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Chapter 23 Performance Measurement, Compensation, and Multinational Considerations questions with answers.
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  • CIMP - Certificate in Investment Performance Measurement
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  • CIMP - Certificate In Investment Performance Measurement

Chapter 23 Performance Measurement, Compensation, and Multinational Considerations questions with answers.

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  • September 23, 2024
  • 6
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • chapter 23 performance measurement compensation

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  • CIMP - Certificate in Investment Performance Measurement
  • CIMP - Certificate in Investment Performance Measurement

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Chapter 23 Performance Measurement,
Compensation, and Multinational
Considerations questions with answers.
Balanced Scorecard ANS -1. Financial perspective

2. customer perspective

3. internal business process perspective

4. learning and growth perspective



Designing accounting-based performance measures: ANS -1. choose performance measures that align
with the firm's financial goals

2. choose the details of each performance measure in step 1

3. choose a target level of performance and feedback mechanism for each performance measure in step
1



Investment ANS -resources or assets used to generate income



Weakness of comparing OI alone ANS -it ignores the differences in the size of the investment



Return on Investment (ROI) ANS -accounting measure of income divided by an accounting measure of
investment



ROI = Income / Investment



indicates which investment yields the highest return



ROI is popular because ANS -"accounting rate of return"

"accrual accounting rate of return"

(1) it blends all the ingredients of profitability into single percentage

, (2) it can be compared with the rate of return on opportunities elsewhere



DuPont Method of Profitability Analysis ANS -Income / Investment

=

Income / Revenues

X

Revenues / Investment



ROI = Return on sales X investment turnover



DuPont method recognizes ANS --increasing the income per dollar of revenues

-using assets to generate more revenues



Reducing investment base involves ANS --decreasing idle cash

-managing credit judiciously

-determining proper inventory levels

-spending carefully on long-term assets



Residual Income (RI) ANS -accounting measure of income minus a dollar amount for required return on
an accounting measure of investment



RI = Income - (required rate of return x investment)



overcomes goal congruence of ROI



Imputed Cost ANS -costs recognized in particular situations but not incorporated in financial accounting
records because it is an opportunity cost



Imputed cost of the investment = ANS -required rate of return

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