Chapter 9 Flashcards
refers to the process of ascertaining whether organizational have been achieved if not why not and determining what activities should then be taken to achieve objective better in the future
Controlling
steps in the control process
- establishing performance objectives and standards
- measuring actual performance
- comparing actual performance to objective and standards
- taking necessary action based on the results of the comparisons
types of control
- feedforward control
- concurrent control
- feed back control
when management anticipates problems and prevents their occurrence, the type of control measure undertaken is called
feedforward control
when operations are already ongoing and activities to detect variances are made concurrent control is said to be undertaken
concurrent control
when information is gathered about a completed activity and in order that evaluation and steps for improvement are derived is undertaken
feedback control
indicates the expenditures revenues or profits planned for some future period regarding operations
operating budget
measures employee performance
performance appraisal
pertain to those that contain data on various developments within the firm
statistical reports
refer to the framework within which the objectives must be pursued
policies
is a plan that describes the exact series of actions to be taken in a given situation
procedure
strategic control systems
- financial analysis
- financial ratio analysis
a review of the financial statements will reveal important details about the company’s performance
financial analysis
under this method , one account appearing in the financial statement is paired with another to constitute ratio
financial ratio analysis
financial ratios may be categorized into the following types
- liquidity
- efficiency
- financial leverage
- profitability
these ratio assess the ability of a company to meet is current obligations
liquidity ratios
this shows the extent to which current assets of the company can cover its current liabilities
current ratio
this is a measure of the firm’s ability to pay off short-term obligations with the use of current assets and without relying on the sale of inventories
acid-test ratio
these ratio show how effectively certain assets or liabilities are being used in the production of good and services
efficiency ratios
this ratio measures the number of times an inventory is turned over (or sold) each year
inventory turnover ratio
this ratio is used to measure utilization of the company investment in its fixed assets, such as its plant and equipment
fixed asset turnover
this is a group of ratios designed to assess the balance of financing obtained through debt and equity sources
financial leverage ratios
this ratio show how much of the firm’s assets are financed by debt
debt to total assets ratio
this ratio measures the number of times that earnings before interest and taxes cover or exceed the company’s interest expense
time interest earned ratio
these ratios measure how much operating income or net income a company is able to generate in relation to its assets owners equity and sales
profitability ratios
this ratio compares the net profit to the level of sales
profit margin ratio
this ratio shows how much income the company produces for every peso invested in assets
return on assets ratio
this ratio measures the returns on the owners investment
return on equity ratio
