agr隘eement 啊would o版nly pro啊vide La藹urentia昂n with 拔guarant頒eed sal巴es of h叭alf thi霸s amoun般t. Know俺les exp稗ected t絆hat the案re was 皚a 50% c笆hance t半hat the癌 grocer鞍y chain擺 would 翱order o昂nly the敗 guaran捌teed am氨ount. L瓣aurenti捌an sold矮 froze

38、n斑 pizzas奧 to its扒 custom稗ers for襖 $1.7 i頒n 1995 昂and pri跋ces wer熬e expec隘ted to 搬increas矮e just 襖enough 奧to keep爸 pace w爸ith inf襖lation.愛(ài) Produc稗tion co背sts wer翱e expec靶ted to 邦increas辦e at a 辦similar拔 rate.搬Laurent巴ian had壩 consid稗ered, b哀ut reje皚cted, t岸hree ot斑h(yuǎn)er alt版ernativ盎es to i版ncrease稗 it

39、s fr愛(ài)ozen pi佰zza cap靶acity. 癌First, 稗the acq邦uisitio挨n of a 版competi爸tors f頒acility搬 in 氨Canada敗 had be斑en reje翱cted be鞍cause t唉he equi瓣pment w背ould no罷t satis背fy the 捌immedia白te capa佰city ne半eds nor敗 achiev把e the c愛(ài)ost red安uction 案possibl百e with 半expansi鞍on of t愛(ài)he 巴Winnipe捌g霸 plant.案 Second傲, the

40、a背cquisit叭ion of 跋a compe半titor i吧n the 案U.S.跋 had be笆en reje白cted be暗cause t叭he avai皚lable p跋lant wo岸uld req哀uire a 辦capital擺 infusi安on doub暗le that傲 requir鞍ed in 絆Winnipe疤g芭. As we把ll, the敖re were癌 risks 班that th胺e produ扒ct qual霸ity wou柏ld be i礙nferior笆. Last,岸 the ex敗pansion辦 of the氨 拌Toronto背 ca

41、ke p敖lant ha半d been 拔rejecte百d as it白 would 伴require唉 a capi哎tal out背lay sim芭ilar to挨 that i矮n the s凹econd a芭lternat半ive. Th暗e only 按remaini八ng alte艾rnative傲 was th案e expan半sion of捌 the 岸Winnipe邦g鞍 plant.啊 By kee罷ping th昂e froze哀n pizza奧 in 稗Winnipe凹g靶, Laure版ntian c矮ould be安tter ex斑ploit e啊conomie拜

42、s of sc稗ale and傲 assure佰 consis拜tently 敗high pr壩oduct q扮uality.跋The Pro芭posal 藹The exp阿ansion 澳proposa版l, whic頒h would扮 requir案e six m邦onths t辦o compl爸ete, wo霸u(píng)ld rec拌ommend 哎four ma奧in expe扳nditure版s: expa傲nding t懊he exis哎ting bu斑ilding 笆in 半Winnipe奧g盎 by 60%挨 would 熬cost $1礙.3 mill板ion; ad奧ding a

43、班spiral 斑freezer澳, $1.6 絆million瓣; insta礙lling a埃 new hi氨gh spee扮d pizza敖 proces傲sing li霸ne, $1.艾3 milli版on; and案 acquir邦ing add安itional案 wareho氨use spa埃ce, $60按0,000. 拔Includi邦ng $400柏,000 fo案r conti瓣ngency 胺needs, 挨the tot罷al cash稗 outlay氨 for th案e proje辦ct woul矮d be $5扳.2 mill邦ion. Th耙e equip藹men

44、t wa凹s expec耙ted to 頒be usef矮ul for 邦10 year奧s, at w拜hich po哀int its澳 salvag俺e value捌 would 背be zero扳.百The lan爸d on wh版ich the啊 暗Winnipe斑g唉 plant 芭was bui胺lt valu唉ed at 2拜50,000 霸and no 拌additio翱nal lan埃d would岸 be nec板e(cuò)ssary 拔for the按 projec啊t. Whil埃e the e按xpansio拌n would凹 not re按quire L百aurenti佰a

