Module 3 Assignment Organizational Performance Anal.docx

Module 3 Assignment:
Organizational Performance Analysis and Recommendations
Prepared by:
Date:
Walden University
WMBA 6050:
Accounting for Management Decisions
Part 1: The Financial Performance Analysis
Introduction
Capital Budgeting is allocating resources for significant capital,
or investment, expenditures. Capital Budgeting determines
whether an organization's long-term assets, such as new
machinery, replacement of machinery, new plants, new
products, and research development projects, are worth
pursuing. Organizations invest in capital projects to make a
profit or increase the organization's value (Bierman,2020).
Investing in a capital project is based on analyzing the project's
expected financial performance. This performance is measured
using various financial metrics, such as net present value,

internal rate of return, and payback period. Capital Budgeting is
essential for organizations because it allows them to make
informed decisions about which projects to invest in. By
carefully evaluating a project's expected financial performance,
organizations can ensure that they are investing in projects that
will generate the highest return on investment. The part of this
project report provides the financial performance analysis of
two target investment options: Air scrubbers and Furnace Fuel
changers. The objective is to provide a numerical analysis of the
two projects using project appraisal approaches, the NPV, IRR,
PBP, and ARR.
Results of calculations of the NPV, PBP, IRR, and ARR
Air Scrubbers
Net Present Value using the Annuity Table to determine PV of
cash flow
NPV = Initial Cost + (Net Annual Cash Flow × Factor)
Amount
Factor
Present Value
Initial investment
$(1,350,00)
1
$(1,350,000)
PV of Annual net cash flow for 15 years
$225,000
9.7122
$2,185,245
Net present value

$835,245
OR
Net Present Value Using Excel to determine PV cash flow
NPV = Initial Cost + PV of Cash Flow
Present Value
Initial investment
$ (1,350,000)
=PV (rate, value1, [value2])
2,185,256
Net present value
$835,256
Payback Period = Initial Investment / Net Annual Cash Flow

6
Internal Rate of Return
Using Annuity Table
14%
OR
Using Excel =IRR (M6:M21), use the IRR worksheet
14%
Average Rate of Return = Ave Net Income / Ave Book Value of
investment

20%
Furnace Fuel Change
Net Present Value using the Annuity Table to determine PV of
cash flow
NPV = Initial Cost + (Net Annual Cash Flow × Factor)
Amount
Factor
Present Value
Initial investment
$(1,385,00)
1
$ (1,385,000)
$315,000
9.7122
3,059,343
Net present value
$1,674,343
OR

Net Present Value Using Excel to determine PV cash flow
NPV = Initial Cost + PV of Cash Flow
Present Value
Initial investment
$(1,385,000)
=PV (rate, value1, [value2])
$3,059,358
Net present value
$1,674,358
Payback Period = Initial Investment / Net Annual Cash Flow
4.397

Internal Rate of Return
Using Annuity Table
22%
OR
Using Excel =IRR (M26:M41), use the IRR worksheet
22%
Average Rate of Return = Ave Net Income / Ave Book Value of
investment
21.7%

Analysis of the Results
The net present value is the present value of all future cash
flows from a project minus the initial investment. The NPV is
used in project appraisal to determine whether a project is worth
undertaking. A positive NPV indicates that the project is worth
undertaking, while a negative NPV indicates that the project is
not worth undertaking. When an organization has two target
projects and wants to select one, the decision rule when using
the NPV method is to select a project with the highest NPV
since it is more viable than a project with a lower Net Present
Value (PRAVEEN,2020). In this context, Furnace fuel change
has a higher NPV of $ 1,674,343
than the air scrubber, which has an NPV of $ 835,245;
therefore, it should be implemented first before the Air
scrubber.
The Internal Rate of Return (IRR) is a financial metric used to
assess the profitability of an investment project. The IRR is the
discount rate that makes an investment project's net present
value (NPV) equal to zero. In other words, it is the rate of
return that makes the NPV of the project equal to its initial
investment. The IRR is used in project appraisal to compare the
profitability of different investment projects. The higher the
IRR, the more profitable the project. In this light of this
analysis, the IRR of the Furnace Fuel changer is 22% and is
higher than that of the Air scrubber, which is 14%, as the
Furnace Fuel Changer should be selected over the Air Scrubber.
The payback period is the length of time it takes for an
investment's benefits to equal its costs. The payback period is
used in project appraisal to help decide whether or not to go
ahead with a project. The payback period is expressed in years,
representing the period the organization will take to recoup the
initial cost of investment (Frost & Rooney,2021). Short periods
are often considered better than long periods since projects are
often affected by market risks; therefore, investors often prefer
to recoup their initial capital. From the results provided above,

