管理会计学课件
合集下载
相关主题
- 1、下载文档前请自行甄别文档内容的完整性，平台不提供额外的编辑、内容补充、找答案等附加服务。
- 2、"仅部分预览"的文档,不可在线预览部分如存在完整性等问题,可反馈申请退款(可完整预览的文档不适用该条件!)。
- 3、如文档侵犯您的权益，请联系客服反馈,我们会尽快为您处理(人工客服工作时间：9:00-18:30)。
G Discuss methods of evaluating and
ቤተ መጻሕፍቲ ባይዱ
rewarding managerial performance
PPT 10-3
Measuring the Performance of Investment Centers
G Return on Investment (ROI) G Residual Income (RI) G Economic Value Added (EVA)
PPT 10-6
10-7
Net Book Value versus Gross Cost
Most companies use the net book value of depreciable assets to calculate average operating assets.
Acquisition cost Less: Accumulated depreciation Net book value
ADVANCED MANAGEMENT ACCOUNTING
PPT 10-1
Performance Evaluation
PPT 10-2
Learning Objectives
G Compute and explain return on investment
(ROI), residual income (RI), and economic value added (EVA)
(
Average operating assets
×
Minimum required rate of return
)
ROI measures net operating income earned relative to the investment in average operating assets. Residual income measures net operating income earned less the minimum required return on average operating assets.
ROI =
Net operating income Sales
×
Sales Average operating assets
ROI = $30,000 $500,000
$500,000 × $200,000
ROI = 6% × 2.5 = 15%
PPT 10-14
10-15
Investing in Operating Assets to Increase Sales
PPT 10-4
10-5
Return On Investment (ROI)
Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
PPT 10-5
10-6
to the relationships among sales, expenses, and investment, as should be the case for a manager of an investment center.
G It encourages cost efficiency. G It discourages excessive investment in operating
Snack Food Year 1 Margin Turnover ROI 6.0% x 3.0 18.0% === Year 2 5.0% x 4.0 20.0% ===
Appliance Year 1 3.0% x 6.0 18.0% === Year 2 2.5% x 6.0 15.0% ===
$535,000 × $230,000
ROI = 9.35% × 2.33 = 21.8% ROI increased from 15% to 21.8%.
PPT 10-16
Advantages of ROI
G It encourages managers to pay careful attention
PPT 10-10
Appliance Division $117,000,000 3,510,000 19,500,000 $117,000,000 2,925,000 19,500,000
$40,000,000 2,000,000 10,000,000
Margin and Turnover Comparisons
G It can encourage myopic behavior, in that
managers may focus on the short run at the expense of the long run.
PPT 10-18
10-19
Criticisms of ROI
In the absence of the balanced scorecard, management may not know how to increase ROI. Managers often inherit many committed costs over which they have no control. Managers evaluated on ROI may reject profitable investment opportunities.
Net operating income above some minimum required return on operating assets
PPT 10-21
Residual Income
Residual income is the difference between operating income and the minimum dollar return required on a company’s operating assets:
PPT 10-23
Residual Income Example
Project I Investment Operating income Targeted ROI $10,000,000 1,300,000 10% Project II $4,000,000 640,000 10%
PPT 10-9
An ROI Example
Year 1: Snack Foods Division Sales $30,000,000 Operating income 1,800,000 Average operating assets 10,000,000 Year 2: Sales Operating income Average operating assets Minimum return of 10%
Net operating income Average operating assets Sales Operating expenses $ 50,000 $ 230,000 $ 535,000 $ 485,000
PPT 10-15
Let’s calculate the new ROI.
10-16
PPT 10-19
10-20
Residual Income
Compute residual income and understand its strengths and weaknesses.
PPT 10-20
10-21
Residual Income - Another Measure of Performance
assets.
PPT 10-17
Disadvantages of the ROI Measure
G It discourages managers from investing in
projects that would decrease the divisional ROI but would increase the profitability of the company as a whole. (Generally, projects with an ROI less than a division’s current ROI would be rejected.)
Return on Investment (ROI) Formula
Income before interest and taxes (EBIT)
Net operating income ROI = Average operating assets
Cash, accounts receivable, inventory, plant and equipment, and other productive assets.
PPT 10-8
10-9
Understanding ROI
Net operating income ROI = Average operating assets Net operating income Margin = Sales Sales Turnover = Average operating assets ROI = Margin × Turnover
ROI = Margin × Turnover
ROI =
Net operating income Sales
×
Sales PPT 10-13 Average operating assets
10-14
Increasing ROI – An Example
ROI = Margin × Turnover
Investing in Operating Assets to Increase Sales
ROI = Margin × Turnover
ROI =
Net operating income Sales
×
Sales Average operating assets
$50,000 ROI = $535,000
PPT 10-7
Components of ROI
Decomposition of the ROI formula: ROI = Operating income/Average operating assets = (Operating income/Sales) x (Sales/Average operating assets) = Operating income margin x Operating asset turnover
Suppose that Regal's manager invests in a $30,000 piece of equipment that increases sales by $35,000, while increasing operating expenses by $15,000.
Regal Company reports the following:
G Residual income = Operating income -
(Minimum rate of return x Operating assets)
PPT 10-22
10-23
Calculating Residual Income
Residual = income Net operating income
Regal Company reports the following:
Net operating income Average operating assets Sales Operating expenses $ 30,000 $ 200,000 $ 500,000 $ 470,000
What is Regal Company’s ROI?
