Profitability ratio

Describes the firm's profit in terms of a source of profit (for example sales or total assets)

- Profit Margin = net income / sales

- Gross Margin = gross income / sales

Cash budget

Cash budget estimates reciept and expenditures of money on a daily or weekly basis to ensure that on organization has sufficient cash to meet its obligations.

Revenue Budget

A revenue budget lists forecasted and actual revenues of the organization.

Expense Budget

a budget that outlines the anticipated and actual expenses for a responsibility center.

A responsibility center

organizational dept. or unit under the supervision of a single person who is responsible for its activity.

steps to feedback control

1) establish standards of performance

2) measure actual performance

3) compare performance to standards

4) take corrective action

Feedback Control

control that focuses on the organization's output;  also called postaction output control.

Concurrent Control

control that consists of monitoring ongoing activities to ensure they are consistant with standards.

Feedforward Control

Control that focuses on human, material, and financial resources flowing into the organization; also called preliminary or preventative controls.

Capital Budget

A budget that plans & reports investments in major assets to be depreciated over seeral years.

Top-down Budgeting

Process in which middle and lower level managers set dept. budget targets in accordance with overall company revenues and expenditures specified by top managment.

Organizational Control

Is the systematic process of regulating organizational activities to make them consistant with the expectations established in plans, targets, and standards of performance.

 Leverage Ratio

= Total debt

---------------

Total assets

Activity Ratio

 Organizations internal performance with respect to key activities defined by management.

- Inventory turnover = total sales / avg inventory

- conversion ratio = purchase orders / customer inquiries

Liquidity Ratio

A financial ratio that indicates the organization's ability to meet its current debt obligations

Profitability Ratio

A financial ration that describes the firm's profit in terms of a source of profits

Bureaucratic Control

Use of rules, policies, heirarchy of authority, reward systems, and other formal devices to influence employee behavior and assess performance.

Decentralized Control

Use of organizational culture, group norms, and a focus on goals, rather than rules and procedures, to foster compliance woth organizational goals.

Total Quality Management (TQM)

An organizationwide commitment to infusing quality into every activity through continuous improvement.

Quality Circle

Group of 6-12 volunteer employees who meet regularly to discuss and solve problems affecting the quality of their work.

Benchmarking

The continuous process of measuring products, services, and practices against major competitors or industry leaders.

Balanced Scorecard

A comprehensive management control system that balances traditional financial measures with measures of customer services, internal business processes, and the organization's capacity for learning and growth.

ISO 9000

A set of international standards for quality management, setting uniform guidelines for processes to ensure that products conform to customer requirements

Economic Value-added (EVA) system

A control system that measures performance in terms of after-tax profits minus the cost of capital invested in tangible assets.

Market Value-added (MVA) system

A contol system that measures the stock market's estimate of the value of a company's past and expected capital investment projects.

Activity-based costing (ABC)

A contol system that identifies the various activities needed to provide a product and allocates costs accordingly.

Cycle time

Time to complete a company's process.