Chapter 24: Q9RQ (page 1355)
What is a performance evaluation system?
A performance evaluation system is systematic performance evaluation of an employees’ job.
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Padgett Company has compiled the following data:
Net sales revenue $1,000,000
Operating income 60,000
Average total assets 400,000
Management’s target rate of return 12%
Compute the following amounts for Padgett:
How is the use of a balanced scorecard as a performance evaluation system helpful to companies?
How is the use of a balanced scorecard as a performance evaluation system helpful to companies?
XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and inline skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-snow Sports. The following divisional information is available for the past year:
Net Sales Revenue | Operating Income | Average Total Assets | ROI | |
Snow Sports | \(5,500,000 | \)990,000 | $4,100,000 | 24.1% |
Non-snow Sports | 8,500,000 | 1,530,000 | 6,100,000 | 25.1% |
XTreme’s management has specified a 13% target rate of return. Calculate each division’s profit margin ratio.
Interpret your results.
What are the goals of a performance evaluation system?
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