Lesson 16

The use of a balanced scorecard when gauging the performance of executives at Paradigm Toys is useful because it measures several key areas that measure past and real time performance that directly affects the company. A balance scorecard can contain both financial and nonfinancial measures as well as both quantitative and qualitative performance measures. Additionally because a balance scorecard can be tailored to the business’s specific targets it can measure the substance of performance better that basic financial indicators that are usually considered the basis of performance ratings. It is important to use more than just financial indicators, because other factors, those qualitative in nature, measure how an employee does their job and gives a larger picture of how well an employee performs. For example, in the case of sales concerning installation of home improvement products one might be measured by repeat buyers or customer satisfaction of how well the salesman followed up with their sale and installation. This kind of non-financial factor can be used to measure the company’s goal of repeat buyer and customer satisfaction which can translate into future sales and growth. Financial indicators are used in similar ways, but are more quantitative in nature. The main reason to use financial indicators is because they can provide a clear picture

To consider this we need net credit sales and average receivable balance. This ratio indicates average collection period should be consistent with corporate credit policy. An increase suggests a decline in financial health of customers.

As we have mentioned in introduction, Harvey Norman (ASX. HVN) is a giant company, business cover Australia nationally, Asia in Singapore, Malaysia and Europe- Ireland. Core business specialized in retailing & franchising, in areas of electrical, computer, furniture, entertainment, bedding goods. In this part of assignment, we aimed to find out some non-quantitative factors that might leads to potential misstatement, which eventually overstated or understated specific accounts that shown in profit and loss or balance sheet.

Balanced scorecard is a methodological tool that businesses use to get a measure by which someone can determine whether the set goals have been met or exceeded. It adds non-financial metrics to traditional financial metrics to give a well-rounded view of the performance in an organization. Balanced scorecards also help organizations to predict their success in meeting their overall strategic goals.

There are four perspectives when it comes to balanced scorecard. First one is learning and growth which means how the information and knowledge are processed and turned into competitive advantage against other companies. Second is about product manufacturing and making sure that all the products are made the same without any defaults. Third one is about customer satisfaction and making sure that customers are happy with product, service and price. Fourth one is about financial performance and making sure that company’s financial data is used properly.

In order to confirm the accounts receivable balances, I decided to use positive confirmations since this was my first time auditing the company and the collateral for the loan would be the receivables. The confirmations helped to verify the accuracy and existence of the accounts. I also calculated the Receivables Turnover Ratio in order to better evaluate the overall success of collection on accounts. The sample size that I chose was determined by the factors of tolerable misstatement, inherent risk, control risk, achieved detection risk

a) The opening Act of King Lear evidently portrays Lear’s downward movement as it coincides with Aristotle’s structure of Greek tragedy. The play begins with Lear, a hero of noble birth and ruler of Britain, in an ordered society soon to be disrupted by a fatal flaw that is the result of his excessive pride. His journey from the ordered to the disordered world becomes apparent after he hands his land over to his two elder daughters and banishes his youngest daughter Cordelia from the kingdom. The initial situation began when Lear asks Cordelia, “What can you say to draw / A third more opulent than your sisters?” (I i 87-88), in which she answers “Nothing, my lord” (I i 89). This demonstrates Lear’s arrogance and triggers

The balanced scorecard does not focus solely on achieving financial objectives but also highlights the non-financial objectives .It balances the use of financial and non-financial performance measures to evaluate short-run and long-run performance in a single report . And this is problems faced by Norwalk Division managers. They complained about the continual pressure to meet short-term financial objectives in business that required extensive investments in risky projects to yield long-run returns. Furthermore, the Division-business strategy mentioned in Exhibit 1is not clearly and detailed enough for the whole company ,which is quite simple style and without a clear “quantitative data” as an objective ,it is difficult to communicate to employees and achieve the goals setup by headquarters.

“The balanced scorecard should translate a business unit’s mission and strategy into tangible objectives and measures. The measures represent a balance between external measures for shareholders and customers and internal measures of critical business processes, innovation and learning and growth. The measures are balance between outcome measures, the results of past efforts, and the measures that drive future performance. And the scorecard is balanced between objective, easily quantified outcome measures and subjective, somewhat judgmental, performance…”

Answer: Aging schedules definitely help a company keep track of which of its customers are paying on time, and are useful in figuring cash flow. In this case, it is apparent that the majority of accounts receivable by the end of March are less than 30 days old (80.8%). By the end of June, that percentage goes down to 63.7%. By the end of March, 19.2% of accounts receivable are between 30-60 days old, and by the end of June, there is 36.3%. 0% of accounts receivable get to be over 60 days old, which indicates payment.

Moreover, from the analyse tab and the function “Age”, an aging of the Accounts Receivable was performed.

The balanced scorecard uses short- and long-term, internal and external, and financial and nonfinancial measures to evaluate performance. Management can analyze these measures and compare

Interco's overall financial health is relatively healthy. It is highly-liquid as the current ratios are consistently over 3.5, showing that it has plenty of cash to cover any of its current liabilities. Its accounts receivable days indicate that in 1987 it took longer to collect on outstanding accounts while this figure would drop in 1988. The same trend follows with its inventory days, increasing in 1987 and decreasing in 1988, which would signal that its turnover was slower in 1987 and faster in 1988. The accounts payable days increased in 1987 while slightly decreasing in 1988. This is a healthy trend as Interco was able to take

Operating profit margin figures in the table above show the return from net sales[13]. However profit margin ratios are high enough for the 3 years, there is a fall from 12.86% to 11.26% during 2011-12. Sales revenue increases with a higher rate than gross profit so there is a poor

The firm’s accounts receivable ratio increased from 68.71 in 2006 to 74.56 in 2010. This means that it is taking Abbott almost six days longer to collect from its customers today than it did five years ago. Furthermore, the firm’s accounts payable days has decreased from 43.72 in 2006 to 38.22 in 2010. This means that Abbott is paying its suppliers 5½ days earlier today than it did in 2006. A change in the inventory ratio from 8.01 in 2006 to 11.03 in 2010 indicates that it is taking the firm longer to sell finished goods than it used to. The increase in the accounts receivable and inventory ratios, combined with a decrease in the accounts payable ratio, indicates poor working capital management and helps to explain why the firm has increased its holdings of cash and short-term investments. To correct this, Abbott’s managers should focus on collecting cash from its customers faster and delaying payments to its suppliers. To maximize its cash position, the firm would be best served by paying its suppliers in the same amount of time as it collects payment from its customers.