5. Business Measures Flashcards Preview

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Flashcards in 5. Business Measures Deck (13):
1

Balanced Scorecard
P. 55

Organizational metrics into four perspectives:
1. Financial
2. Customer
3. Internal Business Process
4. Learning and Growth

2

Key Performance Indicators
P. 56

Financial and nonfinancial metrics that reflects an organization's key business drivers (KBD), also cretical success factors (CSF)

-Quantitative and measurable
-Goal based
-Strategy based
-Time based

3

SMART (KPI)
P. 56

-Specific
-Measurable
-Achievable yet aggressive
-Relevant
-Time bounded

4

Customer Loyalty Metrics
P. 59

-Customer referrals
-Customer abandonment rate (customer churn)
-Customer retention rate
-Customer renewal rate
-Repeat customer
-Share of wallet (loyalty of other product)

5

Lagging Indicators
P. 60

Indicator follows an event, after the fact.

6

Leading Indicators
P. 60

Indicator predicts or infers a future event.

7

Common Financial Measures
P. 62

-Percent profit margin (net profit / net sales)
-Percent gross margin (gross profit / net sales)
-Percent operating margin (operation profit / net sales)
-Percent net margin (net profit / net sales)

8

Net Present Value
P. 64

PV= F (1 + i)^ -n

F- Amount to be received n periods from now
i- Annual interest rate expressed as a decimal

9

ROI
P. 65

Income - Cost / Cost (%)

10

Cost-Benefit Analysis (CBA)
P. 65

SUM NPV all benefits anticipated / SUM NPV of all costs anticipated = benefit per dollar expended

11

Cost of Quality (removed)
P. 67

-Appraisal costs (inspection)
-Prevention costs
-Internal failure costs
-External failure costs (while customer owns the product)

12

Hard Dollars (cost savings)
P. 69

-A prior baseline of spending must be established
-The dollars must have been planned and in the budget
-Cost saving must affect bottom line

1. Cost take out
2. Revenue Growth
3. Working capital / cash flow

13

Soft Dollars (cost avoidance savings)
P. 70

1. Budget impacting
2. Non-budget impacting.
3. Cost avoidance results from productivity / efficiency.