Lesson 11: Controlling

Question 1

____ refers to the process of ascertaining whether organizational objectives have been achieved

____ completes the cycle of management functions.

Answer 1

Controlling

Question 2

Steps in the control process

Establishing performance ___________
Measuring _____ performance
Comparing actual performance to
___________

Answer 2

• objectives, standards
• actual
• objectives, standards

Question 3

Establishing performance objectives and standards

• _____- which are expressed in quantity or monetary terms.
• _____ are expressed in quantity or quality.
• _____ - which is expressed in terms of the rate of absences.
• _____ - which is expressed in many accidents for given periods.
• _____ used are expressed in quantity or monetary terms for given periods.

Answer 3

• Sales targets
• Production targets
• Worker attendance
• Safety record
• Supplies

Question 4

Measuring Actual Performance

There is a need to measure ____ performance so that when ____ occur, ____ can be made.

The ____ will differ from organization to organization, as each has its own unique objectives.

Answer 4

• actual, shortcomings, adjustments
• measuring tools

Question 5

Comparing Actual Performance to Objectives and Standards

Once ____ performance has been determined, this will be ____ with what the organization seeks to ____ .

____ production output will be compared with the ____ output.

Answer 5

• actual, compared, achieve
• actual, target

Question 6

The purpose of comparing actual performance with the desired result is to provide management with the opportunity to take ____ when necessary.

Answer 6

corrective action

Question 7

Three types of Control

Answer 7

• Feedforward control
• Concurrent control
• Feedback control

Question 8

When management anticipates problems and prevents their occurrence, the type of control
measure undertaken is called ?

This type of control provides the assurance that the required human and nonhuman resources are in place before operations begin.

Answer 8

Feedforward control

Question 9

When operations are already ongoing and activities to detect variances are made, ____ is said to be undertaken. It is always possible that deviations from standards will happen in the production process.

When such deviations occur, ____ are made to ensure ____ with requirements. Information on the adjustments are also necessary inputs in the pre-operation phase.

Answer 9

• counter current control
• adjustments, compliance

Question 10

When information is gathered about a completed activity, and in order that evaluation and steps for improvement are derived, _____ is undertaken.

_____ aimed at improving future activities are one of its features.

it validates ____ and _____. If accomplishments consist only of a percentage of standard requirements, the standard may be too high or inappropriate.

Answer 10

• feedback control
• corrective
• objectives and standards

Question 11

Six Components of Organizational Control Systems

Answer 11

Strategic Plans
Long-Range Financial Plans
The Operating budget
Performance Appraisals
Statistical Reports
Policies and Procedures

Question 12

provides the basic control mechanism for the organization.

Answer 12

strategic plan

Question 13

the process of budgeting for operations and growth and renewal for buildings, infrastructure, and land.

Answer 13

long-range financial plan

Question 14

indicates the expenditures, revenues, or profits planned for some future period regarding operations.

Answer 14

the operating budget

Question 15

measures employee performance.

also function as effective checks on new policies and programs.

Answer 15

performance appraisals

Question 16

pertain to those that contain data on various developments within the firm.

Answer 16

statistical reports

Question 17

Among the information which may be found in a statistical report pertains to the following: (7)

Answer 17

1. labour efficiency rates
2. quality control rejects
3. accounts receivable
4. accounts payable
5. sales reports
6. accident reports
7. power consumption report

Question 18

____ refer to “the framework within which the objectives must be pursued.”

____ is “a plan that describes the exact series of actions to be taken in a given situation.”

Answer 18

policies
procedures

Question 19

two strategic control systems

Answer 19

financial analysis
financial ratio analysis

Question 20

The success of most organizations
depends heavily on its financial
performance. It is just fitting that certain measurements of financial performance be made so that whatever deviations from standards are found out, corrective actions may be introduced.

Answer 20

financial analysis

Question 21

a more elaborate approach used in controlling activities. Under this method, one account appearing in the financial statement is paired with another to constitute a ratio.

Answer 21

financial ratio analysis

Question 22

five types of financial ratios

Answer 22

liquidity ratios
efficiency ratios
financial leverage ratios
profitability ratios
return on equity ratios

Question 23

These ratios assess the ability of a company to meet its current obligations.

Answer 23

liquidity ratios

Question 24

The following ratios are important indicators of liquidity:

____ ratio- This shows the extent to which current assets of the company can cover its current liabilities. The formula
for computing current ratio is as follows:

____ 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.

Answer 24

current ratio
acid-test ratio

Question 25

-These ratios show how effectively certain assets or liabilities are being used in the production of goods and services.

Answer 25

efficiency ratios

Question 26

Among the more common efficiency ratios are:

1. • This ratio measures the number of times an inventory is turned over (or sold) each year.
2. • This ratio is used to measure utilization of the company’s investment in its fixed assets, such as its plant and equipment.

Answer 26

• inventory turnover ratio
• fixed asset ratio

Question 27

This is a group of ratios designed to assess the balance of financing obtained through debt and equity sources.

Answer 27

financial leverage ratios

Question 28

sources. Some of the
more important leverage ratios are as follows:

1. ____ - This ratio shows how much of the firm’s assets are financed by debt.
2. ____ - This ratio measures the number of times earnings before interest and taxes cover or exceed the company’s interest expense.

Answer 28

• Debt to total assets ratio
• Times interest earned ratio

Question 29

-These ratios measure how much operating income or net income a company is able to generate in relation to its assets, owner’s equity, and sales.

Answer 29

profitability ratios

Question 30

Among the more notable profitability ratios are as follows:

1. ____ - This ratio completes the net profit to the level of sales.
2. ____ - This ratio shows how much income the company produces for every peso investment in assets.

Answer 30

• profit margin ratio
• return on assets ratio

Question 31

This ratio measures the returns on the owner’s investment.

Answer 31

return on equity ratio

Question 32

identifying control problems

3 approaches that kreitner mentioned

Answer 32

1. Executive reality check
2. Comprehensive internal audit
3. Symptoms of inadequate control

Question 33

Employees at the frontline often complain management imposes certain requirements that are not realistic.

Answer 33

executive reality check

Question 34

An internal audit is one undertaken to determine the efficiency and effectiveness of the activities of an organization.

Answer 34

comprehensive internal audit

Question 35

If a comprehensive internal audit cannot be availed of for some reason, this approach is utilize

Answer 35

symptoms of inadequate control

Question 36

Symptoms of Inadequate control

Kreitner has listed some of the common symptoms as follows: (8)

Answer 36

1. An unexplained decline in revenues and profits.
2. A degradation of service
3. Employee dissatisfaction
4. Cash shortages caused by bloated inventories or delinquent accounts receivable.
5. Idle facilities or personnel.
6. Disorganized operations
7. Excessive costs.
8. Evidence of waste and inefficiency