Question 1

Which of the following is not a reason companies use key performance indicators?
A)To align business activity with corporate strategy
B)To improve company performance
C)To improve timeliness of business decisions
D)To measure production efficiency in the past few months

Accepted Answer

Key performance indicators are used to measure current or future performance and inform decision making. Option D, measuring production efficiency in the past few months, focuses on past performance rather than current or future performance, and may not be as helpful for decision making.

Question 2

Which of the following is an example of a customer-oriented nonfinancial measure?
A)Product flexibility
B)Product defects
C)Production volume
D)New product introductions

Accepted Answer

Product flexibility is an example of a customer-oriented nonfinancial measure as it reflects the company's ability to meet the individual needs of customers, which is important for customer satisfaction and loyalty. Product defects, production volume, and new product introductions are financial or operational measures that do not directly indicate customer satisfaction or loyalty.

Question 3

Measures that help predict a future result are referred to as
A)lagging indicators.
B)earnings per share.
C)leading indicators.
D)EVA.

Accepted Answer

Leading indicators are used to predict future economic or financial trends or outcomes. Lagging indicators reflect past events and are often used to confirm or refute trends suggested by leading indicators. Earnings per share and EVA are financial metrics, not measures used to predict future outcomes.

Question 4

Nonfinancial measures can be

Accepted Answer

The answer of Nonfinancial measures can be ...

Question 5

A difference in quantitative indicators and qualitative indicators is
A)quantitative indicators differ based of who is doing the measuring whereas qualitative indicators are the same among individuals since each one has a unique perspective.
B)qualitative indicators are subjective while quantitative indicators are objective.
C)quantitative indicators always consist of numerical amounts while qualitative indicators are not numerical.
D)quantitative indicators are financial and qualitative indicators are non-financial.

Accepted Answer

Quantitative indicators are measurable and objective, consisting of numerical data such as statistics, financial data, or performance metrics. Qualitative indicators are subjective because they rely on the interpretation and judgment of the observer or researcher. Examples of qualitative indicators include descriptive data, opinions, or individual experiences. Thus, the key difference between quantitative and qualitative indicators is the objectivity or subjectivity of the data collected.

Question 6

Qualitative indicators tend to be based on
A)feelings or accounting records.
B)feelings or perceptions.
C)accounting records or perceptions.
D)perceptions or clarifications.

Accepted Answer

Qualitative indicators are subjective and based on perceptions, opinions, attitudes, and beliefs. They are not measurable with accounting records. Therefore, the best choice is B – feelings or perceptions.

Question 7

Which of the following is an example of an employee-oriented nonfinancial measure?
A)Setup efficiency
B)Labor productivity
C)Accidents per month
D)Time to respond to customer problems

Accepted Answer

Accidents per month is an example of an employee-oriented nonfinancial measure, as it focuses on the safety and well-being of employees rather than financial performance or efficiency metrics.

Question 8

Which of the following is an example of an internal operating nonfinancial measure?
A)Accidents per month
B)Labor productivity
C)Market share
D)Product flexibility

Accepted Answer

Labor productivity is an internal operating nonfinancial measure because it measures the efficiency of a company's internal operations.

Question 9

Before deciding whether a measure is a leading or lagging indicator, a manager should be sure to know
A)to what event the measure is related.
B)whether the measure is used by companies in the industry.
C)whether the measure is financial or non-financial.
D)the effect the indicator will illustrate.

Accepted Answer

Knowing to what event the measure is related is crucial in determining whether it is a leading or lagging indicator. Leading indicators predict future performance and are related to events that occur before a change in performance, while lagging indicators measure past performance and are related to events that have already occurred. Without knowing to what event the measure is related, it is impossible to determine whether it is leading or lagging. The other options may be important considerations, but they are not as essential in determining whether a measure is leading or lagging.

Question 10

The best measures relate to corporate Strategy and SMART.Which of the following is not a component of SMART?
A)Measurable
B)Timeliness
C)Actionable
D)Responsibility

Accepted Answer

SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. Responsibility is not a component of SMART.

Question 11

For managers to adequately monitor the organization's performance, they need to use
A)leading and cycle indicators.
B)lagging and budget indicators.
C)leading indicators and lagging indicators.
D)lagging and cycle indicators.

