Deutsche

Greta Schweitzer has recently joined Deutsche Brauerei as a member of the board of directors and is getting ready to attend her first board meeting. The board is looking to use her financial expertise to help with the company financial issues. The upcoming board meeting agenda is to discuss the approval of the 2001 financial budget, declaration of the quarterly dividend, and the adoption of a compensation scheme for Oleg Pinchuck. Greta needs to take everything she has learned about the company and form some sort of an opinion on these matters. She will also need to rate the company overall and determine options for the best way to proceed in the future to achieve high results concerning the company’s credit policy, dividend policy, and the compensation package on the table for Oleg Pinchuck.

The first topic of the meeting is the approval of the 2001 financial budget. This budget includes a big investment of EUR7 million in new plant and equipment and an investment of EUR6.8 million in a new warehouse and distribution center in Ukraine. For Greta to come up with an opinion on this matter she will have to look into the financial aspect of the company. She will have to determine how well the company is doing at this point in time. Ratios and the Du-Pont analysis could be used at this point to determine if they are liquid enough and profit enough in both the long term and the short term. The current credit policy could also be evaluated here. She will need to determine how good the financial forecasts are and if they make sense or are reasonable. Recommendations on changes or additions could be made at this point.

The second topic of the meeting is the declaration of the quarterly dividend. The company has aimed for a 75% dividend payout from earnings each year in the past. Pinchuk states with improved profits he is proposing an increase in dividends for this quarter to EUR698, 000, one fourth of the dividends projected to be paid in 2001....