accounting Flashcards
Net income calcul
Total revenues - Total expenses
Direct cost
cost that can be unambiguously traced to a object
Indirect cost
Cost that represents a resource consumed by several cost objects
Variable Cost
Cost that changes in proportion to changes in the related level of total activity
Fixed cost
cost that remains unchanged for a given period of time despite significant changes in the related level of total activity
Relevant cost
Expected future cost that differs among alternative courses of action being considered
Relevant revenue
expected future revenue that differs among alternative courses of action being considered
Sunk Cost
Past cost that is unavoidable because it will be incurred despite any taken action
Avoidable cost
A cost that will be incurred if an activity is suspended
EBIT definition + calcul
Earning Before Interest
(Selling Price - Unit variable cost) X Quantity -Fixed Cost.
or
UCM X Qty - FC
UCM
Unit Contribution Margin
Selling Price - Unit Variable Cost
Break Even Point (BEP)
Total cost and total revenue or equal
Quantity (BEP)
Fixed Costs / Unit contribution margin
Revenue (BEP)
Quantity (BEP) X Selling Price
or
(Fixed Costs / Unit contribution margin) X Selling Price
or
(Fixed Costs / (Selling Price - Unit Variable Cost)) X Selling Price
Wage
Fixed regular payment earned for work or services
Safety Margin (SM) definition
Activity that enables a company to make profit
Quantity (SM)
Quantity - Quantity(BEP)
or
Quantity - (Fixed costs / Unit contribution margin)
or
Quantity - (Fixed costs / (selling price - Unit Variable Cost))
Revenue (SM)
(Quantity - Quantity(BEP) ) X Selling Price
or
(Quantity - (Fixed costs / Unit Contribution Margin) ) X Selling Price
Average Cost (AC)
(Unit Variable Cost + Fixed Cost) / Quantity
Management control definition
process that provides information to support decisions and guide managers and employees
name the different areas of financial performance
Activity, Profitability, Return on investment, Value creation, Cash Flow
NOPAT def + calcul
Net Operating Profit After Tax
EBIT - Tax
COI def
Current Operating Income
ROS def
Return On Sales
Gross Profit Ratio calcul
Gross Profit / Sales
Operating Profit Margin calcul
Operating income / Sales (ROS)
Net operating profit margin calcul
NOPAT / Sales
Net profit margin
Net income / Sales
ROE def + calcul
Return on Equity
Net income / Shareholder equity
ROA def + calcul
Return on Assets
Net income / Assets
ROCE def + calcul
Return on Capital Employed
NOPAT / Capital employed
Capital employed calcul
Net Fixed Assets + Net Working Capital
MVA def + calcul
Market Value Added
Market value of the company - Capital Employed
TSR def
Total shareholder return
EVA def + calcul
Economic value added
NOPAT - (WACC X Capital Employed)
WACC def
Weighted average cost of capital
EBITDA def
Earnings before interest, taxes, depreciation, and amortisation
different type of motivational issues
Hidden agendas
Lack of incentives
Dashboard def
performance measurement tool that facilitates the “pro-active” management of one or more activities as part of the group process
type of dashboard
dashboard for monitoring operations
Dashboards for the strategy
example of customer KPI
loyalty program
% of new customers
sales / customers
market share
example of financial KPI
sales growth
EBIT
ROCE
EVA
EBITDA
example of internal process KPI
% trained staff to a new process
number of improvement ideas from the staff
example of environment and sustainability KPI
Raw material cost
CO2 reduction
% decrease in energy
example of value/unit KPI
cost per passenger
% Distribution cost
Cost / Unit Produced
example of staff KPI
Direct labour hours per unit of output
Strike days
% Unionised staff
Work accidents
OVAR method
Objective, Value, Action, Results
CPV def
Critical Performance Variable
how many KPI per objective and CPV?
at least 1
BSC method
Financial perspective
Customer perspective
Internal processes perspective
Learning and growth perspective
name different influences on a budget targets
pasts results
changes in the environment
long term goals
improvements
Name the basic functions of business planning
anticipation
regulation
learning
for anticipation in a business plan, what are the details
projections on general data concerning the activity
simulation of different action plans
determination of required resources
quantification of expected results
what is the main thing you do when regulating a business plan?
comparison of targeted objectives as a reference to the actual results.
for learning in a business plan, what are the details?
Opportunity to design or adjust the performance model
what is the task of a controller in a budget planning process
Organising and faiclitating
what does the person controller of organization are in charge of creating
timetable
communication
data characteristics
information tools
information flows
for the facilitating part of the job of a controller, what Is their interactions with others
assistance to operational managers
internal coherence of each budget
assistance to operational managers
Incremental budgeting def
a company uses the current year’s budget as a starting point and makes adjustments to it for the next budgeting cycle
zero-based budgeting def
all expenses must be justified. Restart from 0
disadvantages of budgeting
cannot deal with rapid change
focus on short-term targets rather than value creation
encourages a “top-down” management style
time - consuming
Protect rather than lower costs