45、n to i跋ncrease哎 the si白ze of t敗he plan隘ts adm凹inistra氨tive st襖aff, Kn懊owles w跋ondered拜 what p敗ortion,靶 if any百, of th矮e $223,皚000 in 般fixed s骯alaries班 should凹 be inc佰luded w敖hen eva疤luating暗 the pr扳oject. 爸Likewis疤e, she 襖estimat癌ed that癌 it cos芭t Laure拜ntian a阿pproxim襖ately $稗40,000 靶in sale熬s staf

46、f拌 time a唉nd expa澳nses to按 secure矮 the 翱U.S.搬 contra藹ct that襖 had cr伴eated t疤he need懊 for ex敖tra cap阿acity. 班Last, n啊et work擺ing cap矮ital ne熬eds wou霸ld incr唉ease wi霸th addi按tional 班sales. 芭Working笆 capita搬l was t傲he sum 版of inve礙ntory a笆nd acco暗unts re巴ceivabl澳e less 頒account藹s payab班l(xiāng)e, all唉 of whi

47、版ch were佰 a func氨tion of昂 sales.扒 Knowle瓣s estim凹ated, h板owever,耙 that t瓣he new 板high-sp霸eed lin愛(ài)e would伴 allow 挨the com愛(ài)pany to搬 cut tw拜o days 隘from av暗erage i昂nventor啊y age.白Added t耙o the b拌enefit 按derived骯 from i柏ncrease叭d sales昂, the p隘roject 挨would r按educe p拌roducti礙on cost襖s in tw哀o ways.吧 Fir

48、st,板 the ne柏w high-岸speed l巴ine wou癌ld redu唉ce plan奧t-wide 敖unit co熬st by $懊0.009, 矮though 斑only 70皚% of th暗is incr翱eased e暗fficien稗cy woul案d be re叭alized 佰in the 班first y頒ear. Th八ere was安 an equ芭al chan俺ce, how澳ever, t辦hat onl笆y 50% o跋f these傲 saving爸s could奧 actual白ly be a骯chieved啊. Secon襖d, “oth骯

49、er” sav扮ings to隘taling 敖$138,00百0 per y皚ear wou般ld also瓣 result絆 from t巴he new 壩line an啊d would拜 increa叭se each拔 year a哀t the r叭ate of 鞍inflati隘on.敖Each ye阿ar, a c班apital 扳cost al般lowance頒 (CCA),霸 akin t罷o depre柏ciation靶, would胺 be ded搬ucted f伴rom ope隘rating 瓣income 按as a re隘sult of熬 the ca礙pital e敗

50、xpendit搬ure. Th板is dedu壩ction, 背in turn擺, would柏 reduce皚 the am般ount of藹 corpor昂ate tax班 paid b絆y Laure胺ntian. 矮I(xiàn)n the 罷event t捌hat the跋 compan絆y did n把ot have岸 positi扒ve earn敗ings in靶 any ye隘ar, the班 CCA de笆duction皚 could 白be tran鞍sferred頒 to a s芭ubseque伴nt year扳. Howev哀er, cor矮porate 埃earning叭s we

51、re 翱project班ed to b芭e posit藹ive for矮 the fo奧reseeab案le futu稗r(nóng)e. Kno哀wles co盎mpiled 啊the eli板gible C矮CA dedu皚ction f霸or 10 y案ears (s邦ee Exhi扳bit 6).辦 For th拌e purpo矮se of h翱er anal笆ysis, s礙he assu安med tha絆t all c疤ash flo耙ws woul跋d occur挨 at the耙 approp艾riate y八ear-end靶.邦Three a暗reas of襖 enviro俺nmenta

52、l八 concer敖n had t藹o be ad霸dressed埃 in the把 propos矮al to e擺nsure b頒oth con按formity吧 with L岸aurenti百an poli霸cy and 礙complia氨nce wit芭h regul白atory b版odies a絆nd loca搬l by-la擺ws. Fir邦st, des搬ign and稗 instal藹lation 安of sani瓣tary dr把a(bǔ)in sys扮tems, i八ncludin盎g re-ro愛(ài)uting o胺f exist吧ing dra拌ins, wo愛(ài)uld imp骯ro

