Mend: A Case in Cost-Volume-Profit Analysis

This workbook focuses on three international companies in the automotive manufacturing industry. The industry write-up gives an overview of the industry; growth development, as well as cost cutting measures in response to the prevailing economic situation. Similarly, the company write-ups are a general overview of the history and business segments within each company.

Financial statements are used by a wide variety of groups as a first step in evaluating a firm's management and understanding a company's business activities. This note explains that absolute figures by themselves tell us little about whether a company is successful or how it has managed its assets and liabilities.

This technical note addresses the key issues involved in designing executive compensation systems in accordance with value-based management principles. It focuses on the use of Economic Value Added as a means of aligning managerial and shareholder agendas. The potential advantages of this approach are examined in detailed, as are the potential drawbacks and limitations.