This brief case deals with the issue of how companies arrive at financial return targets for their operating managers. Naert's CEO has determined that the company needs to generate a Return on Equity (ROE) of 16% if it's to be competitive in the capital markets. His CFO, Mr. Van Roost, is tasked with transmitting this goal to the company's operating managers.
This case is not designed to fill a 1.5-hour class, but it does lay out nicely and succinctly some of the issues that CEOs, CFOs, and chief accountants often encounter in setting performance goals. Although the mistakes made by the CFO may seem somewhat obvious, and even egregious, from my experience they are quite common, even in large publicly trade companies where CFOs have MBAs from top business schools.
- AR2005
- AR0506
- RD0905
