Controlling Performance Flashcards
(143 cards)
1
Q
What are the types of control systems?
A
financial
budgetary
quality
inventory
2
Q
Why do managers use financial control?
A
assess financial footing soundness
indicated of other performance problems
3
Q
Which level of managers do financial controls?
A
top management
4
Q
How does the top management do financial control?
A
defines a financial forecast for the org.
performs financial analysis
use financial audits
5
Q
A financial analysis is performed based on ?
A
selected ratios
6
Q
What does a financial analysis reveal ?
A
business performance
7
Q
What are the 3 steps in financial control?
A
financial statements
financial analysis
financial audit
8
Q
What level of information do financial statements provide
A
basic
9
Q
What are the major types of financial statements
A
balance sheet
income statement
10
Q
Income statement is also known as
A
profit and loss
11
Q
What does the balance sheet show?
A
financial position
with respect to assets and liabilities at a certain point of time
12
Q
What does the income statement show
A
financial performance
for a given time interval , usually a year
13
Q
In the income statement, what are the items
A
revenues
expenses
bottom line
14
Q
What is financial analysis all about?
A
interpreting the numbers
15
Q
What is a financial ratio?
A
comparison of 2 financial numbers
16
Q
What are examples of financial ratios?
A
liquidity
activity
profitability
leverage
17
Q
What does the liquidity ratio indicate?
A
company’s ability to meet its current debt obligations
18
Q
What is an example of liquidity ratio?
A
cuurent ratio . current assets/current liabilities
19
Q
What does the current ratio tell?
A
company has sufficient assets to convert to cash to pay off its debts
20
Q
What does the activity ratio measure?
A
internal performance with respect to key activities
21
Q
What is an example of activity ratio?
A
inventory turnover. total sales/average inventory
22
Q
What does the inventory turnover show?
A
how many times the inventory is turned to meet total sales figure
23
Q
What does the profitability ratio describe?
A
firm’s profits relative to a source of profits such as assets or sales
24
Q
What is an example of profitability ratio
A
return on total assets. ROA. net income/total assets
25
What does ROA measure?
company's ability to generate earnings
with other investment opportunities
(if company earn less in using assets than investing in bank)
26
What does the leverage ratio refer to ?
funding activities with borrowed money
27
What is an example of leverage ratio?
debt ratio. total debt/total assets
28
What is the debt ratio effective in ensuring?
org. does not exceed level they consider acceptable
29
Which external party looks at the debt ratio
lenders
30
What do financial audits intend to do?
verify the numbers
31
What are financial audits?
independent appraisals
| of the org. financial records
32
Where can audits be done?
internal
| external
33
Who does internal audit?
experts in the organisation
34
Where do internal auditors evaluate?
departments, divisions throughout the organisation
35
What do internal auditors ensure?
operations are efficient
| conducted according to prescribed company practices
36
Who does external audits?
experts outside the organisation
| CPA
37
What does CPA stand for?
certified public accountants
38
What is the process for budgetary control?
setting targets for org. expenditure
monitoring results
comparing them to budget
making changes
39
What do budget reports list?
variance between
budgeted (planned)
actual amounts for each item
40
How is analysis for budget control system done?
according to responsibility centres
41
What is a responsibility centre?
org. department/unit
under supervision of a single person
who is responsible for the activity
42
How do top managers use budgets?
for the company as a whole
43
How do middle managers use budgets?
focus on budget performance for their department or division
44
What are the budgets used?
expense
revenue
cash
capital
45
What does an expense budget include?
anticipated and actual expenses for each responsibility centre and total organisation
46
How can expense budget be narrowed down?
according to particular categories
47
What happens if actual expenses exceed budgeted amounts?
mangers identify possible problems
| take corrective actions
48
What does a revenue budget list?
forecasted and actual revenues
49
When actual revenues are below forecasted revenues, what needs to be done?
investigate how to improve revenue
50
What does a cash budget estimate?
receipts and expenditures of money on a daily or weekly basis
51
Why is a cash budget important?
