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MGT601 - SME Management - Lecture Handout 18

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PROBLEMS FACED BY NEWLY ESTABLISHED COMPANY

This lecture will continue with the previous lecture problem and then chapter deals with the teething problem that a newly established company faces.

Cash Flow Analysis

If the projected sales associated financial requirements and available financial resources are known, the anticipated cash flow can easily be determined.

Cash Flow (Projected)

Cash Flow and Financial Transactions Period 1 Period 2
1) Cash flow    
Initial expense    
Fixed investment    
Operating expense    
Total cash outflow    
2) Cash inflow    
Cash sales    
Account receivables    
Total operating inflow    
3) Net cash flow (2-1)    
4) Desired minimum cash balance    
5) Total amount of funds required
[3 (if negative + 4)]
   

Read more: MGT601 - SME Management - Lecture Handout 18

MGT603 - Strategic Management - Lecture Handout 44

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MEASURING ORGANIZATIONAL PERFORMANCE

Learning Objectives

This topic concern with various is for measuring the performance of an organization.

Measuring organizational performance

To determine that which objectives are most important in the evaluation of strategies can be difficult. Strategy evaluation is based on both quantitative and qualitative criteria. Selecting the exact set of criteria for evaluating strategies depends on a particular organization's size, industry, strategies, and management philosophy. An organization pursuing a retrenchment strategy, for example, could have an entirely different set of evaluative criteria from an organization pursuing a market-development strategy. Quantitative criteria commonly used to evaluate strategies are financial ratios, which strategists use to make three critical comparisons: (1) comparing the firm's performance over different time periods, (2) comparing the firm's performance to competitors', and (3) comparing the firm's performance to industry averages. Some key financial ratios that are particularly useful as criteria for strategy evaluation are as follows:

  1. Return on investment
  2. Return on equity
  3. Profit margin
  4. Market share
  5. Debt to equity
  6. Earnings per share
  7. Sales growth
  8. Asset growth

  9. Read more: MGT603 - Strategic Management - Lecture Handout 44