Capital investment strategies are being analyzed within an integrated oil company utilizing information from a mathematical model which determines optimal allocations of single and multi year capital outlays that will maximize the net worth of the company over a long term horizon. The optimal processes focus on an economic profit measure which is closely related to net present value or market value added when applied to any business segment or operating level within the company. It provides a more robust and comprehensive measure of value created for the shareholder than more traditional financial and accounting measurements such as net income, cash flow, earnings per share, or return on assets. The optimization model is described and the theoretical aspects and application of the economic profit measure are discussed.

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