PPT 10-11
10-12
Increasing ROI
There are three ways to increase ROI . . .
Reduce Increase Expenses Sales Reduce Assets
PPT 10-12
10-13
Increasing ROI – An Example
ቤተ መጻሕፍቲ ባይዱ
rewarding managerial performance
PPT 10-3
Measuring the Performance of Investment Centers
G Return on Investment (ROI) G Residual Income (RI) G Economic Value Added (EVA)
PPT 10-6
10-7
Net Book Value versus Gross Cost
Most companies use the net book value of depreciable assets to calculate average operating assets.
Acquisition cost Less: Accumulated depreciation Net book value
ADVANCED MANAGEMENT ACCOUNTING
PPT 10-1
Performance Evaluation
PPT 10-2
Learning Objectives
G Compute and explain return on investment
(ROI), residual income (RI), and economic value added (EVA)
(
Average operating assets
×
Minimum required rate of return
)
ROI measures net operating income earned relative to the investment in average operating assets. Residual income measures net operating income earned less the minimum required return on average operating assets.
ROI =
Net operating income Sales
×
Sales Average operating assets
ROI = $30,000 $500,000
$500,000 × $200,000
ROI = 6% × 2.5 = 15%
PPT 10-14
10-15
Investing in Operating Assets to Increase Sales
PPT 10-4
10-5
Return On Investment (ROI)
Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
PPT 10-5
10-6
to the relationships among sales, expenses, and investment, as should be the case for a manager of an investment center.
G It encourages cost efficiency. G It discourages excessive investment in operating
Snack Food Year 1 Margin Turnover ROI 6.0% x 3.0 18.0% === Year 2 5.0% x 4.0 20.0% ===
Appliance Year 1 3.0% x 6.0 18.0% === Year 2 2.5% x 6.0 15.0% ===
$535,000 × $230,000
ROI = 9.35% × 2.33 = 21.8% ROI increased from 15% to 21.8%.
PPT 10-16
Advantages of ROI
G It encourages managers to pay careful attention
PPT 10-10
Appliance Division $117,000,000 3,510,000 19,500,000 $117,000,000 2,925,000 19,500,000
$40,000,000 2,000,000 10,000,000
Margin and Turnover Comparisons
G It can encourage myopic behavior, in that
managers may focus on the short run at the expense of the long run.
PPT 10-18
10-19
Criticisms of ROI
In the absence of the balanced scorecard, management may not know how to increase ROI. Managers often inherit many committed costs over which they have no control. Managers evaluated on ROI may reject profitable investment opportunities.
Net operating income above some minimum required return on operating assets
PPT 10-21
Residual Income
Residual income is the difference between operating income and the minimum dollar return required on a company’s operating assets:
PPT 10-23
Residual Income Example
Project I Investment Operating income Targeted ROI $10,000,000 1,300,000 10% Project II $4,000,000 640,000 10%
PPT 10-9
An ROI Example
Year 1: Snack Foods Division Sales $30,000,000 Operating income 1,800,000 Average operating assets 10,000,000 Year 2: Sales Operating income Average operating assets Minimum return of 10%
Net operating income Average operating assets Sales Operating expenses $ 50,000 $ 230,000 $ 535,000 $ 485,000
PPT 10-15
Let’s calculate the new ROI.
10-16
PPT 10-19
10-20
Residual Income
Compute residual income and understand its strengths and weaknesses.
PPT 10-20
10-21
Residual Income - Another Measure of Performance
assets.
PPT 10-17
Disadvantages of the ROI Measure
G It discourages managers from investing in
projects that would decrease the divisional ROI but would increase the profitability of the company as a whole. (Generally, projects with an ROI less than a division’s current ROI would be rejected.)
Return on Investment (ROI) Formula
Income before interest and taxes (EBIT)
Net operating income ROI = Average operating assets
Cash, accounts receivable, inventory, plant and equipment, and other productive assets.
PPT 10-8
10-9
Understanding ROI
Net operating income ROI = Average operating assets Net operating income Margin = Sales Sales Turnover = Average operating assets ROI = Margin × Turnover
ROI = Margin × Turnover
ROI =
Net operating income Sales
×
Sales PPT 10-13 Average operating assets
10-14
Increasing ROI – An Example
ROI = Margin × Turnover
Investing in Operating Assets to Increase Sales
ROI = Margin × Turnover
ROI =
Net operating income Sales
×
Sales Average operating assets
$50,000 ROI = $535,000
PPT 10-7
Components of ROI
Decomposition of the ROI formula: ROI = Operating income/Average operating assets = (Operating income/Sales) x (Sales/Average operating assets) = Operating income margin x Operating asset turnover
Suppose that Regal's manager invests in a $30,000 piece of equipment that increases sales by $35,000, while increasing operating expenses by $15,000.
Regal Company reports the following:
G Residual income = Operating income -
(Minimum rate of return x Operating assets)
PPT 10-22
10-23
Calculating Residual Income
Residual = income Net operating income
Regal Company reports the following:
Net operating income Average operating assets Sales Operating expenses $ 30,000 $ 200,000 $ 500,000 $ 470,000
What is Regal Company’s ROI?
PPT 10-11
10-12
Increasing ROI
There are three ways to increase ROI . . .
Reduce Increase Expenses Sales Reduce Assets
PPT 10-12
10-13
Increasing ROI – An Example