Air Scrubber has a payback period of 6years, while Furnace
Fuel Changer has a payback period of 4 years. The Furnace Fuel
Changer will recoup the initial investment faster than the Air
Scrubber.
The Average Rate of Return (ARR) is a financial metric used to
evaluate the expected profitability of an investment project. The
ARR is calculated by taking the average of the project's cash
flows over its lifetime. The Average Rate of Return is used in
project appraisal because it provides a quick and easy way to
compare the relative profitability of different investment
projects (PRAVEEN, 2020). The higher the ARR, the more
profitable the project is expected to be. The Furnace Fuel
Changer's average return rate is 21.7%, while Air Scrubber has
an ARR of 20%. In this regard, the Furnace Fuel Changer will
return more to the organization than the Air Scrubber.
Conclusion
All four investment appraisal techniques used in evaluating the
viability of the Air Scrubber and Furnace Fuel Changer point to
the fact that the Furnace Fuel Changer is more profitable than
the Air scrubber. Therefore, the organization should select the
Furnace Fuel changer over the Air scrubber.

References
Bierman, H. (2020). Capital budgeting.
Handbook of financial planning and control, pp. 77–89.
https://www.taylorfrancis.com/chapters/edit/10.4324/978100306
2165-7/capital-budgeting-harold-bierman
Frost, G., & Rooney, J. (2021). Considerations of sustainability
in capital budgeting decision-making.
Journal of Cleaner Production, p.
312, 127650.
https://www.sciencedirect.com/science/article/pii/S0959652621
018680
PRAVEEN, B. (2020). Effective Capital Budgeting Decisions
by Firms.
International Review of Business and Economics,
4(2), 41.
https://digitalcommons.du.edu/irbe/vol4/iss2/41/
Page 1 of 7

Prepared by:
Date:
Walden University
WMBA 6050:
Part 2: Ethical Responsibility
Introduction
Ethical responsibility is a concept in Business Management that
lends itself to identifying, creating, and adopting the highest
ethical framework that observes, respects, and upholds a
conducive working environment. Moral responsibility reduces
conflict of interest, builds the brand image, and increases
profitability (Roša & Lobanova, 2022). An ethically
irresponsible organization is often confronted with a myriad of
problems, including but not limited to conflict with
stakeholders, including the government and employees. To this
end, business organizations must act and operate ethically. In
this regard, this paper critically evaluates the importance of
ethical responsibility to the organization. The analysis will
examine the ethical responsibility environment of a midsize
copper smelting company in northern Canada. This analysis will
build on the company's previous evaluation of the capital
budgeting plans of the organization.
The importance of Ethics in Managerial Accounting
Ethics are a core part of Managerial Accounting and are
essential to ensuring that the integrity of business transactions
is maintained. Without ethics, managers cannot trust their
employees to uphold company policies and procedures, which
means that any business transaction may be subject to fraud or
misrepresentation. More importantly, without an ethical

foundation, managers would not be able to make decisions that
are in the best interests of the company as a whole and its
shareholders (Rosa & Lobanova,2022). Managers must have a
solid understanding of ethics and how it affects their business.
It is not enough for managers to say they have ethics; they must
prove this by acting on their beliefs. For example, if a manager
believes paying employees somewhat is essential, they should
ensure that they adhere to this belief by paying employees
fairly. The same goes for other ethical principles, such as
honesty, fairness, and transparency. Managers should never
forget that they are responsible for enforcing ethical standards
in all aspects of their organization's operations. This includes
ensuring that all employees know what they need to do to
comply with all applicable laws and regulations and reporting
any violations to appropriate authorities. If managers are
accused of violating an employee's rights, they lose their right
to make future decisions about the employee's performance.
Additionally, Ethics is important because it helps the manager
to do their job properly and ethically, which means they will be
able to do more good for their organization. Ethics is also
necessary because it teaches employees how to work together in
a way that will benefit them all as a team. As long as everyone
knows what is right and wrong, they can work towards making
sure everyone else gets what they need at the same time. In light
of this analysis, the management of the Canadian copper
smelting company should learn to fully disclose the data
relating to its plant, as this will reduce the potential problems
with the government and other stakeholders.
Impacts of Ethics on the organization
Ethics are essential to any organization because they help
determine its culture, mission, and direction. They also
influence how decisions are made, and employees engage with
their work.
Ethics can, directly and indirectly, impact an organization's
overall financial performance. For example, if an employer fails
to pay its employees on time, it can affect the company's