To ensure the org. has sufficient cash to meet its obligations
52
What does the cash budget show?
level of funds flowing through the org.
| nature of cash disbursements
53
What does the capital budget list?
planned investments in major assets
54
What kinds of major assets are in capital?
heavy machinery
buildings
complex IT systems
55
How do capitals have a large impact on organisation?
future expenses
| investments designed to enhance profits
56
Who is involved in capital budgetting?
Top level mangers
57
What are the approaches to budgeting?
top down budgeting
| bottom up budgeting
58
What kinds of companies use top-down budgeting?
traditional
59
What is the implication of top-down budgeting?
budgeted amounts for year imposed on middle and lower level managers
mangers set departmental budget in accordance with overall company revenue and expenditures specified by top executives
60
When is top-down budgeting effective?
economic crisis
unit managers have limited knowledge of the situation
close co-ordination among various units is necessary
61
What does bottom-up budgeting promote?
employee empowerment
participation
learning
62
What is the process in bottom-up budgeting?
lower-level managers anticipate department's resource needs
| pass up to top management for approval
63
When is bottom up budgeting best used?
operating managers have specialised knowledge about environment and marketplace
innovation is important. lower-level mangers understand opportunities, alternative courses of action, resource needs
management want greater commitment from managers of the operating unit
64
in reality what budgetary approach is used
a mix of both
65
What are the advantages of budgetary control?
facilitate coordination across departments
improve communication among employees
resource requirement become a financial blueprint
specify resources, revenues, acitivities to carry out strategic plan
Improves resource allocation
provide a tool for corrective action through reallocations
strategic plans into departmental actions
record organisational activities
66
What are the disadvantages of budgetary control?
mechanical
exercise for filling out paperwork
demotivate employees, lacks participation
perception of unfairness
competition for resources and politics
limit opportunities for innovation and adaptation
67
What does a rigid budget structure make difficult?
obtain money for new ideas
| reduce initiative and innovation at lower levels
68
What is quality control?
process to ensure products and services have quality they were planned to have
competed against standards set
action taken to correct defects
69
A company focusses on certain aspects of quality by choosing from
8 dimensions of quality
70
What are the 8 dimensions of quality?
```
performance
feature
reliability
conformance
durability
serviceability
aesthetics
perceived quality
```
71
What is a product's performance?
primary operating characteristics
72
What is a feature
supplements to basic functioning characterstici
73
what is reliability?
probability of the product not working properly
| breaking down
74
Reliability is important for what kind of products?
home appliances
75
What is conformance?
degree to which product's design or operating characterstics conform to pre-established standards
76
What is durability?
measure of how much a person gets from a product before it breaks down , replaced
77
What is serviceability?
promptness
courtesy
proficiency
ease of repair
78
What is aesthetics
```
how good a product looks
feels
sounds
tastes
smells
```
79
Aesthetics they are all highly
subjective.
| highly dependent on personal judgement and preference
80
What is perceived quality?
individual's subjective assessments of product or service quality
81
It is not possible for companies to compete on all 8 dimensions without
charging high prices
82
What is TQM?
organisation-wide effort
infuse quality into every activity
through continuous improvement
83
What does TQM require?
organisation-wide commitment
84
What does TQM promote?
total participation
innovation and continuous improvement
employing incentives (rewards quality)
85
What does TQM aim to do?
devoted to prevention rather than correction
quality measurement (feedback)
quality training at all levels
stresses problem identification and solution (using teams)
high performance standards with zero defects
86
How do you implement TQM?
```
quality circles
benchmarking
six sigma
reduced cycle time
continuous improvement
```
87
What are quality circles?
```
group of 6-12 volunteer employees
meet regularly
identify problems
discuss and solve problems
affecting their workplace
```
88
When do QC members meet?
set time during the workweek
89
What is the implication of QC?
decision-making pushed to organisation level
| recommendations made by people who do the job, and know it better than anyone else
90
What is benchmarking?
continuous process of
| measuring products, services and practices against the toughest competitors or industry leaders
91
What is the key in benchmarking?
analysis
92
How does a company start benchmarking?
start with own mission statement
analyse current procedures
determine areas for improvement
93
What is the second step in benchmarking?
selects worthy competitors
94
What is six sigma?
