Listed below are eight terms introduced or emphasized in this chapter:
Residual income
Management compensation
Return on sales
Business process lens
Balanced scorecard
Return on investment
Stock options
Capital turnover
Each of the following statements may (or may not) describe one of these terms. For each statement, indicate the term described, or answer “none” if the statement does not correctly describe any of these terms.
a. Tells managers the incremental operating earnings for each additional sales dollar.
b. The focus of this business performance measurement is the sales dollars earned from each invested dollar.
c. A tool used by managers and owners of organizations to align managers’ goals with those of the organization.
d. This method considers all costs borne by the consumer from purchase to disposal of a product.
e. A business performance measurement that takes into account the minimum required return on the assets employed.
f. Measures for this category of business performance are associated with eliminating non-value added costs from the value chain.
g. A method in which a product’s selling price is determined by adding a fixed amount to the product’s current production cost.
h. This performance evaluation method is criticized for motivating managers, in some instances, to ignore investments that are in the best interest of the company as a whole.
i. An important aspect of this method is the consideration of the many perspectives of the multiple stakeholders in an organization.