reputation and lead to higher turnover rates. This may cost the
business money and cause significant losses in productivity and
customer satisfaction, which could ultimately lead to lost
revenue or increased costs as customers move elsewhere for
their needs. In addition to the financial impact, ethics can
directly impact stakeholders, such as employees who may need
overtime pay or time off due to illness or injury. Customers who
feel uncomfortable with unethical practices and suppliers might
see their business grow less attractive due to unethical behavior
by others in their industry (Lavekar,2021). For instance,
customers may not purchase from businesses with poor ethical
practices because they do not want their trust violated by
receiving poor-quality products or services from businesses that
do not value honesty above all else. Customers will also avoid
buying from these types of businesses because it makes them
feel unsafe. To this end, the executive of a Canadian copper
smelting company should not only understand the discussed
impacts of ethics on the organization, but they should take it
upon themselves to prevent unwarranted concealing of the
company information.
Recommendations
The company should implement a system for employees to
report if they are aware of unethical workplace behavior and
how to report that behavior. The company should also train
employees to be ethical and ensure that their actions align with
these principles.
In addition, the company should implement a code of conduct
that clearly defines ethical standards in all departments and
levels of management. This code can be made available on the
company website and distributed to employees in written form
so that all employees know what is expected of them within
their roles and the broader organization (Islam & Greenwood,
2021). Another critical recommendation that the Canadian
copper smelting company executive should implement is an
ethical review committee system, where employees can come
together to discuss ethical issues and make recommendations for

how the company can improve. This approach would allow for
greater transparency and accountability than if it were left to
individual supervisors alone.
Conclusion
In summary, the success of an organization stems from how
ethically it relates to the stakeholders. Ethical responsibility
builds and sustains the brand reputation, gives direction to the
organization, and creates a more inclusive, fair, and transparent
organization.
References
Islam, G., & Greenwood, M. (2021). Reconnecting to the social
in business ethics.
Journal of Business Ethics,
170(1), 1–4.
https://link.springer.com/article/10.1007/s10551-021-04775-7
Lavekar, S. S. S. (2021). Business Ethics in Financial Sector.
RESEARCH JOURNEY, 113.
https://www.shriwaghmarebrothers.com/wp-
content/uploads/2021/10/VOL_266-B.pdf#page=114
Roša, A., & Lobanova, L. (2022). Ethical Responsibility of a
Company in the Context of Digital Transformation of Work:
Conceptual Model.
Sustainability,
14(18), 11365.
https://www.mdpi.com/1823256
Page 6 of 6

Prepared by: Replace this text with your name.
Date: Replace this text with the submission date.
Walden University
WMBA 6050:
Executive Summary
Replace this text with your executive summary.
Part 1: The Financial Performance Analysis
Replace this text with introductory information. Add or remove
headings as necessary.
[Heading]
Insert your calculations of the NPV, payback, IRR, and ARR
from Excel. Add or remove headings as necessary.
For information on inserting data from Excel into Word, refer to
the following:
Microsoft. (n.d.).
Insert a chart from an Excel spreadsheet into Word.
https://support.microsoft.com/en-us/office/insert-a-
chart-from-an-excel-spreadsheet-into-word-0b4d40a5-3544-
4dcd-b28f-ba82a9b9f1e1

[Sub-Heading]
Replace or remove this text. Add or remove headings as
necessary.
Part 2: Ethical Responsibility
[Heading]
necessary.
[Sub-Heading]
necessary.
Part 3: The Triple Bottom Line and Positive Social Change
[Heading]
necessary.
[Sub-Heading]
necessary.
References

