BUS 498 Lecture Notes - Lecture 5: Triple Bottom Line, Competitive Advantage, Performance Metric
Document Summary
Chapter 5- competitive advantage, firm performance, and business models. To measure and assess firm performance: accounting profitability, shareholder value creation, economic value creation. Integrative frameworks, combining quantitative data with qualitative assessments: the balanced scorecard, the triple bottom line. Available through: standardized accounting metrics (gaap, fasb, form 10-k statements, profitability ratios, return on invested capital (roic), return on equity (roe), return on assets (roa), and return on revenue (ror) To explore further drivers of this difference, we break down return on revenue into three additional financial ratios: cost of goods sold (cogs) / revenue, research & development (r&d) expense / revenue. Selling, general, & administrative (sg&a) expense / revenue. Comparing apple and microsoft: drivers of firm performance. Return on revenue: how much of the firm"s sales is converted into profits. Working capital turnover: how effectively capital is being used to generate revenue. Cost of goods sold (cogs) / revenue: how efficiently a company can produce a good.
