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Flashcards in Performance Measures (M45) Deck (60):
1

____ Describes how an organization uses its activities and resources to achieve its objectives

Strategy

2

____ Includes the performance measures used to ensure the strategy of the organization is being executed and to monitor performance

Execution

3

The ______ is a strategic performance measurement and management framework for implementing strategy by translating an organization's mission and strategy into a set of performance measures

Balanced Scorecard

4

What are the 4 primary perspectives of a balanced scorecard?

1) Financial
2) Customer
3) Internal Business Processes
4) Learning & Growth

5

What are the 5 components of a balanced scorecard?

1) Strategic Objectives
2) Performance measures
3) Baseline performance
4) Targets
5) Strategic initiatives

6

What is the most important purpose of a balanced scorecard?

Measure performance

7

What are the 5 characteristics of the balanced scorecard?

1) Strategy-Focused
2) Balanced
3) Includes both financial & non-financial measures
4) Cause & Effect Linkages
5) Unique to the strategy

8

Economic Profit is...

Accounting Profit Minus Cost of Capital

9

Economic Value Added is...

Net operating profit after taxes -

[the after-tax weighted-average cost of capital * (total assets minus current liabilities)]

10

These ratios measure how effective a firm is at generating profit from operations. Management attempts to maximize these ratios to maximize firm value

Profitability Ratios

11

How do you calculate Gross Margin/Gross Profit

Gross Sales
- Sales Discounts
- Sales Returns & Allow
= Net Sales
- CoGS
= GM/GP

12

How do you calculate common stockholder's equity?

Total SHE
- P/S Par Value
- P/S Dividends
- P/S Liq Premiums
= SHE to C/S

13

Calculate Cost of Goods Purchased

Gross Purchases
- Purchases Discounts
- Purchases Returns & Allow
= Net Purchases
+ Freight in
= CoG Purchased

14

Calculate Cost of Goods Sold

Beginning Inventory
+ CoG Purchased
= CoGAS
- Ending Inventory
= CoGS

15

These ratios measure the effectiveness with which management finances the assets of the firm. They are used to evaluate the financial leverage of the firm

Debt Utilization Ratios

16

These ratios involve measures that consider the market value of the firm's common stock

Market Ratios

17

What financial analysis technique would imply benchmarking with other firms?

a) Horizontal analysis
b) Vertical analysis
c) Cross-sectional analysis
d) Ratio analysis

C

18

This compares similar operations within different units of the same organization

Internal Benchmarking

19

This targets processes and methods used by an organization's direct competitors

Competitive Benchmarking

20

This compares similar functions within the same broad industry

Functional or Industry Benchmarking

21

This compares processes that are independent of industry

Generic Benchmarking

22

When the Numerator is Greater than the Denominator, and you add equal amounts to both, you get a ___ in the ratio

Decrease

23

When the Numerator is Greater than the Denominator, and you decrease equal amounts to both, you get a ___ in the ratio

Increase

24

When the Denominator is Greater than the Numerator and you add equal amounts to both, you get a ___ in the ratio

Increase

25

When the Denominator is Greater than the Numerator and you decrease equal amounts to both, you get a ___ in the ratio

Decrease

26

This is a continuous process of comparing the levels of performance in producing products and services and executing activities against the best levels of performance. It is the search for and implementation of best practices.

Benchmarking

27

These are the performance metrics used in benchmarking

Benchmarks

28

This focuses on managing the organization to excel in quality in all dimensions of products and services for customers

Total Quality Management

29

What are the 5 phases of the life cycle of business process management?

1) Design
2) Modeling
3) Execution
4) Monitoring
5) Optimization

30

This phase of the life cycle of business process management involves identification of existing processes and design of process improvements.

Design

31

This phase of the life cycle of business process management simulates the process in a test environment and performs "what if" analysis to try to determine how it will work under varying conditions

Modeling

32

This phase of the life cycle of business process management involves installing software, training personnel, testing, and implementing the new processes

Execution

33

This phase of the life cycle of business process management is continuous after the execution phase and involves tracking the processes with performance statistics

Monitoring

34

This phase of the life cycle of business process management involves retrieving performance statistics from modeling or monitoring and identifying potential bottlenecks or other problems for additional improvements of the process

Optimization

35

___________ is a statement of what the strategy must achieve and what is critical to its success

Strategy Objective

36

_________ is a key action program that is required to achieve strategic objectives

Strategic Initative

37

_____ are diagrams of the cause-and-effect relationships between strategic objectives

Strategy Maps

38

_____ describe the level of performance or rate of improvement needed in the performance measure

Targets

39

What is the formula for the Debt-to-Total-Asset Ratio?

Total Debt / Total Assets

40

What is the formula for the A/R Turnover?

Total Credit Sales / Avg AR

41

What is the formula for Inventory Turnover?

CoGS / Avg Inv

42

What is the formula for Total Asset Turnover?

Sales / Avg Total Assets

43

What is the formula for Return on Assets?

Net Income / Avg Total Assets

44

What are the costs related to designing components that will not break down

Prevention Costs

45

What are the costs relating to inspecting products to detect individual units that do not conform to specifications

Appraisal Costs

46

What are the costs incurred when substandard products are produced but discovered before shipment to the customer

Internal Failure Costs

47

What are the costs related to parts returned by customers

External Failure Costs

48

What is the formula for Return on Investment?

Sales / Investment
*
Net Income / Sales

49

Return on Investment is also known as Return on ____

Assets

50

A formula for Return on Investment is as follows:

Sales / Investment
*
Net Income / Sales

What is another formula that can be used when this information is not available?

Asset Turnover * Profit Margin on Sales

51

What is the formula for Capital Turnover?

Sales of Division / Invested Capital of Division

52

What is the formula for Residual Income?

Division Net Income - Imputed Interest on Investment

53

What is the DuPont Formula for calculating Return on Investment?

Asset Turnover * Income as a % of Sales = Return on Investment

AKA

[Revenue / Invested Capital] *
[Income / Revenue] =
[Income / Invested Capital]

54

How do you calculate Free Cash Flow?

Net Operating after taxes + Depr Exp - Change in Net Working Capital - Capital Expenditures

55

_____ is the practice of adding resources to shorten selected activity time on the critical path of a project

Project Crashing

56

When a project can be completed in a number of completely different ways that might involve branching after performing activities, the best schedule and control technique would be

Graphical Evaluation & Review Technique

57

T/F

Residual income is a performance evaluation that is used in conjunction with return on investment (ROI) or instead of ROI. In many cases, residual income is preferred over ROI because residual income concentrates on maximizing absolute dollars of income rather than a percentage return as with ROI

TRUE

58

T/F

Return on Investment = Return on Sales * Capital Turnover

TRUE

59

_____ is an improvement initiative specifically designed to address errors in defects

Six Sigma

60

T/F

Residual income concentrates on maximizing absolute dollars of income rather than a percentage return as with ROI


TRUE