E5 Performance management

Which type of indicator reports on past results?

• 1 A budget
• 2 A leading indicator
• 3 A forecast
• 4 A lagging indicator

Customer satisfaction scores that give early warning of future revenue are usually:

• 1 Tax indicators
• 2 Cost indicators
• 3 Leading indicators
• 4 Lagging indicators

What is short-termism?

• 1 Reducing costs only
• 2 Increasing sales only
• 3 Planning for the future
• 4 Putting short-term results ahead of long-term value

A division has an ROI of 20 percent and a cost of capital of 12 percent. A $500,000 project earns 16 percent. What does ROI suggest?

• 1 Accept the project
• 2 The project has no return
• 3 Reject the project, because 16% is below the division's ROI of 20%
• 4 The project is risk free

A division has an ROI of 20 percent and a cost of capital of 12 percent. A $500,000 project earns 16 percent. If the project is accepted, what is the annual change in residual income?

• 1 $0
• 2 $20,000
• 3 $80,000
• 4 $60,000

Which of the four Balanced Scorecard perspectives covers employee training and new products?

• 1 Financial
• 2 Customer
• 3 Innovation and learning
• 4 Internal business process

What is a challenge of the Balanced Scorecard?

• 1 It uses only financial data
• 2 It is too short
• 3 It has no link to strategy
• 4 Data overload and the choice of indicators

Which issue is specific to transfer pricing in multinational groups?

• 1 Only one currency
• 2 Tax rate differences and rules on arm's-length prices
• 3 No tax authorities
• 4 Prices are never agreed