Performance Measures Flashcards Preview

Audti > Performance Measures > Flashcards

Flashcards in Performance Measures Deck (28):
1

Financial / Customer / Internal Business Processes / Learning and Growth

Performance Measurement

2

To measure Performance.

Performance Measurement

3

Diagrams of Strategic Cause and Effect Relationships.

Performance Measurement

4

A plan to achieve goals.

Performance Measurement

5

Return on Investment
Residual Income
Spread
Economic Value Added
Free Cash Flow

Performance Measurement

6

ROI : Return / Investment

Example: You Invest $100 to buy a machine that generates $60 in Operating Income

$60 / $100 : 60% ROI

Performance Measurement

7

Operating Income - (Required Rate of Return x Invested Capital) : Residual Income

Performance Measurement

8

RROR is also called 'Cost of Capital'

Performance Measurement

9

Cost of Capital is the weighted average of the interest rates you pay for your Capital.

Includes Debt and the Rate of Return your Equity Shareholders expect

Example: 45% of your Capital is supported by debt and has an interest rate of 9%. 55% of your Capital is supported by equity and shareholders expect a ROR of 12%

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

Performance Measurement

10

Spread : ROI - Cost of Capital

Performance Measurement

11

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

Economic Value Added : Operating Income After Tax - (Net Assets x WACC)

Performance Measurement

12

Operating Income After Tax
+ Depreciation & Amortization
- Capital Expenditures
- Change in Net Working Capital
: Free Cash Flow

Performance Measurement

13

It measures a product versus its quality goal.

Performance Measurement

14

Sales / Average Assets

Performance Measurement

15

Can the company pay their short-term liabilities?

Current Ratio : Current Assets / Current Liabilities

Performance Measurement

16

How is the company financing its capital?

Debt to Equity Ratio : Total Debt / Total Equity

Performance Measurement

17

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

Debt to Total Assets : Total Liabilities / Total Assets

Performance Measurement

18

How profitable is the product after COGS?

Gross Margin : Gross Profit / Net Sales

Performance Measurement

19

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

Operating Profit Margin : Operating Profit / Net Sales

Performance Measurement

20

Can the company make their interest payments?

Times Interest Earned : Earnings Before Tax & Interest / Interest Expense

Performance Measurement

21

What % return are the assets generating?

Return on Assets : Net Income (net of interest & taxes) / Average Total Assets

Performance Measurement

22

Market Value of Common Stock / Book Value of Common Stock

Performance Measurement

23

How quickly does inventory get sold?

Inventory Turnover : COGS / Average Inventory

Performance Measurement

24

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

Quick Ratio : (Current Assets - Inventory) / Current Liabilities

Performance Measurement

25

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

Average Collection Period : Average AR / Average Sales Per Day

Performance Measurement

26

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

Performance Measurement

27

Product reaches the customer- but they are not satisfied with the quality of the product.

This includes recalls.

Performance Measurement

28

Quality control- testing & inspection costs.

Performance Measurement