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CIMA - P2 > 5. Performance and Budgets > Flashcards

5. Performance and Budgets Flashcards

1
Q

What is the equation for Return on Capital Employed?

A

PBIT/ TALCL

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2
Q

What is the equation for gross profit margin?

A

Gross profit / revenue

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3
Q

What is the equation for operating profit margin?

A

PBIT / Revenue

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4
Q

What is the equation for asset turnover?

A

Revenue/ TALCL

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5
Q

What is the alternative equation for Return on Capital Employed?

A

Operating Profit Margin x Asset Turnover

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6
Q

What is the equation for the current ratio?

A

Current Assets / Current Liabilities

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7
Q

What is the equation for the quick ratio?

A

Current Assets - Inventory / Current Liabilities

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8
Q

What is benchmarking?

A

The establishment, through data gathering, of targets and comparators that permit relative levels of performance

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9
Q

What are the 4 types of benchmarking?

A
  1. Internal
  2. Functional (vs best external performer)
  3. Competitive
  4. Strategic (competitive on a strategic level)
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10
Q

What is the name for benchmarking against previous years performance?

A

Historic benchmarking

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11
Q

What are the 3 uses of benchmarking?

A
  1. Setting tough but attainable targets
  2. Identify where improvements are necessary
  3. Be a driver for a change in a business
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12
Q

Why is it important to monitor non financial performance indicators?

A

They give information about underlying aspects of the business that indicate how it will perform in the future

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13
Q

What do non financial performance indicators look at in public sector organisations?

A

How well the business meets the needs of its stakeholders

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14
Q

What are the 4 categories of NFPIs used in service industries?

A
  1. Flexibility
  2. Innovation
  3. Resource Utilisation
  4. Excellence/Quality
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15
Q

What are the 3 categories of NFPIs used in not for profit organisations?

A
  1. Economy
  2. Efficiency
  3. Effectiveness
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16
Q

Who are the target users of the balanced scorecard?

A

Management involved in strategic policy formulation

17
Q

What are the 4 categories of the balanced scorecard?

A
  1. Financial
  2. Internal business processes
  3. Customer satisfaction
  4. Innovation & Learning
18
Q

How does the balanced scorecard influence budgeting?

A

Ensures resources are allocated in an effective manner based on the four dimensions

19
Q

What are the 2 problems with the balanced scorecard?

A
  1. Danger of information overload

2. Short term vs long term conflicts

CIMA - P2 (10 decks)

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