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注会综合阶段英语水平提升班——第七单元2

t-admin154 网校老师 发表于 2017-10-29 16:40:12 | 评论:0  查看:583次 [注会英语]

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Unit 7 Cost management
2.Performance evaluation
2.1 Return on investment (ROI)
This is a similar measure to ROCE but is used to appraise the investment decisions of an individual department.
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Or
ROI = (PBIT/Capital Employed) × 100%
Advantages of ROI:
w Widely used and accepted
w As a relative measure it enables comparisons to be made with
divisions or companies of different sizes
It can be broken down into secondary ratios for more detailed analysis,
e.g. profit margin and asset turnover.
Disadvantages of ROI:
w May lead to dysfunctional decision making, e.g. a division with a
current ROI of 30% would not wish to accept a project offering an ROI of 25%, as this would reduce its current figure. However, the 25% ROI may meet the company’s target.
w ROI increases with the age of the assets if NBVs are used, thus giving
managers an incentive to hang on to possibly inefficient, obsolescent machines.
w It may encourage the manipulation of profit and capital employed
figures to improve results, e.g. in order to obtain a bonus payment.
w Different accounting policies can confuse comparisons (e. g.
depreciation policy).
2.2 Residual income (RI)
RI=Controllable profit – Notional interest on capital
Or RI = PBIT - Imputed Interest On Capital Employed
剩余收益=收益-投资要求的报酬率×投资额
w Controllable profit is calculated in the same way as for ROI.
w Notional interest on capital =capital employed multiplied by a notional
cost of capital or interest rate.
w The selected cost of capital could be the company’s average cost of
funds. However, other interest rates might be selected, such as the current cost of borrowing, or a target ROI.
Advantages of RI
w Reduce the problem of rejecting project with ROI greater than the
group but less than division’s ROI. The best decision will be made for the business as a whole.
w Possible to use different rates of interest for different types of assets.
w Making a specific charge for interest helps to make investment center
managers more aware of the cost of the assets under their control.
Disadvantages of RI
w Does not facilitate comparisons between divisions since the RI is
driven by the size of divisions and of their investments.
w It is based on accounting measures of profit and capital employed
which may be subject to manipulation, e.g. in order to obtain a bonus payment.
2.3 Economic value added is a refinement of the residual income measure.
EVA = after-tax operating income – ( division’s total assets – division’s current liabilities )× weighted average cost of capital.
经济增加值=调整后税后经营利润-调整后的投资资本×加权平均资本成本
2.4 Responsibility centers refer to the subunits that perform different functions within a business organization. Business responsibility centers are usually classified as cost centers, profit centers, or investment centers.
A cost center is a business section that incurs costs (or expenses) but does not directly generate revenue. Cost centers are evaluated primarily on (1) their ability to control costs and (2) the quantity and the quality of the services that they provide.
成本中心往往没有直接产生的收入,但要产生成本或者费用。成本中心主要从两个方面进行业绩评价:(1)控制成本的能力(2)所提供服务的数量和质量。
A profit center is a part of a business that generates both revenue and costs. In a profit center, mangers have decision-making responsibility over both input and output-related resources. Profit centers are evaluated primarily on their profitability.
利润中心既产生收入又产生成本,经理有输入和输出相关资源的决策权,主要通过其利润的多少来评价该中心的业绩。
An investment center is a profit center for which management has been given decision-making responsibility for making significant capital investments related to the center’s business activities. The performance of each investment center is evaluated using return on investment measurements.
投资中心是一个利润中心,不同的是经理所拥有的决策权不仅包括短期经营决策权,而且还包括重大的资本投资决策权。投资报酬率是主要的业绩评价指标。
2.5 Illustration of a responsibility income statement
Sales
Less: Variable costs
Contribution margin ( 贡献毛益)
Less: Traceable fixed costs: controllable
Performance margin (业绩毛益)
Less: Traceable fixed costs: committed
Division responsibility margin (责任毛益)
Less: Common fixed costs
Income from operations



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