[管理學(xué)]ppt_ch13_management_accounting_5e-文庫(kù)吧資料
2025-01-25 15:45本頁(yè)面
【正文】 the relative performance of investment centres – Even when those business units are of different sizes 138 Copyright ? 2022 McGrawHill Australia Pty Ltd PowerPoint Slides t/a Management Accounting 5e by LangfieldSmith Prepared by Kim LangfieldSmith The limitations of ROI ? Encourages managers to focus on shortterm financial performance at the expense of longterm viability and petitiveness ? Encourages managers to defer asset replacement – To maintain high ROI and apparent high performance ? Discourages managers from investing in projects which are acceptable from the anisation’s point of view, but decrease the investment centre’s ROI 139 Copyright ? 2022 McGrawHill Australia Pty Ltd PowerPoint Slides t/a Management Accounting 5e by LangfieldSmith Prepared by Kim LangfieldSmith Minimising the behavioural problems of ROI ? Use ROI as one of several performance measures that focus on both shortterm and longterm performance ? Consider alternative ways of measuring invested capital to minimise dysfunctional decisions ? Use alternative financial measures, such as residual ine or economic value added 1310 Copyright ? 2022 McGrawHill Australia Pty Ltd PowerPoint Slides t/a Management Accounting 5e by LangfieldSmith Prepared by Kim LangfieldSmith Residual ine ? Residual ine (RI) = profit – (invested capital imputed interest rate) ? Imputed interest charge – Based on the required rate of return that the firm expects of its investments, which is based on the anisation’s cost of capital – Weighted average cost of capital (WACC) is the weighted average of the cost of funds from all sources of borrowings and equity 1311 Copyright ? 2022 McGrawHill Australia Pty Ltd PowerPoint Slides t/a Management Accounting 5e by LangfieldSmith Prepared by Kim LangfieldSmith The advantage of residual ine ? More likely to promote goal congruence, pared to ROI ? Takes account of the anisation’s required rate of return in measuring performance ? Encourages investment in projects which yield a positive residual ine to the anisation 1312 Copyright ? 2022 McGrawHill Australia Pty Ltd PowerPoint Slides t/a Management Accounting 5e by LangfieldSmith Prepared by Kim LangfieldSmith Disadvantages of residual ine ? Cannot be used to assess the relative performance of businesses that are of different sizes, unlike ROI ? Formula is biased in favour of larger businesses, unlike ROI ? Can encourage shortterm orientation/focus, as with ROI 1313 Copyright ? 2022 McGrawHill Australia Pty Ltd PowerPoint Slides t/a Management Accounting 5e by LangfieldSmith Prepared by Kim LangfieldSmith Measuring profit and invested capital ? Total assets – Investment centre manager is responsible for decisions about all assets ? Total productive assets – Investment centre managers retain nonproductive assets ? Total assets less current liabilities – Investment centre is responsible for decisions about assets and manages shortterm liabilities ? Choose average or endofyear balances 1314 Copyright ? 2022 McGrawHill Australia Pty Ltd PowerPoint Slides
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