Date of Publication

2-24-2020

Document Type

Master's Thesis

Degree Name

Master of Business Administration

Subject Categories

Finance and Financial Management

College

Ramon V. Del Rosario College of Business

Department/Unit

Management and Organization

Thesis Adviser

Denver Bingski D. Daradar

Defense Panel Chair

Patrick Adriel H. Aure

Defense Panel Member

Maricel S. Balatbat
Rachel A. Quero

Abstract/Summary

Capital intensive companies such as Isla Petroleum and Gas Corporation heavily relies on capital investments to achieve incremental year-on-year growth. Alongside this need, careful budgeting is one of the primary tasks of key decision makers. Given that capital investments usually involve long-term capitalizable assets, correct and careful analysis of its profitability over a given number of years is vital for sound decision-making. A common practice adopted in the oil and gas industry is the Discounted Cash Flows analysis which primarily takes into consideration the time value of money – a concept stating that the value of money today will not be same after a number of years. While this process of analyzing the profitability of CAPEX is normally being done by finance experts, for a company like IPG, the task of initially valuating a proposed CAPEX project is entrusted upon its sales team members. Since members of the sales team are not finance and accounting experts, the painstaking task of executing a DCF Analysis is simplified with the company’s own financial model – the CAPEX Valuation Model (VM). The VM serves as a DCF analysis calculator that any employee within the organization, regardless of whether his or her expertise is in the field of finance and accounting, may readily use.

Over time, technology continuously changed and developed. Together with its development is the advent of more user-friendly MS Excel features that may be used in building usable and straightforward financial models. Unfortunately for IPG’s VM template, these technological

advancements were not fully utilized. This eventually paved the way for its end-users to already find the use of the company’s VM template not only laborious, but also a confusing and complex task to do.

It is for this very reason that this action research paper utilized all available action research tools to facilitate a collaborative and systematic process of improving the current VM of the company. Through cycles one and two of this action research project, the VM template of IPG, specifically for use by its indirect packed commercial sales team in Luzon, saw the conception of the new CAPEX Form and the CAPEX Form Quick Notes. The new CAPEX Form employed formulas and techniques in MS Excel to improve the automation of the DCF analysis by providing a single input worksheet which will collate all required information to produce the necessary decision- making metrices needed by IPG’s Manual of Authority (MoA) approvers.

Abstract Format

html

Language

English

Format

Print

Keywords

Petroleum industry and trade—Capital investments

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Embargo Period

8-4-2022

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