[Please delete this note before submitting your Assignment. For
more information about formatting your reference list, please
visit the following site:
https://academicguides.waldenu.edu/writingcenter/apa/reference
s.]
Include appropriately formatted references to support your
Assignment. Refer to the Assignment guidelines for further
information on the requirements.
Page 5 of 15
This Assignment complete PART 3 & Executive Summary
Only!!
(approximately 3–4 pages in length,
excluding title page and references).
A Template is provided for Part 3 & Executive Summary
(attached)
Part 1 & Part 2 is attached just in case you would like to look
back to help with this assignment.
For this final Assignment, you will continue in your role as
consultant to the executive team of a midsize copper smelting
company in northern Canada. As a reminder, here is a summary
of the team’s current situation and need:
Due to some recent changes to the local environmental air
quality laws, the company’s large coal-fueled smelting furnace
is now operating out of compliance due to high levels of
pollutants in the exhaust gases. The regulatory agency has given
the company 12 months to demonstrate compliance, after which
it will be fined $1,000 per day until the operations meet the
regulation. The company has two alternatives. The first

alternative is to install air scrubbers to reduce the output
pollutant levels. The second alternative is to convert the
smelting furnace from coal to natural gas. Both alternatives will
meet the current regulatory requirements, but there is a slight
concern that the air scrubber solution may not meet future
regulatory restrictions. The executive team wants you to
perform a financial performance analysis on both alternatives
using several different capital budgeting methodologies. The
team also is seeking guidance on nonfinancial considerations
regarding the company’s ethical and social responsibilities
related to this decision.
Last week, for Part 2 of your report, you provided company
leadership with guidance related to the company’s ethical
responsibilities related to this decision.
This week, you will conclude the report with Part 3,
which addresses the company’s social change responsibilities
related to the decision. You will also prepare an executive
summary in which you will synthesize your findings and
recommendations for the company leaders.
***As a reminder, you will continue adding on to the report you
have been developing during the last 2 weeks. In addition to the
requirements that follow, be sure to incorporate references to
appropriate academic sources, such as those found in this
week’s Learning Resources or those in the Walden Library.
***To prepare for this Assignment:
·
Return to the Module 3 Assignment Template you
utilized in Week 6 and Week 7. With the research and readings
from Week 6 through Week 8 in mind, incorporate any
feedback, as needed, into your report as you
complete Part 3 and the executive summary.
***Submit your completed business report to the executive
team. For this final submission, incorporate
Part 3 (approximately 3–4 pages in length,

excluding title page and references)
and the executive summary (page 1 of your report) as
follows:
***
Part 3: The Triple Bottom Line and Positive Social
Change
For this part of your report, you will explore aspects of the
triple bottom line and positive social change that the company
should consider when choosing an investment. In addition to the
financial information provided, your client wants to be sure that
the investment is working toward the greater good for its
stakeholders. You will provide that information by showing
them, through the triple bottom line, that the company can
capture profits and demonstrate protection to people and the
planet. You also will show the executive team how this concept
can lead to having its decision promote the good of all people
through positive social change. To complete this part, address
the following:
· Define the triple bottom line and analyze its importance within
an organization. Give examples of how the organization might
address each of the three Ps.
· Illustrate how the triple bottom line can lead an organization
to have an influence on positive social change. Provide at least
two examples of how this can be accomplished.
· As part of your discussion with the executive team on the
triple bottom line and its potential impact on positive social
change, you believe it is important to emphasize the need for
the leaders to
ask the right questions to ensure effective
implementation of the triple bottom line. To help demonstrate
the effectiveness of questioning as a means of leading change,
propose three to five questions that the executive team members
should ask their staff to prompt both a learning mindset and
lead to improved collaboration within their organization. Be
sure to provide your reasons for choosing these questions and
substantiate your position.

***Executive Summary
Provide the leadership team with an executive summary of your
findings and recommendations. This will serve as the first page
of your report. Be sure to address the following in your
executive summary:
· Clearly identify the purpose of the report.
· Concisely summarize your analysis and recommendations for
the organization’s leaders related to the financial and
nonfinancial considerations that could impact their
stakeholders, their bottom line, and their ability to effect
positive social change.

Module 3 Assignment Organizational Performance Anal.docx

Recommended

Recommended

More Related Content

Similar to Module 3 Assignment Organizational Performance Anal.docx

Similar to Module 3 Assignment Organizational Performance Anal.docx (20)

More from kendalfarrier

More from kendalfarrier (20)

Recently uploaded

Recently uploaded (20)

Module 3 Assignment Organizational Performance Anal.docx