Module 45 Flashcards
(41 cards)
BALANCE SCORECARD
- A performance measurement system that includes financial and nonfinancial performance measures.
BALANCE SCORECARD PERSPECTIVES
- Financial Perspective - all financial statement items/ratios
- Customer Perspective - anything that mentions the cutromer
- Internal Business Process Perspective - all other
- Learning and Growth Perspective - anything that mentions R&D and employees
BALANCE SCORECARD COMPONENTS
- Strategic Objectives - what the strategy is
- Performance Measures - how success measured
- Baseline Performance - current level of performance
- Targets - level of performance needed
- Strategic Initatives - Key actions to achieve objectives
BALANCE SCORECARD CHARACTERISITICS
- Strategy-Focused - measures drivien by mission, vision, strategy
- Balanced - balanced in terms of nonfinancial and financial measures, leading/lagging, internal/external
- Include Non and Financial Measures
- Cause and Effect Linkages
- Unique to the Strategy
VALUE BASED MANAGEMENT
- VBM invlolves the use of value-based metrics in a strategic mgmt system and may be view as a financial scorecard.
- Includes ROI, Economic Profit, EVA, Casf Flow ROI, and Residual Income
ROI/ROA
- Measures the return on investment. The higher the better.
Net Income
Avg. Total Assets
RESIDUAL INCOME
- Residual Inccome is net income (or operating income after taxes) minus a cost of capital based on capital invested in a project
= Net Income - Interest on investment
or
= Net Income - (interest rate * invested capital)
ECONOMIC VALUE ADDED
- Measure the importance of making investments only when the return exceeds cost and in the process stockholders value is maximized
= NOPAT * (WACC * (TA-CL))
Where:
NOPAT = Net Operating Profit After Tax
WACC = Weighted Avg. Cost of Capital
TA = Total Assets
CL = Current Liabilities
FREE CASH FLOW
NOPAT
+ Dep/Amort Exp.
- Capital Expense
- Change in Working Capital Requirements
= Free Cash Flow
PROFITABILITY RATIOS
- Gross Margin
- Operating Profit Margin
- Return on Assets
- Return on Equity
- Dividend Payout Ratio
ASSET UTILIZATION RATIOS
- Receivable Turnover
- Avg. Collection Period
- Inventory Turnover
- Fixed Asset Turnover
- Total Asset Turnover
LIQUIDITY RATIOS
- Current Ratio
- Quick Ratio
- ratios are s/t focused
DEBT UTILIZATION RATIO
- Debt to Total Assets
- Debt to Equity
- Times Interest Earned
- Solvency and l/t focused
MARKET RATIO
- Price/Earnings Ratio
- Market/Book Ratio
COST OF GOODS SOLD
Beginning Inventory
+ COG Purchased
= COGAS
- Ending Inventory
= COGS
COST OF GOODS PURCHASED
Gross Purchases
- Purchase Disc.
- Purchase Returns/Allow
= Net Purchase
+ Freight In
= COG Purchased
GROSS MARGIN
Gross Profit
Net Sales
PROFIT MARGIN
Net Income after Interest and Taxes
Net Sales
OPERATING PROFIT MARGIN
_Operating Profit (EBIT)_ Net Sales
RETURN ON INVESTMENT
Net Income after Interest and Taxes
Avg. Total Assets
RETURN ON EQUITY
Net Income after Interest and Taxes
Avg. Common SHE
TOTAL COMMON SHE
Total SHE
- P/S Par Value
- P/S Dividends (incl. in arrears)
- P/S Liquidation Premium
=Common SHE
DIVIDEND PAYOUT RATIO
Cash Dividend per Common Share
Earnings per Common Share
RECEIVABLES TURNOVER
Net Credit Sales
Avg. Accounts Receivable (net of allow)
