Flashcards on Corporate Financial Analysis: Methods and Forecasting
Corporate Financial Analysis: Methods and Forecasting Guide
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Value & Performance Measurement
63 cards
Card 1
Question: What are 'internal targets' in value & performance measurement and what do they tell you when comparing actual results to them?
Answer: Internal targets are specific goals set for key metrics; comparing actual results shows whether targets are being met, exceeded, or falling short.
Card 2
Question: How should results be compared to industry benchmarks when measuring value and performance?
Answer: Compare results with competitors and industry standards; if growth rate or profit margin lags industry leaders, strategic adjustments may be needed.
Card 3
Question: What is variance analysis in the context of value & performance measurement?
Answer: Variance analysis identifies significant differences between expected (forecasted) and actual performance to understand deviations.
Card 4
Question: What might large discrepancies between forecasts and actuals indicate?
Answer: They may indicate unrealistic forecasting, changes in market conditions, or operational inefficiency.
Card 5
Question: What can a positive variance indicate about a firm's performance?
Answer: Positive variance can indicate strong market demand, effective cost control, or better-than-anticipated sales.
Card 6
Question: What can a negative variance indicate about a firm's performance?
Answer: Negative variance indicates results below expectations and possible issues with pricing, competition, client retention, or rising costs.
Card 7
Question: Name quantitative KPIs recommended for in-depth analysis of dynamics.
Answer: Revenue growth rate, EBITDA, Return on Investment (ROI), Customer Acquisition Cost (CAC), Churn Rate, and Operating Cash Flow.
Card 8
Question: What does Revenue Growth Rate measure in performance evaluation?
Answer: How quickly a firm’s revenue is growing.
Card 9
Question: What does EBITDA track and why is it used in performance measurement?
Answer: EBITDA tracks profitability from core operations.
Card 10
Question: How is Return on Investment (ROI) used in evaluating dynamics?
Answer: ROI measures profitability relative to capital invested.