53、ve sa稗nitatio版n pract扒ices of芭 efflue挨nt/wast靶ewater 佰dischar伴ge. Sec擺ond, th絆e provi哎sion of捌 water-啊flow re笆cording靶 meters拔 would 笆quantif哎y water暗 volume案s consu辦med in 搬manufac叭turing 把a(bǔ)nd hel鞍p to re拌duce it頒s usage按. Last,隘 the re澳frigera耙tion pl氨ant wou白ld use 捌ammonia安 as the扒 coolan八t as o

54、p盎posed t斑o chlor俺o-fluro癌-carbon擺s. Thes半e initi擺atives 八were co班nsidere班d suffi襖cient t跋o satis敖fy the 擺criteri矮a of th癌e Capit頒al Allo斑cation 背Policy.頒THE DEC藹ISION芭Knowles半 believ擺ed that靶 the pr扒oject w熬as cons熬istent 絆with th唉e compa藹nys bu啊siness 安strateg啊y since笆 it wou矮ld ensu昂re that絆 the

55、哀Winnipe白g懊 plant 叭continu爸ed to b白e the l把ow cost礙 produc班er of f半rozen p耙izzas i靶n 哀Canada疤. Howev耙er, she跋 knew t矮hat her癌 analys伴is must埃 consid敖er all 凹factors百, inclu耙ding th巴e proje拔cts ne隘t prese把nt valu柏e. The 矮plants哀 capita靶l(wèi) alloc班ation r扮eview c埃ommitte胺e would扳 be fol拌lowing 巴the pro頒c

56、edures敗 set ou辦t in th般e compa皚nys Ca背pital A笆llocati霸on Poli骯cy as t耙he basi伴s for r艾eviewin把g her r佰ecommen藹dation.八Knowles案 consid矮ered th擺e impli把cations挨 if the稗 projec澳t did n佰ot prov敗ide suf懊ficient案 benefi疤t to co隘ver the般 Class 爸2 hurdl哎e rate 奧of 18%.敖 Enteri拔ng the 扳U.S.扮 grocer愛(ài)y chain熬s

57、 marke瓣t was a佰 tremen啊dous op敗portuni翱ty and 氨she con啊sidered頒 what o艾ther bu背siness 霸could r岸esult f盎rom Lau艾rentian暗s incr壩eased p拌resence敖. She a罷lso won搬dered i半f the h按urdle r奧ate for礙 a proj安ect tha爸t was m八eant to懊 increa邦se capa笆city fo熬r an ex隘isting 巴product捌 should版 be sim版ilar to白 the c

58、o爸mpanys搬 cost o傲f capit拔al, sin熬ce the 八risk of邦 the pr凹o(jì)ject s唉hould b凹e simil跋ar to t板he over凹all ris癌k of th氨e firm.唉 She kn佰ew that頒 Lauren班tians 把board o柏f direc懊tors es鞍tablish耙ed a ta拔rget ca安pital s白tructur邦e that 背include盎d 40% d白ebt. Sh佰e also 藹reviewe背d the c啊urrent 拔Canadia佰n marke疤t bo

59、nd 斑yields,哎 which 挨are lis頒ted in 霸Exhibit板 7. The礙 spread阿 betwee氨n Gover氨nment o敖f Canad愛(ài)a bonds拌 and th愛(ài)ose of 耙corpora背tions w爸ith bon白d ratin翱gs of B艾BB, suc藹h as La礙urentia跋n, had 埃recentl鞍y been 擺about 2安00 basi敗s point版s (2%) 疤for mos昂t long-巴term ma按turitie壩s. Fina阿lly, sh懊e disco把vered t熬

60、hat Lau藹rentian跋s stoc稗k beta 柏was 0.8翱5, and 岸that, h阿istoric鞍ally, t哎he 拌Toronto叭 stock 啊market 八returns昂 outper艾formed 邦long-te鞍rm gove班rnment 扒bonds b罷y about俺 6% ann稗ually.熬EXHIBIT熬 1昂INCOME 懊STATEME矮NT白For The艾 Year E捌nding M胺arch 31巴($ mill骯ions) 頒 澳 捌 懊 罷 哀 扳 胺 昂 1八993 稗 1994 霸 1995澳 敖 板 R俺e