Question 1

Assessing the ability to exploit new growth areas and potential new threats is the focus of short-term value drivers as opposed to long-term value drivers.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following are aspects of the firm that diagnostics of organizational health typically measure?
I.Its culture and values.
II.The depth of management talent.
III.The skills and capabilities of the company.
IV.Its ability to retain employees and keep them satisfied.

Accepted Answer

A) I,II,and III only. 
B) I,III,and IV only. 
C) II,III,and IV only. 
D) I,II,III,and IV. 
A) I,II,and III only. 
B) I,III,and IV only. 
C) II,III,and IV only. 
D) I,II,III,and IV. D

Question 3

List and describe the three categories of short-term value drivers.

Accepted Answer

1.Sales productivity metrics are the drivers of recent sales growth,such as price and quantity sold,market share,and the company's ability to charge a premium.
2.Operating cost productivity metrics are typically drivers of unit costs,which involve determining component costs and defining the optimal approach for producing each component.
3.Capital productivity measures how well a company uses its working capital (inventories,receivables,and payables )and its property,plant,and equipment.]

Question 4

Which set of metrics is best used to describe whether the company can sustain or improve its current revenue growth?

Accepted Answer

A) Asset health. 
B) Commercial health. 
C) Strategic health. 
D) Core health. 
A) Asset health. 
B) Commercial health. 
C) Strategic health. 
D) Core health.

Question 5

In assessing a company's long-term strategic health,it can be hard to identify specific metrics.Thus,these situations require more qualitative milestones.

Accepted Answer

A) True 
 B)False

Question 6

In performance management,because of potential conflicts of interest,operating managers should not be involved in the setting of targets and in reading the measures in pursuing targets.

Accepted Answer

A) True 
 B)False

Question 7

With respect to stock-based compensation for managers,which of the following is most accurate?

Accepted Answer

A) It is never a useful means for incentivizing managers to create value. 
B) It has proven to be a useful tool to incentivize managers to create value in most cases. 
C) There is not enough evidence to reach conclusions concerning its effectiveness. 
D) It may be useful,but when it is used,macroeconomic and industry effects should be removed in formulating the compensation. 
A) It is never a useful means for incentivizing managers to create value. 
B) It has proven to be a useful tool to incentivize managers to create value in most cases. 
C) There is not enough evidence to reach conclusions concerning its effectiveness. 
D) It may be useful,but when it is used,macroeconomic and industry effects should be removed in formulating the compensation.

Question 8

Which of the following are properties of internal benchmarks that businesses use to gauge their productivity and health?
I.They do not provide learning opportunities.
II.The data are likely to be more readily available.
III.They are more challenging because of their specificity.
IV.Unearthing the causes of differences in performance is much easier.

Accepted Answer

A) I,II,and III only. 
B) II and IV only. 
C) III and IV only. 
D) I,II,III,and IV. 
A) I,II,and III only. 
B) II and IV only. 
C) III and IV only. 
D) I,II,III,and IV.

Question 9

Which of the following value drivers is a short-term driver as opposed to a medium-term driver?

Accepted Answer

A) Asset health. 
B) Commercial health. 
C) Capital productivity. 
D) Cost structure health. 
A) Asset health. 
B) Commercial health. 
C) Capital productivity. 
D) Cost structure health.

Question 10

Which of the following is a value driver associated with improving long-term growth as opposed to return on invested capital (ROIC)?

Accepted Answer

A) Asset health. 
B) Commercial health. 
C) Capital productivity. 
D) Cost structure health. 
A) Asset health. 
B) Commercial health. 
C) Capital productivity. 
D) Cost structure health.

Question 11

Managers must regularly revisit the targets they set for each value driver.As their business environment changes,so will the limits of what they can achieve.

Accepted Answer

A) True 
 B)False

Exam 26: Performance Management

Assessing the ability to exploit new growth areas and potential new threats is the focus of short-term value drivers as opposed to long-term value drivers.

Which of the following are aspects of the firm that diagnostics of organizational health typically measure? I.Its culture and values. II.The depth of management talent. III.The skills and capabilities of the company. IV.Its ability to retain employees and keep them satisfied.

List and describe the three categories of short-term value drivers.

Which set of metrics is best used to describe whether the company can sustain or improve its current revenue growth?

In assessing a company's long-term strategic health,it can be hard to identify specific metrics.Thus,these situations require more qualitative milestones.

In performance management,because of potential conflicts of interest,operating managers should not be involved in the setting of targets and in reading the measures in pursuing targets.

With respect to stock-based compensation for managers,which of the following is most accurate?

Which of the following value drivers is a short-term driver as opposed to a medium-term driver?

Which of the following is a value driver associated with improving long-term growth as opposed to return on invested capital (ROIC)?

Managers must regularly revisit the targets they set for each value driver.As their business environment changes,so will the limits of what they can achieve.

Why Value Value

Fundamental Principles of Value Creation

Conservation of Value and the Role of Risk

The Alchemy of Stock Market Performance

The Stock Market Is Smarter Than You Think

Return on Invested Capital

Growth

Frameworks for Valuation

Reorganizing the Financial Statements

Analyzing Performance

Forecasting Performance

Estimating Continuing Value

Estimating the Cost of Capital

Moving From Enterprise Value to Value Per Share

Analyzing the Results

Using Multiples

Valuation by Parts

Taxes

Non-operating Items, Provisions, and Reserves

Leases and Retirement Obligations

Alternative Ways to Measure Return on Capital

Inflation

Cross-Border Valuation

Case Study: Heineken

Corporate Portfolio Strategy

Mergers and Acquisitions

Divestitures

Capital Structure, Dividends, and Share Repurchases

Investor Communications

Emerging Markets

Valuing High-Growth Companies

Cyclical Companies

Banks

Flexibility

Filters