Deck 12: Measuring Organizational Performance

Question 1

Variable demand and high gearing may jeopardize the firm's ability to pay interest

Answer 1

True
High gearing (financial leverage) is very unwise when faced with demand variability, as the additional fixed costs of debt payments may threaten the firm's liquidity

Question 2

The governance crisis may stimulate better measurement of corporate performance

Answer 2

True
Governments in many countries are addressing this issue

Question 3

Valuations never rest upon assumptions about customer behaviour

Answer 3

False
Of course they do, as revenue forecasts are a key component of all valuations, and customers are the source of all revenues

Question 4

Developing numerical estimates for valuation purposes is a straightforward exercise

Question 5

Measurement systems are important for diagnostic reasons

Question 6

Non-financial measures are a critical part of a good measurement system

Question 7

Value creation is the output of a simple process

Question 8

Shareholder value and firm value are different concepts

Question 9

Benchmarking of processes in industries other than one's own is a waste of time

Question 10

Innovation measures are rarely used non-financial metrics

Question 11

Companies with substantial excess cash flow often diversify wisely and economically

Question 12

Identifying key drivers of performance is crucial in developing good measurement systems

Question 13

There is no unambiguous measure of the value of brand equity

Question 14

The balanced scorecard concept is more easily applied at the corporate level than the business level

Question 15

The residual value calculation is one of several weaknesses in net present value calculations

Question 16

There are many excellent measures of the relatedness and diversity of corporate portfolios

Question 17

Revenue enhancement is a possible synergistic benefit for a multi-business firm

Question 18

Corporate dashboards are an outmoded and unnecessary business tool

Question 19

Corporate social responsibility measures are used by many large firms

Question 20

Asset-intensive firms cope well with low operating margins