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About 'management accounting investopedia'|Shipping Industry Update: Going Big and Going Green







About 'management accounting investopedia'|Shipping Industry Update: Going Big and Going Green








Many               companies               are               using               a               Balanced               Scorecard               (BSC)               and               Economic               Value               Added               (EVA)               as               a               way               to               measure               performance.

I               will               provide               a               summary               of               both               to               determine               if               BSC               or               EVA               is               the               better               way               for               a               company               to               determine               performance.

Organizations               need               to               be               able               to               measure               their               financial               and               non-financial               performance.

The               balanced               scorecard               is               one               way               to               measure               the               organizations               past,               current,               and               future               goals               and               objectives               and               puts               them               into               a               set               of               performance               measures               that               is               easy               to               understand               (Horngren,               Sundem,               Stratton,               and               Burgstahler,               Schatzberg,               2008).

A               balanced               scorecard               is               used               to               evaluate               performance               from               the               following               four               objectives:
               •               Learning               and               growth               -               It               is               very               important               to               have               qualified               educated               employees               within               an               organization.

We               need               to               determine               if               our               employees               are               trained               and               if               there               are               any               areas               where               they               may               need               improvement.
               •               Internal               business               -               Managers               need               to               ask               themselves               if               the               organization               is               satisfying               both               the               shareholders               and               their               customers.

This               will               help               management               determine               how               well               the               business               is               running.
               •               Customer               values               -               It               is               important               that               our               customers               are               satisfied.

Companies               will               often               send               out               a               customer               satisfaction               survey               to               determine               if               customers               are               happy               with               the               suppliers               performance.

Some               areas               that               may               be               measured               would               be               customer               service               or               on               time               delivery               of               the               product.
               •               Financial               -               It               is               very               important               to               have               up               to               date               accounting               information               for               our               stockholders.

We               need               to               determine               how               we               are               going               to               make               money               in               order               to               be               a               profitable               company               (BSC               Resources,               2008).
               More               managers               are               choosing               to               apply               the               balanced               scorecard               because               financial               measures               such               as               Return               on               Investment               (ROI)               are               not               sufficient               enough               to               determine               how               an               organization               is               performing               (Horngren,               Sundem,               Stratton,               and               Burgstahler,               Schatzberg,               2008).
               Economic               Value               Added,               or               "economic               profit",               measures               an               organization's               true               profit               after               all               the               cost               of               invested               capital               is               deducted               from               this               number.

EVA               helps               managers               improve               their               decision               making               about               a               person,               project,               department,               or               company.

The               formula               is               EVA               =               adjusted               after-tax               operating               income               -               (after-tax               cost               of               invested               capital               (%)               x               average               invested               capital).

A               positive               EVA               means               that               value               has               been               added               to               the               company               for               the               shareholders.

A               negative               EVA               means               that               the               company               has               not               contributed               to               the               value               of               the               organization               (Harper,               2008).

Managers               can               increase               EVA               by:
               increasing               revenue               minimizing               operating               expenses               producing               the               same               goods               and               services               using               less               capital               investing               only               in               projects               that               will               be               productive               reducing               the               cost               of               capital               Many               companies               are               now               using               both               EVA               and               the               BSC.

EVA               is               a               good               way               to               determine               financial               performance               and               BSC               is               a               good               way               to               determine               not               only               financial               performance               of               an               organization,               but               the               non-financial               performance               of               the               organization               as               well               (Jalbert,               Landry,               2003).
               References:
               BSC               Resourceshttp://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx
               Harper,               D.

(n.d.).

Investopedia               [EVA].

Retrieved               November               29,               2008,               from               http://www.investopedia.com/university/EVA/
               Horngren,               C.T.,               Sundem,               G.L.,               Stratton,               W.O.,               Burgstahler,               D.,               Schatzberg,               J.,               Introduction               to               Management               Accounting               (14th               Edition)               Pearson,               Prentice               Hall,               Upper               Saddle               River,               NJ.
               Jalbert,               T.,               &               Landry,               S.

P.

(2003,               Spring).

Which               performance               measurement               is               best               for               your               company?

Management               Accounting               Quarterly.

Retrieved               November               20,               2008,               from               http://findarticles.com/p/articles/mi_m0OOL/is_3_4/ai_105997565/pg_8






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