Performance Indicators Flashcards
What is a performance indicator?
An individual measurement used to evaluate the performance of an organisation or part of an organisation.
What does productivity measure?
The aspect of the performance of an organisation which could be measured by the level of output.
How is efficiency measured?
By relating the value of the output to the inputs.
What is benchmarking?
The setting of standards or targets for the activities of an organisation.
What is a financial indicator?
A performance indicator measured in money terms.
What is ratio analysis?
The analysis of the financial accounts of an organisation by calculating ratios and percentages.
How is gross profit margin calculated?
Gross Profit / Revenue x 100%.
How is operating profit margin calculated?
Operating Profit / Revenue x 100%.
What does ROCE stand for and how is it calculated?
Return on Capital Employed; calculated as Operating profit / Capital employed x 100%.
Where Capital employed = total equity + non-current liabilities = total assets - current liabilities
How is asset turnover calculated?
Revenue / (Total assets - current liabilities).
What is the receivables period?
Trade receivables / Revenue x 365 days.
What is the payables period?
Trade payables / Cost of sales x 365 days.
How is the inventory holding period calculated?
Inventory / Cost of sales x 365 days.
What is the working capital cycle period?
Inventory days + receivables days - payable days.
What is a balanced scorecard?
The concept of performance measurement from the point of view of four perspectives: financial, customer, internal and innovation and learning.
How is return on investment calculated?
Operating profit / investment x 100%.
What is residual income?
Operating profit - cost of capital charge.
