- after-tax income
- income reduced by tax expenses
- asset turnover
- measure of how efficiently a company is using its capital assets to generate revenues
- balanced scorecard
- tool used to evaluate performance using qualitative and nonqualitative measures
- capital asset
- tangible or intangible asset that has a life longer than one year
- controllable factor
- component of the organization for which the manager is responsible and that the manager can control
- cost center
- part of an organization in which management is evaluated based on the ability to contain costs; the manager primarily has control only over costs
- economic value added (EVA)
- measure of shareholder wealth that is being created by a project, segment, or division
- fixed asset
- tangible long-term asset
- goal congruence
- integration of multiple goals, either within an organization or across multiple components or entities; congruence is achieved by aligning goals to achieve an anticipated mission
- invested capital
- fixed assets, productive assets, or operating assets
- investment center
- organizational segment in which a manager is accountable for profits (revenues minus expenses) and the invested capital used by the segment
- metric
- means to measure something such as a goal or target
- minimum required rate of return
- minimum return, usually in a percentage form, that a project or investment must produce in order for the company to be willing to undertake it
- operating asset
- product asset plus intangible asset and current asset
- operating income
- income before considering interest and taxes
- performance measure
- metric used to evaluate a specific attribute of a manager’s role
- performance measurement system
- evaluates management in a way that will link the goals of the corporation with those of the manager
- productive asset
- fixed asset plus inventory
- profit center
- organizational segment in which a manager is responsible for and evaluated on both revenues and costs
- qualitative factor
- component of a decision-making process that cannot be measured numerically
- quantitative factor
- component of a decision-making process that can be measured numerically
- residual income (RI)
- amount of income a given division (or project) is expected to earn in excess of a firm’s minimum return goal
- responsibility accounting
- method of encouraging goal congruence by setting and communicating the financial performance measures by which managers will be evaluated
- return on investment (ROI)
- measure of the percentage of income generated by profits that were invested in capital assets
- revenue center
- part of an organization in which management is evaluated based on the ability to generate revenues; the manager's primary control is only revenues
- sales margin
- measure of how much profit is generated by each sales dollar
- stakeholder
- someone affected by decisions made by a company; may include an investor, creditor, employee, manager, regulator, customer, supplier, and layperson
- stockholder
- owner of stock, or shares, in a business
- strategic plan
- broad vision of how a company will be in the future
- uncontrollable factor
- decision or outcome over which a manager does not have control
- weighted average cost of capital
- cost that the company expects to pay on average to finance assets and growth using either debt or equity