a highly ambitious quality standard
specifies goal
no more than 3.4 defects per million parts
95
What discipline is six sigma based on?
five-step methodology
| DmAIC, deifne , measure, analyse, improve control
96
What does DMAIC provide?
a structure way for org. to approach and solve problems
97
What is a cycle time?
steps taken to complete a company process
98
How do reduce work cycle?
dropping barriers between work steps and departments
| removing worthless steps in the process
99
What benefits do reduced work cycle bring about?
increased company performance
| better quality
100
What is continuous improvement?
implementation of a large number of small incremental improvments
all areas of organisation
ongoing basis
101
What is inventory
goods the organisation keeps on hand
| for use in production process
102
What are the 3 types of inventory
raw materials
work in process
finished goods
103
What are raw materials?
basic input to org. production process
104
What are work-in-process
materials moving through stages of production process
| not completed
105
What are finished goods?
items passed through entire production process
| not sold
106
What is the importance of inventory
deal with uncertainties in supply and demand
better customer service
more economic purchases of raw materials
107
What costs do inventory incur?
ordering cost
carrying, holding cost
stock-out cost
108
What are examples of ordering cost?
paperwork
postage
time
109
What are examples of carrying cost?
storage
insurance
breakage
110
Stock-out cost are incurred when
stock is running out
| loss of customer goodwill and sales
111
Why is there a need for inventory management?
too much stock ties up funds
stocks become obsolete
too little stock can result in stock-out cost of lost sales
112
What are the 2 inventory control methods?
EOQL economic order quantity
| JIT- just in time
113
What is the procedure for EOQ
balance order costs and carrying costs
| avoid stock-out costs
114
What does economic order quantity require?
continuous monitoring of inventories
115
What does EOQ help mangers in?
deciding how much to order
| when to reorder
116
What is usually done in EOQ?
org. keep extra inventory
| unforeseen contingencies
117
What is the approach for JIt control?
having materials arrive just in time, when they are needed for production
118
What is kept to a minimum for JIT? WHy?
work in process
| goods are produced only as needed to service next stage of production
119
What is vital for products in JIT?
high quality
120
What inventory system does JIT have
zero
121
What is the role of finished goods in JIT?
match sales demand
122
What is required for JIT to be successful?
production system, simple, well coordinated
| excellent employee motivation, cooperation
123
Which managerial level do financial control systems rest on?
top management
| middle managers
124
Which managerial level do budgetary control systems rest on?
middle
lower
higher
125
Which managerial level do quality control systems rest on?
lower
126
Which managerial level do inventory control systems rest on?
lower
| middle
127
Why is the top management in charge of financial system?
overall financial health of the organisation
128
Why is the middle management in charge of financial system?
monitor financial matters
| affecting specialised area
129
Why is the middle and lower management in charge of budgetary system?
run org. activities
| make sure various budgets are met
130
Why is the top management in charge of budgetary system?
monitor overall budget performance
| any major deviations from what is expected
131
Why is the lower management in charge of quality system?
primarily work at operational level
| product and service quality directly affected
132
Middle and top managers are interest in quality, but they are less involved in
hands-on issues
133
How is the top management responsible for inventory system?
use indexes to evaluate costs
134
What timing do financial control systems follow? Why
feedback
data evaluated at the end of periods
plan changes for future periods (affecting org. performance)
135
What timing do budgetary control systems follow? Why
concurrent
| regulate ongoing activities to ensure planned budget levels are met
136
What timing do quality control systems follow? Why
concurrent
| checks are made during actual production or service, ensure quality standards are met
137
When is the timing for quality feedback?
materials scrapped or rejected if they faulty
138
When is the timing for budgetary feedback?
considered only at the end of particular periods
139
When is the timing for budgetary concurrent?
budgets checked in expenditure decisions
140
What timing do inventory controls follow?Why
feedforward
| ensure materials and products will be available when needed
141
Management control systems help achieve overall
company objectives
| strategic plans
142
When management control systems are improperly used , they can lead to
bankruptcy
143
Magement control systems ensure that
operations progress satisfactorily
by identifying deviations
correcting problems
help respond to unforeseen developments
