3.5 Assessing Competitiveness

• Gearing

  measures the proportion of business‘ finances provided by debt

  measures financial health of a business
• High Gearing Ratio

  Greater than 50% - high debt
• Lower Gearing Ratio

  less than 20% - little debt
• If a business has a gearing of 25%, the business is not overburdened by debt
• ROCE - Return on Capital Employed

  • Evaluates overall performance of business
  • provides target return for projects
• Ratios measuring liquidity

  • current ratio
  • acid test ratio
• Ratios measuring profitability

  • GPM
  • OPM
  • ROCE
• Ratios measuring efficiency

  • Gearing
  • inventory turnover
• Key Measures of HR Performance

  • labour turnover/staff retention : percentage of staff leaving during a period
  • Labour productivity: output per employee
  • absenteeism: % of staff absent from work
• Revenue per employee

  a way of assessing how effectively a business Is using its labour resources
• Labour Productivity

  output per period (units)/number of employees
• Absenteeism

  number of absent staff/number Employeed x 100
• Employee Empowerment

  giving employees the power to do their job
• Employee Empowerment covers

  • encouraging employee feedback so they feel their voices are heard
  • showing trust in employees
  • authority to make decisions to front line staff