Western Chemical Questions
Western Chemical Questions
1 What is causing the problems in measuring division performance at Western Chemical Corporation?
-Confusion on what measurement to use. No budget made at the beginning of the year. Using financial information for managerial purposes.
2 Are there alternative methods for measuring division performance that would avoid the problems that company management is having with the methods that they have been using?
-Headed in the right direction. Want to be based on cash flows not purely accruals. EVA is a good step. Want to have diversity- look at cash flows in and out
3 Evaluate the approach to using Economic Value Added (EVA) that the company management is discussing and using experimentally. What are the strengths and weaknesses of this approach?
-How much is returned to us. Problem with EVA is that we don’t have current values or disposal values. Using book values which can cause problems. Need to figure out what we are going to charge the 12% on.
4 How should the performance of divisions of the company me measured?
5 What should Samantha Chu tell the analyst if he asks specifically about the investments in the Czech Republic, Poland, and Malaysia?
-Regulation FD- full disclosure.
1 What is causing the problems in measuring division performance at Western Chemical Corporation?
-Confusion on what measurement to use. No budget made at the beginning of the year. Using financial information for managerial purposes.
2 Are there alternative methods for measuring division performance that would avoid the problems that company management is having with the methods that they have been using?
-Headed in the right direction. Want to be based on cash flows not purely accruals. EVA is a good step. Want to have diversity- look at cash flows in and out
3 Evaluate the approach to using Economic Value Added (EVA) that the company management is discussing and using experimentally. What are the strengths and weaknesses of this approach?
-How much is returned to us. Problem with EVA is that we don’t have current values or disposal values. Using book values which can cause problems. Need to figure out what we are going to charge the 12% on.
4 How should the performance of divisions of the company me measured?
5 What should Samantha Chu tell the analyst if he asks specifically about the investments in the Czech Republic, Poland, and Malaysia?
-Regulation FD- full disclosure.