subsidiary recorded a net loss in fiscal 1996; however, the causes of this net loss were (according to Case Exhibit 4) financial transactions by the company and other non-operating activities, none of which are susceptible to change as a results of any operational changes that might be implemented by John Madden, the new Operations Manager at the company's Brazilian subsidiary. To obtain a return on total assets of 14 percent at the Brazilian subsidiary on the basis of net income by relying only on changes at the operational level would require sufficient income increases at the operational level to (a) overcome the US$2.1 million non-operating deficit in 1996 (the difference between an operating profit of US$1.94 million and a net loss of US$0.13 and (b) an additional US$1.3 million at the subsidiary according to Case Exhibit 4), for an overall increase in operating income of US$3.4 million to a total of US$5.3 million compared to the 1996 performance of US$1.9 million. Such an objective is well beyond the capacity of a revised material flow plan in the Brazilian manufactu
...