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EVALUATION
CONTROL
AND
is
to
5 Steps :
APPROPRIATE
MEASURES
for
evaluating a corporations or a divisions
ability
to
achieve
a
profitability
objective :
Return on Investment (ROI)
Earnings per Share (EPS)
influence
future
TYPES OF CONTROL
Output Controls focus on actual
performance result.
Behavior Controls how something
is to be done through policies,
rules,
standard
operating
procedures,
and
orders
from
superiors.
Input Controls focus on resources
(knowledge, skills, abilities) that
are used in performance.
ACTIVITY-BASED COSTING
TRADITIONAL
ACCOUNTING
COST
ENTERPRISE
MANAGEMENT
RISK
A
corporatewide,
integrated
process
for
managing
the
uncertainties that could negatively
or
positively
influence
the
achievement of the corporations
objective.
TRADITIONAL
MEASURES
FINANCIAL
1. Return on Investment
=Net
Income(before
taxes)
Investment
2. Earnings per Share
= Net Income / Common Stock
3. Return on Equity
= Net Income / Equity
4. Operating Cash Flow
PRIMARY
MEASURES
OF
CORPORATE PERFORMANCE
1. Stakeholder Measure
- deal with the direct and indirect
impacts of corporate activities
on stakeholders interests.
2. Shareholder Value
- the present value of the
anticipated future stream of
cash flows from business plus
the value of the company if
liquidated.
a. Economic Value Added (EVA)
measures the difference
between the pre-strategy and
post strategy values for the
business. Simply put, EVA is
the
after-tax
operating
income minus the total
annual cost of capital.
b. Market Value Added (MVA)
the difference between the
market value of a corporation
and capital contributed by
shareholders and lenders,
3. Balanced Scorecard approach
- combines financial measures
that tell the results of actions
already taken with operational
measures
4 Areas:
Financial
Customer
Internal Business Prospective
Innovation and Learning