Accounting Business Reporting for Decision Making

CHAPTER 14 Performance measurement 597

14.31   LO6

One common objective is quality. Listed below are businesses that regard quality as a strategic

objective. For each business, list two performance measures that could help capture the strategic

objective of quality.

a. A taxi company

b. A faculty within a university

c. An accounting firm

d. A bank

e. A company that manufactures furniture

f. A shop that sells clothing

14.32   LO1

A family business has built a chain of fast-food outlets. The basic underlying principles of

the chain, which has helped it to grow, are cost effectiveness, quality of service and product

innovation. Determine two performance measures for each of these success factors.

14.33   LO3

The data below have missing values. Determine the missing values indicated by the letters (a)

through (h).

Division 6 Division 7 Division 8

Return on investment a. 32% 21%

Profit margin 13% 13% f.

Asset turnover 3 d. 4

Sales b. $54 000 g.

Investment $255 000 e. $42 000

Profit c. $19 000 h.

14.34   LO5

Select a company in your region and search its website for its mission statement. Investigate the

information on the website to discover what factors drive the company’s success and any related

information about its overall performance.

Further review its annual report and investigate how senior management and the board of

directors are paid. Comment on whether the remuneration process would be effective at enhancing

the company’s long-term performance.

14.35   LO4

Refer to the company in exercise 14.34 and investigate the environmental and social information it

provides. This may be in its annual report, its CSR report or on its website. What are the company’s

environmental and social concerns? How is it addressing these concerns? List some performance

measures the company uses to assess its performance against its corporate and social goals.

14.36   LO1

Critique the two approaches to incorporating environmental and social performance in the

balanced scorecard.

14.37   LO3

Information for the three divisions of the Birdsville Corporation follows.

Horses Camels Dogs

Profit before interest and taxes $ 650 000 $ 89 000 $ 141 000

Assets $3 020 000 $211 000 $1 100 000

Current liabilities $ 640 000 $ 57 000 $ 121 100

Weighted    average cost    of   capital 15.8% 13.5% 9.2%

Required

Assuming that the tax rate is 30 per cent, calculate the EVA for each division.