Capital Expenditure and Strategic Investments

What are the investment priorities and why?

Capital expenditure (CapEx) affects return on capital employed (ROCE) performance. Finance must evaluate investment decisions carefully:

  • Establish a basis for prioritizing and justifying capital expenditures.
  • Coordinate with different function areas.
  • Weigh mergers and acquisitions critically.

To arbitrate such decisions, Finance requires detailed scenarios that forecast your return on investment and payback to manage performance.

With the Capital Expenditure and Strategic Investments decision area, you can set planning goals and scorecarding metrics for performance management elements such as:

  • Investment ($)
  • Net present value (NPV) ($)
  • ROI (%)
  • Acquisition profit and sales growth (%)
  • Assets and fixed assets ($)
  • Breakeven and payback months (#)
  • Capital employed change ($ and %)
  • Internal rate of return (IRR) (%).

Analyze these goals and metrics by a number of dimensions to find the hidden gems in the data:

  • Fiscal month / year
  • Balance sheet lines / class
  • Division / department
  • Project / program type.

Using the CapEx and Strategic Investments decision area

You set targets based on your goals and metrics in CapEx and Strategic Investments. You monitor your success by looking at how you measure up against your targets. Further, you dive into your results to find out more about these elements driving performance management.

  • Investment ($) : Will the business lose sales if we don’t build the plant? Will this action fix product quality problems? Will production costs increase or decrease?
  • Acquisition sales growth (%) : What are the potential cost savings from combining these two businesses? If the businesses are complementary, what is the volume of incremental sales?
 
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Reporting and Performance Management
Online Demo
See reporting as part of managing performance for every department.
Become the trusted advisor and compliance enforcer in your company.
Book
Download the finance chapter of the Performance Manager book.
Ventana Research - 2007 Performance Management Vendor and Product Scorecard
Article
Cognos ranked as a leading vendor for Performance Management in latest PM Scorecard
Consolidation Automation: Advancing Compliance and Performance Management
White Paper
Automate with the right tools, and your compliance and performance management efforts can be mutually supportive.
Cognos Virtual Finance Forum 2008
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Practical advice & proven practices in FPM. Compelling conference sessions, solution demos, and first-hand customer successes.
 
I'm interested in better performance— my next steps
 
Finance
Reporting and Performance Management
Online Demo
See reporting as part of managing performance for every department.
Become the trusted advisor and compliance enforcer in your company.
Book
Download the finance chapter of the Performance Manager book.
Ventana Research - 2007 Performance Management Vendor and Product Scorecard
Article
Cognos ranked as a leading vendor for Performance Management in latest PM Scorecard
Consolidation Automation: Advancing Compliance and Performance Management
White Paper
Automate with the right tools, and your compliance and performance management efforts can be mutually supportive.
Virtual Finance Forum June 4
Web Link
Practical advice & proven practices in FPM. Compelling conference sessions, solution demos, and first-hand customer successes.
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