Traditional Financial Measures Flashcards
A measure of
performance that is calculated by dividing net
income before taxes by total assets.
Return on Investment (ROI):
A calculation that is
determined by dividing net earnings by the
number of shares of common stock issued.
Earnings per share (EPS):
(EPS):
Earnings per share
A measure of
performance that is calculated by dividing net
income by total equity
Return on Equity (ROE):
(ROE):
Return on Equity
The amount of money
generated by a company before the costs of
financing and taxes are figured.
Operating cash flow:
The amount of money a new
owner can take out of a firm without harming
the business.
Free cash flow:
A method of keeping
track of stakeholder concerns.
Stakeholder measure:
The present value of the
anticipated future stream of cash flows from a
business plus the value of the company if it were
liquidated.
Shareholder value:
A shareholder
value method of measuring corporate and
divisional performance. Measures after-tax
operating income minus the total annual cost of
capital.
Economic value added (EVA):
(EVA):
Economic value added
The difference
between the market value of a corporation and
the capital contributed by shareholders and
lenders.
Market value added (MVA):
(MVA):
Market value added
Balanced Scorecard Approach: Using Key
Performance Measures
Combines financial
measures with operational measures on customer
satisfaction, internal processes, and the
corporation’s innovation and improvement
activities.
Balanced scorecard:
In the balanced scorecard, management develops
goals or objectives in each of four areas:
Financial
- Customer
- Internal Business Perspective
- Innovation and Learning
