Exam 23: Performance Measurement, compensation, and Multinational Considerations

The ________ method of profitability analysis recognizes the two basic ingredients in profit-making: increasing income per dollar of revenues and using assets to generate more revenues.

Answer the following questions using the information below: Care Inc., has two divisions that operate independently of one another. The financial data for the year 2015 reported the following results: North South Sales \ 6,000,000 \ 5,000,000 Operating income 1,500,000 1,200,000 Taxable income 1,200,000 700,000 Investment 14,000,000 10,000,000 The company's desired rate of return is 10%. Income is defined as operating income. -What are the respective return-on-investment ratios for the North and South Divisions?

A report that measures financial and nonfinancial performance measures for various organization units in a single report is called a(n)________.

Team incentives encourage cooperation by ________.

Sensitive performance measures ________.

A company which favors the residual income approach wants managers to ________.

Megatron Corp.earned net income of 13,000 Euros in its overseas branch at France.Its headquarters is located in the U.S.The rate of conversion during set up was $1.306 / Euro.What is the value of its income in its home currency if the rate is $1.508 / Euro at the end of a financial year and the average rate being $1.407 / Euro?

The DuPont method recognizes the two basic ingredients in profit making: increasing the income per dollar of revenues and using assets to generate more revenues.

Answer the following questions using the information below: Waldorf Company has two sources of funds: long-term debt with a market and book value of $5 million issued at an interest rate of 12%, and equity capital that has a market value of $4 million (book value of $2 million). Waldorf Company has profit centers in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 12%, while the tax rate is 25%. Operating Income Assets Current Liabilities St. Louis \ 480,000 \ 2,000,000 \ 100,000 Cedar Rapids \ 600,000 \ 4,000,000 \ 300,000 Wichita \ 1,020,000 \ 6,000,000 \ 600,000 -What is the EVA for Cedar Rapids?

The return on investment is usually considered the most popular approach to measure performance because ________.

Managers usually use the return on investment to evaluate ________.

Bouvous Corp has two regional offices.The data for each are as follows: Maryland New Jersey Revenues \ 290,000 \ 300,000 Operating assets 2,400,000 4,500,000 Net operating income 1,008,000 1,500,000 What is the return on investment for the New Jersey Division?

Return on investment,Residual income,or Economic value added measures are more appropriate than return on sales because they consider only the investment to measure the performance.

Measures which monitor critical performance variables that help managers track progress toward achieving a company's strategic goals are collectively called diagnostic control systems.

"Levers of control," in addition to a diagnostic control system,are needed in an organization because ________.

Some companies,make environmental performance a line item on every employee's salary appraisal report.

In an EVA calculation,the measure of the invested capital for a division would be that division's assets minus that division's long-term liabilities.

Stock options give executives the right to buy company stock at a specified price,called the exercise price,within a specified period.

Relative performance evaluation ________.

Aaron Corp's net income is $25,000.What is the amount of the investment if the return on investment is 20%?