Exam2 - FC3

Exam2 - FC3 - The flashcards are formatted for printing....

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1. Measure performance, 2. Compare to objectives, 3. Act to correct problems Measure
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Specific and quantifiable in terms of performance to know if things are working. Strategic control:
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Strategic Control Key Success Factors (KSFs)
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Strategic controls that include passenger load factors for airlines, sales square feet for retailing and occupancy rates for hotels. An exercise in figuring out how we define measuring things right; how we know if the strategy is working (What’s the goal? What’s the metric?).
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Financial Ratios 1. Profitability 2. Activity 3. Liquidity 4. Leverage
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Financial ratios: Simple, but useful probes that give us a base to track changes in isolation, over time, and over the industry.
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Financial Ratios KSFs and Financial Ratios
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Common strategic controls: Help us detect when something’s wrong, but doesn’t specify what’s wrong.
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Current Assets / Current Liabilities Liquidity
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Do we have enough cash in our pocket to do short-term things? Current ratio:
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Inventory (Current Assets – Inventory) / Current Liability
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Quick ratio: Sometimes it can’t be quickly converted into cash, depending on the industry (i.e. auto industry).
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Sales / Total Assets Activity
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Is the flow of “food” (sales) in the company sufficient? How much nourishment is coming into the company relative to the company size? Asset turnover:
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Total Liabilities / Total Assets Sales / Inventory
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Inventory turnover: Debt ratio:
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EBIT / Interest Expense Total Liabilities / Total Common Equity
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Debt to equity: Times interest earned:
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Leverage Leverage
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question that could be good or bad; debt is risky, but some people like risk. Is the debt burden
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Exam2 - FC3 - The flashcards are formatted for printing....

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