Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

BEC > Performance Measures > Flashcards

Performance Measures Flashcards

1
Q

What 4 perspectives are included

in Balanced Scorecard?

A
  1. Financial
  2. Customer
  3. Internal Business Processes
  4. Learning and Growth
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Why was Balanced Scorecard created?

A

To measure Performance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are Strategy Maps?

A

Diagrams of Strategic Cause and Effect Relationships.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is a Strategic Initiative?

A

A plan to achieve goals.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What measures are used under

Value-Based Management?

A
  • Return on Investment
  • Residual Income
  • Spread
  • Economic Value Added Free Cash Flow
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How is Return on Investment (ROI) calculated?

A

Return

Investment

Ex: $100 machine generates $60 income

$60 / $100 = 60% ROI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How is Residual Income calculated?

A

Operating Income

- (Required Rate of Return x Invested Capital)

= Residual Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is another name for

Required Rate of Return (RROR)?

A

RROR is also called ‘Cost of Capital’

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is Weighted Avg Cost of Capital (WACC)?

How is it calculated?

A
  • Cost of Capital = weighted avg of the interest rates you pay for your Capital
  • includes Debt & the Rate of Return Shareholders expect

Ex: 45% of Capital is from debt and has an interest rate of 9%.

55% of Capital is equity and shareholders expect a ROR of 12%

Your Cost of Capital = (.45 x .09) + (.55 x .12) = 10.65%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How is Spread calculated?

A

Spread = ROI - Cost of Capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the primary point of Economic Value Added? How is it calculated?

A

Investments should exceed costs, with an emphasis on stockholder value.

Operating Income After Tax

- (Net Assets x WACC)

= Economic Value Added

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How is Free Cash Flow calculated?

A

Operating Income After Tax

+ Depreciation & Amortization

  • Capital Expenditures

- Change in Net Working Capital

= Free Cash Flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is measured by Six Sigma?

A

It measures a product

vs its quality goal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the Asset Turnover Ratio?

A

Sales

Avg Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What does the Current Ratio tell us?

How is it calculated?

A

Can the company pay their short-term liabilities?

CA

CL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does the Debt to Equity Ratio tell us?

How is it calculated?

A

How is the company financing its capital?

Total Debt

Total Equity

17
Q

What does the Debt to Total Assets ratio tell us?

How is it calculated?

A

What proportions of the company’s assets are encumbered with debt?

Total Liabilities

Total Assets

18
Q

What does Gross Margin % tell us?

How is it calculated?

A

How profitable is the product after COGS?

Gross Margin = Gross Profit

Net Sales

19
Q

What does Operating Profit Margin tell us?

How is it calculated?

A

How profitable is the product after all expenses (except interest and taxes)?

Operating Profit Margin = Operating Profit

Net Sales

20
Q

How is Times Interest Earned calculated

and what does it mean?

A

Can the company make their interest payments?

Times Interest Earned= Earnings Before Tax & Interest

Interest Expense

21
Q

What does Return on Assets tell us?

How is it calculated?

A

What % return are the assets generating?

Return on Assets= Net Income (net of interest & taxes)

Avg Total Assets

22
Q

How is Market/Book ratio calculated?

A

Market Value of Common Stock

Book Value of Common Stock

23
Q

What is Inventory Turnover

and how is it calculated?

A

How quickly does inventory get sold?

Inventory Turnover = COGS

Avg Inventory

24
Q

What is the Quick Ratio

and how is it calculated?

A

It measures short-term liquidity- and only includes assets that are quickly available (i.e. not inventory)

Quick Ratio = (Current Assets - Inventory)

Current Liabilities

25
Q

What is Avg Collection Period

and how is it calculated?

A

How many days does it take the company to collect payment on A/R?

Avg Collection Period= Avg AR

Avg Sales Per Day

26
Q

What is an Internal Failure?

A

Products have quality defects, but are caught BEFORE they leave the warehouse.

27
Q

What is an External Failure?

A

Product reaches the customer, but they are not satisfied with the quality of the product. This includes recalls.

28
Q

What is Appraisal Cost?

A

Quality control - testing & inspection costs.

BEC (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions