会计学企业决策基础14e whbcfinal.pptx

REWARDINGBUSINESSPERFORMANCEChapter

25

LearningObjectiveLO1Toexplaintheimportance

ofincentivesystemsfor

motivatingperformance.

GoalCongruence

Alignmentofemployee

goalsandobjectives

withorganizational

goalsandobjectives.MotivationandAligning

GoalsandObjectives

MotivationandAligning

GoalsandObjectivesFeedbackSteeremployees

towardgoals.Measureprogress

inachievinggoals.Measure

performance.Improve

performance.Reward

performance.

LearningObjectiveLO2TousetheDuPont

systemtoevaluate

businessperformance.

Returnoninvestmentistheratioof

profittotheaverageinvestmentused

togeneratetheprofit.ReturnonInvestment(ROI)ROI=ProfitAverageinvestmentUsingROItoevaluatebusinessperformance

isoftenreferredtoastheDuPontsystem.

SalesAverageInvestmentROI=ProfitAverageInvestmentROI=ProfitSales×ReturnonInvestment(ROI)Return

onSalesCapital

Turnover

ReturnonInvestment(ROI)HollyCompanyreportsthefollowing:

Profit $30,000 Sales $500,000 AverageInvestment $200,000Let’scalculateROI.

ReturnonInvestment(ROI)SalesAverageInvestmentROI=ProfitSales×ROI=6%×2.5=15%$500,000$200,000ROI=$30,000$500,000×

ThreewaystoimproveROIIncreaseSales

PricesDecrease

ExpensesLowerInvested

CapitalImprovingROI

ImprovingROIHolly’smanagerwasabletoincrease

salesrevenueto$600,000which

increasedeto$42,000.Therewasnochangeininvestedcapital.Let’scalculatethenewROI.

ImprovingROISalesAverageInvestmentROI=ProfitSales×HollyincreasedROIfrom15%to21%.ROI=7%×3.0=21%$600,000$200,000ROI=$42,000$600,000×

LearningObjectiveLO3Toidentifyandexplain

thecriticismsofusing

returnoninvestment

(ROI)astheonly

performancemeasure.

AsdivisionmanageratWinston,Inc.,yourcompensationpackageincludesasalaryplusbonusbasedonyourdivision’sROI--thehigheryourROI,t