Question Tag: Financial measures

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  • 15 Marks

PM – May 2024 – L2 – SC – Q6 – Balanced Scorecard

Explanation of profitability measures and the application of the balanced scorecard in an insurance company.

Many firms still focus on profitability as their main measure of performance, despite increasing evidence that non-financial measures are often more important.

Required:
a. Explain the arguments for using the profit measure as the all-encompassing measure of the performance of a business. (5 Marks)
b. An insurance company is considering introducing a balanced scorecard. State the FOUR perspectives of the balanced scorecard and recommend, with explanations, two performance measures for each perspective. (10 Marks)

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  • 20 Marks

MA – Aug 2022 – L2 – Q1 – Other aspects of performance measurement

This question asks about the Balanced Scorecard concept, its differences from traditional measures, and benchmarking to improve company performance.

Ancient Ltd is a company engaged in the assembling and selling of computers, mobile phones, and their accessories. This company has been the market leader for the last 5 years in this field but is now incurring losses due to decreasing demand and escalating production costs. Currently, the company evaluates its performance using financial measures. The managing director of Ancient Ltd has learned at a recently attended workshop that the concepts of Balanced Scorecard and Benchmarking could be used to improve the performance of organizations. It was also noted that the Balanced Scorecard should be considered at the strategic planning stage in order to set smart objectives.

Required:
a) Explain the concept of the Balanced Scorecard approach to performance measurement.
(2 marks)

b) State TWO (2) differences between the Balanced Scorecard and Traditional Performance measures.
(3 marks)

c) Explain the role of each perspective of the Balanced Scorecard approach at the strategic planning stage. (You are required to give an example of performance measures for each perspective.)
(8 marks)

d) How can the concept of benchmarking be used to improve the performance of Ancient Ltd.?
(3 marks)

e) Explain with an example, how benchmarking could be used to improve performance measures in relation to the customer perspective of Ancient Ltd’s Balanced Scorecard.
(4 marks)

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  • 15 Marks

CSEG – Nov 2017 – L2 – Q5a – Strategy evaluation and control

Explain the limitations of financial measures for evaluating performance and describe financial and non-financial measures that can be used.

During the past year, the management of Doncat Limited faced many challenges, including several customer complaints, loss of some key customers, and a high level of employee turnover. At a meeting of the Board of Directors, the Chief Executive Officer presented a report on the financial performance of the company during the period and, in his closing remarks, he said, “Overall, we have done very well, notwithstanding the challenges we faced.” Some members of the Board were not happy with these remarks and accused him of doing a “partial evaluation” of the company.

Required:

i) Explain FOUR limitations of the use of financial measures for evaluating the performance of the company. (6 marks)

ii) Describe THREE financial measures and THREE non-financial measures that Doncat Limited may use to evaluate its performance. (9 marks)

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  • 12 Marks

FM – MAY 2019 – L2 – Q1a – Introduction to Financial Management

Suggest financial, economy, efficiency, and effectiveness measures for evaluating a library project by Adenta Municipal Assembly.

Adenta Municipal Assembly (AdMA) has established an ultra-modern library and internet facility for its inhabitants. It intends to subsidize the costs of using this facility for its inhabitants. This facility is to be evaluated by the local assembly (AdMA) to assess amongst other things, whether it is financially sound and offers value for money.

Required:
Suggest THREE (3) appropriate measures each of Financial, Economy, Efficiency, and Effectiveness that could be set for the facility based on targets. (12 marks)

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  • 15 Marks

PM – May 2024 – L2 – SC – Q6 – Balanced Scorecard

Explanation of profitability measures and the application of the balanced scorecard in an insurance company.

Many firms still focus on profitability as their main measure of performance, despite increasing evidence that non-financial measures are often more important.

Required:
a. Explain the arguments for using the profit measure as the all-encompassing measure of the performance of a business. (5 Marks)
b. An insurance company is considering introducing a balanced scorecard. State the FOUR perspectives of the balanced scorecard and recommend, with explanations, two performance measures for each perspective. (10 Marks)

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  • 20 Marks

MA – Aug 2022 – L2 – Q1 – Other aspects of performance measurement

This question asks about the Balanced Scorecard concept, its differences from traditional measures, and benchmarking to improve company performance.

Ancient Ltd is a company engaged in the assembling and selling of computers, mobile phones, and their accessories. This company has been the market leader for the last 5 years in this field but is now incurring losses due to decreasing demand and escalating production costs. Currently, the company evaluates its performance using financial measures. The managing director of Ancient Ltd has learned at a recently attended workshop that the concepts of Balanced Scorecard and Benchmarking could be used to improve the performance of organizations. It was also noted that the Balanced Scorecard should be considered at the strategic planning stage in order to set smart objectives.

Required:
a) Explain the concept of the Balanced Scorecard approach to performance measurement.
(2 marks)

b) State TWO (2) differences between the Balanced Scorecard and Traditional Performance measures.
(3 marks)

c) Explain the role of each perspective of the Balanced Scorecard approach at the strategic planning stage. (You are required to give an example of performance measures for each perspective.)
(8 marks)

d) How can the concept of benchmarking be used to improve the performance of Ancient Ltd.?
(3 marks)

e) Explain with an example, how benchmarking could be used to improve performance measures in relation to the customer perspective of Ancient Ltd’s Balanced Scorecard.
(4 marks)

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  • 15 Marks

CSEG – Nov 2017 – L2 – Q5a – Strategy evaluation and control

Explain the limitations of financial measures for evaluating performance and describe financial and non-financial measures that can be used.

During the past year, the management of Doncat Limited faced many challenges, including several customer complaints, loss of some key customers, and a high level of employee turnover. At a meeting of the Board of Directors, the Chief Executive Officer presented a report on the financial performance of the company during the period and, in his closing remarks, he said, “Overall, we have done very well, notwithstanding the challenges we faced.” Some members of the Board were not happy with these remarks and accused him of doing a “partial evaluation” of the company.

Required:

i) Explain FOUR limitations of the use of financial measures for evaluating the performance of the company. (6 marks)

ii) Describe THREE financial measures and THREE non-financial measures that Doncat Limited may use to evaluate its performance. (9 marks)

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  • 12 Marks

FM – MAY 2019 – L2 – Q1a – Introduction to Financial Management

Suggest financial, economy, efficiency, and effectiveness measures for evaluating a library project by Adenta Municipal Assembly.

Adenta Municipal Assembly (AdMA) has established an ultra-modern library and internet facility for its inhabitants. It intends to subsidize the costs of using this facility for its inhabitants. This facility is to be evaluated by the local assembly (AdMA) to assess amongst other things, whether it is financially sound and offers value for money.

Required:
Suggest THREE (3) appropriate measures each of Financial, Economy, Efficiency, and Effectiveness that could be set for the facility based on targets. (12 marks)

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