The Genesis Energy operations management team, nearing completion of its agreement with Sensible Essentials, was asked by senior management to present a capital plan for the operating expansion. The capital plan was not to be a wish list but an analysis of the necessary expenditures to successfully establish a fully equipped operating facility overseas. 

In addition, senior management requested meaningful financial and operating metrics to ensure that the performance objectives for the facility were being met. The operations management team was given five days to accomplish the following:

1. Calculate the firm’s WACC. 
2. Prepare and analyze each planned capital expenditure. 
3. Evaluate, rank, and recommend the capital expenditures according to beneficial value to the organization, using the evaluation tools NPV, payback, and IRR. Evaluation, ranking, and recommendations should be by category of expenditures. For example, facility, equipment 1, 2, and 3, and inspection. 
4. Using the selected choices in part three, calculate the full cost of establishing a fully equipped facility. This would include the facility, equipment 1, 2, and 3, and inspection. In addition, calculate the payback, NPV, and IRR for the completed facility. 
5. Construct and recommend between three and five metrics to measure the performance of the organization. At least one metric should be dividend decision-making driven. 
6. Prepare an executive summary along with a separate document showing the calculations. 

Part I

Following the example of the operations management team, do the following: 

1. Download the Capital Budgeting spreadsheet, and compute the WACC for Genesis Energy.
2. Using the information provided in the spreadsheet, analyze Genesis Energy’s project options. Then, calculate the periodic and cumulative net cash flows for each potential project and its associated options. Please note that there are five projects (facility, equipment pieces 1, 2, and 3, and internal inspection), and that each project offers multiple-configuration options (facility size, equipment type, etc.).
3. Evaluate, rank, and recommend a specific option for each capital project according to beneficial value to the organization, using the evaluation tools NPV, payback, and IRR. 
4. Construct and recommend between three and five metrics to measure the performance of the new operating strategy. At least one metric should reflect dividend policy as it relates to rewarding shareholders. 
5. Prepare an executive summary describing your recommendations for each project and the overall cost, net cash flows, and expected returns of the operating configuration that you recommend. Be sure to justify your recommendations in terms of the investment criteria applied in Step 3 above. Be sure to report the full cost of the facility as it is configured per your recommendations. Present and justify your operating strategy performance metrics. 

Your complete report should include all of your calculations as appendices (5 pages, or 1 page for each project). 

Part II—Executive Summary Presentation

Because of limited resources in an era of plentiful opportunities, companies must carefully select investments. You analyzed Genesis Energy’s expansion plans and explained your findings in M4: Assignment 1.

This assignment is based on those findings. In this assignment, you will create a PowerPoint presentation that will include the following information: 

• An executive summary of your findings from M4: Assignment 1. Be sure to adhere to the following:
  • The presentation should be approximately 6–8 minutes (or 10–12 slides). 
  • A statement of the problem or topic is included. 
  • A concise analysis of the findings is included. 
  • Specific details from M4: Assignment 1 to highlight or support the summary are incorporated. 

Develop a 10–12-slide presentation in PowerPoint format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M5_A2.ppt.

 

 

Both the Genesis Energy and Sensible Essentials teams believe that the client engagement was very successful. All the critical learning tools were fully explored. However, the operations management team believes there were several topics that were not covered but are important to their respective disciplines. These topics centered primarily on selecting/developing meaningful and rational measurements of performance as they relate to measuring the success of the company’s expansion strategy. The financial indicators are important, but the team is also concerned about more forward-looking measures that might reflect product quality, customer satisfaction, internal process efficiency, performance, and perhaps, other strategic indicators. 

Based on your understanding of the concepts covered in this course, address the following: 

• Develop and describe a strategic measurement “scorecard” that incorporates the financial measures applied in this course. Consider the prospect of new equity owners and explain why this is important. 
• Describe the non-financial measures that should be considered and are important to the success of an organization. Explain why these measures should also be considered in the strategic initiatives of the organization. 

 

Attachments:

• 1495592263-final_assignment_template.xlsx