Kulagin V.P.Published in:
Russian Journal of Entrepreneurship
– Volume 19, Number 12 (December 2018)

JEL classification: G31, G32, G39

Keywords: budgeting, Financing Cost, personnel motivation, Return on Capital Employed [ROCE], return on Invested Capital [ROIC]


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Abstract:

This article is focused on development and approbation of business as a whole and business units’ performance evaluation from investors’ perspective. Basic principle applied was to evaluate investment resource required for achieving sales and profit targets. The method of capital employed evaluation and rational capital consumption as target and one of the key performance indicators for managers was depicted. Financing cost as deduction from business unit profit is proposed as an instrument for managers’ motivation of rational capital consumption and higher return on capital employed results. The method is approbated in Russian business practice.

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