APMP5

Syllabus C1. Strategic Performance Measures in the Private Sector 1 / 7

a) Demonstrate why the primary objective of financial performance should be primarily concerned with the benefits to shareholders.

b) Discuss the appropriateness of, and apply different measures of performance, including:
i) Gross profit and operating profit
ii) Return on Capital Employed (ROCE)
iii) Return on Investment (ROI) 
iv) Earnings Per Share (EPS)
v) Earnings Before Interest, Tax Depreciation and Amortisation (EBITDA)
vi) Residual Income (RI)
vii) Net Present value (NPV)
viii) Internal rate of return and modified internal Rate of Return (IRR, MIRR)
ix) Economic Value Added (EVA)

c) Discuss why indicators of liquidity and gearing need to considered in conjunction with profitability.
d) Compare and contrast short and long run financial performance and the resulting management issues.
e) Assess the appropriate benchmarks to use in assessing performance.
Strategic Performance Measures in the Private Sector