Audit Exercise Paper Three - RUNNING HEAD AUDIT PAPER EXERCISE THREE Audit Exercise Paper Three Edgar Bazan MGT497 Strategic Technology Planning for

Audit Exercise Paper Three - RUNNING HEAD AUDIT PAPER...

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RUNNING HEAD: AUDIT PAPER EXERCISE THREE Audit Exercise Paper Three Edgar Bazan MGT497: Strategic Technology Planning for Organizations Instructor: Jamillah Davis November 23, 2015
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AUDIT PAPER EXERCISE THREE When attempting to conjure up a strategy for success that a firm could use there is no better method than using what referred to as a Balance Score card. This concept was developed by two men named David Norton and Robert Kaplan; according to our text book “In this method, it is argued that the firm needs to look beyond financial measures to other metrics related to customers, business processes, and organizational learning. The organization looks not only at goals but also at how close they are to the goals and the value of the goals relative to the firm s strategy” (White & Garry, 2014). Many profit-making firms have a strategy map that is tied to four elements which are: financial results, customers, human resources, and sustainability. Financial Results Looking at the financial results element the goal for this element would be to increase the firms’ financial statement by improving revenues in important key areas. According to the Kaplan Finnancial Knowledge Bank () “Traditionally, financial performance measures are split into the following categories: profitability, Liquidity or working capital, gearing”. Poor cash management is one of the reasons that companies fail or go underhaving something like ROCE (return on capital employed) can assist in becoming more profitable. Things like cutting cost on energy bills and cutting cost on supplies can greatly increase profitability. The knowledge of where your liquidity lies can prevent any cash flow problems. Monitoring account payable and receivable is one of the best ways to keep an eye on a company’s liquidity. In addition to managing profitability and liquidity it is also important for a company to manage its financial risk which is what gearing would represent in the support of this element. According to an article on Investopedia.com entitled what is a good gearing ratio? “Generally, a lower gearing ratio means greater financial stability. However, not
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AUDIT PAPER EXERCISE THREE all debt is bad debt. Loans and other fixed interest liabilities are a way for companies to leverage their value to increase profits for shareholders, so the optimal gearing ratio is largely determined by the individual company relative to others in its sector”. Customers The goal for the customer element would be to Increase the relationship with customers to grow brand loyalty and further increase the firms sustainability. “Customer loyalty is arguably the most important factor in business today. Not only will it bring repeat business, but also translate to more opportunities via word of mouth as well as brand mulligans for those little hiccups that occur every now and again” this is according to an article on entrepreneur.com entitles 3 Ways to Increase Customer Loyalty. According to the article the 3
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