Debriefing the Balanced Scorecard

Debriefing the Balanced Scorecard - Debriefing the Balanced...

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Debriefing the Balanced Scorecard Financial: Stock Price – Can be influenced via dividend issues and retiring stock/long-term debt, however it is mostly driven by the company’s Profitability. In short, the higher the profits, the higher your Stock Price Profits – How much money the company actually keeps after paying off interest, taxes, etc. Largely driven by the company’s Sales and Contribution Margin. Increasing the price of your product and/or decreasing your cost of production both drive up Profitability Leverage – Calculated as “Assets/Equity.” In short, it is asking the question, “how well are we using debt to purchase assets?” When purchasing Plant Improvements (Capacity/Automation) these investments should be funded with as much Long-term debt as possible. This allows you to pay off the asset over its life while driving up your Leverage ratio. Internal Business Process: Contribution Margin – Calculated as “(Price – Labor Costs - Material Costs - Inventory Carrying Costs)/Price.” Influences how much money the company actually keeps after paying off its debts. Can be increased by reducing the Cost of production (Material and
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