Ch 9 - Performance Management Systems Flashcards
What are the 5 perspectives of a balanced score card?
- Financial
- Customer
- Environmental
- Internal business prospective
- Learning and growth/Organizational capacity
What is an example of a financial KPI?
Revenue growth
What is an example of a customer KPI?
Customer satisfaction
What is an example of an environmental KPI?
Reducing carbon emissions by x%
What is an example of an Internal business prospective KPI?
Employee’s CEO approval rating
What is an example of a Learning and growth/Organizational capacity KPI?
Employee turnover
What are the four responsibility centres?
- Revenue centre
- Cost centre
- Profit centre
- Investment centre
Revenue Centre: What can the management team of a business segment control and influence?
Revenue
Cost Centre: What can the management team of a business segment control and influence?
Costs
Profit Centre: What can the management team of a business segment control and influence?
Revenue and Costs
Investment Centre: What can the management team of a business segment control and influence?
Revenue, Costs, and Investing decisions
How do you determine if management is an investment centre (regarding only investing, so don’t mention revenue or costs)
That management has the AUTHORITY to APPROVE investment decisions
What are sample metrics for each centre?
- Revenue: # of products/services sold
- Cost: Actual cost vs. budgeted cost
- Profit: Gross Margin
- Investment: ROA (Return on Assets)
What is the management reporting cycle?
A process that involves:
- setting budget targets,
- producing management reports,
- making decisions to improve performance, and
- continuously motivating employees to meet company goals.
What is a variance analysis?
When companies compare actual results against either
- Budget
- Prior periods,
- Other (e.g forecasts)
What line items in a Statement of P&L are considered favourable when actual > budgeted?
- Revenue
- Contribution Margin
- Gross Margin
- Operating Income
- Net Income
What line items in a Statement of P&L are considered favourable when budgeted > actual?
Expenses
[NOT A QUESTION] Review how to prepare financial reports