Accepted Answer

Managers need to use leading indicators to predict future performance and lagging indicators to track past performance. Using both types of indicators provides a more comprehensive understanding of the organization's overall performance. Budget indicators are useful for tracking financial performance, but they do not provide insight into other aspects of the organization's performance. Cycle indicators are useful for tracking short-term fluctuations but do not provide a broader understanding of the organization's performance. Therefore, the best choice is to use leading and lagging indicators together.

Question 12

Return on investment is a financial measure that is

Accepted Answer

The answer of Return on investment is a financial measure...

Question 13

The best measures relate to corporate strategy and SMART.Which of the following is not a component of SMART?
A)Tangible
B)Measurable
C)Relevant
D)Specific

Accepted Answer

SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. "Tangible" is not a component of SMART.

Question 14

Which of the following not a qualitative measure that McDonald's may use?
A)Accidents per month
B)Customer retention
C)Current ratio
D)Number of orders filled incorrectly

Accepted Answer

The current ratio is a quantitative measure that evaluates a company's ability to pay its short-term liabilities. It is not a qualitative measure that evaluates factors such as customer satisfaction or employee motivation. The other options (A, B, D) are qualitative measures that McDonald's may use to evaluate their performance.

Question 15

Which of the following is not a main barrier to the effective use of nonfinancial performance measures by organizations?
A)Skepticism that the measures are directly related to the bottom line
B)Lack of management skill needed to implement the measures
C)Lack of familiarity with the measures on the part of the board members
D)Undeveloped tools for analyzing the measures

Accepted Answer

The answer of Which of the following is not a...

Question 16

Earnings per share is a financial measure that is

Accepted Answer

The answer of Earnings per share is a financial measure...

Question 17

Qualitative indicators
A)tend to be based on feelings and perceptions.
B)tend to be based on perceptions and are non-financial amounts.
C)rely upon accounting records.
D)are also referred to as non-financial.

Accepted Answer

Qualitative indicators are often based on subjective measures such as feelings and perceptions, rather than quantitative data or financial records.

Question 18

Measures that provide managers with information they need to take timely, corrective action are referred to as
A)budget indicators.
B)variance indicators.
C)cycle indicators.
D)leading indicators.

Accepted Answer

Leading indicators are metrics that provide early signals about future trends and help managers take preemptive action to address potential issues or opportunities.

Question 19

Leading indicators provide managers with the information they need to
A)calculate direct material and direct labor variances.
B)take timely, corrective action.
C)prepare GAAP-based financial statements.
D)All of these answer choices are correct.

Accepted Answer

Leading indicators are used to provide managers with timely information that can help them take corrective action before problems escalate. They are not related to calculating direct material and labor variances or preparing GAAP-based financial statements.

Question 20

Which of the following is not a reason companies use key performance indicators?
A)To mandate to report company performance to stakeholders
B)To increase accuracy of business decisions
C)To improve company performance
D)To identify costs that may be non-value-added

Accepted Answer

The answer of Which of the following is not a...

Quiz 11: Decentralization and Performance Evaluation

Which of the following is not a reason companies use key performance indicators?

Which of the following is an example of a customer-oriented nonfinancial measure?

Measures that help predict a future result are referred to as

Nonfinancial measures can be

A difference in quantitative indicators and qualitative indicators is

Qualitative indicators tend to be based on

Which of the following is an example of an employee-oriented nonfinancial measure?

Which of the following is an example of an internal operating nonfinancial measure?

Before deciding whether a measure is a leading or lagging indicator, a manager should be sure to know

The best measures relate to corporate Strategy and SMART.Which of the following is not a component of SMART?

For managers to adequately monitor the organization's performance, they need to use

Return on investment is a financial measure that is

The best measures relate to corporate strategy and SMART.Which of the following is not a component of SMART?

Which of the following not a qualitative measure that McDonald's may use?

Which of the following is not a main barrier to the effective use of nonfinancial performance measures by organizations?

Earnings per share is a financial measure that is

Qualitative indicators

Measures that provide managers with information they need to take timely, corrective action are referred to as

Leading indicators provide managers with the information they need to

Which of the following is not a reason companies use key performance indicators?