Chapter_6_and_7_Presentation.pptx management

SPM

1. Evaluating Strategic Profit Performance Chapter 6: Key Concepts and Insights

2. Key Concepts of Profit Evaluation Definition of Strategic Profit Performance Importance of measuring profitability Key metrics: Variance Analysis Relevance to business strategy

3. Variance is the difference between (1) an item estimated on a profit plan or budget prepared prior to the start of an accounting period and (2) the actual income or expense as reflected on accounting statements prepared after the accounting period has ended. Variances are favorable (F) if actual profit is higher than planned profit variances are unfavorable (U) if actual profit is below planned profit.

4. Profit Plan

5. Designing Asset Allocation Systems Chapter 7: Key Concepts and Insights

6. Why Asset Allocation Matters Asset allocation helps in optimizing returns and managing risks. It aligns resources with strategic goals for long-term growth. Ensures balanced investments in both tangible and intangible assets.

7. Evaluating Assets: Key Metrics Return on Capital Employed (ROCE): Measures how well a company uses its capital to generate profits. Net Present Value (NPV): The present value of cash inflows vs. cash outflows over time. Internal Rate of Return (IRR): The discount rate that makes the net present value of a project zero.

8. Common Challenges in Asset Allocation Systems Balancing short-term and long-term investments. Dealing with uncertainty and market volatility. Overcoming information gaps and ensuring data accuracy.

9. Key Takeaways from Chapter 7 Effective asset allocation maximizes returns and minimizes risk. Strategic allocation decisions are crucial for long-term success and financial stability.