Measuring Business Performance

• What is the first method to measure overall business performance?

  Look at the finances of the business
• What financial statements should be examined for business performance?

  Income statement and balance sheet
• What key figures are found in the income statement?

  Gross profit, operating profit, profit for the year
• What does the statement of financial position show?

  Assets, liabilities, and total equity
• How can financial ratio analysis be categorized?

  Profitability, liquidity, efficiency, capital structure
• What do efficiency ratios measure?

  Operational performance and resource utilization
• Why is capital structure ratio important?

  It indicates the amount of long-term debt
• Why should financial ratios be compared over multiple years?

  To identify trends in performance
• Why compare financial ratios to industry averages?

  To gauge performance against competitors
• What is a potential issue with financial ratios?

  They are often historical and not future indicators
• What other functional areas should be considered for overall business performance?

  HRM, operations, and marketing
• What HRM metric can indicate workforce efficiency?

  Employee cost as a percentage of turnover
• What operational metric can indicate efficiency?

  Cost per unit and capacity utilization
• What marketing metrics are important for business performance?

  Market share and overall market growth
• What are core competencies in a business?

  Unique strengths that provide competitive advantage
• What indicates a focus on short-term performance?

  High unsustainable dividends and low R&D investment
• What is the triple bottom line (TBL) model?

  Profit, planet, and people considerations
• What does the first bottom line in TBL represent?

  Profit for the year
• What does the 'planet' aspect of TBL refer to?

  Environmental impact and sustainability
• What does the 'people' aspect of TBL refer to?

  Social responsibility towards employees and communities
• Why did Elkington recall his TBL model?

  It was misused as an accounting model
• What was Elkington's original vision for TBL?

  A transformation of capitalism, not just accounting