Financial Performance Measurement Flashcards
7 cards from real CPFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Performance Measurement flashcards as text
A balanced scorecard evaluates performance across financial, customer, internal process, and which fourth perspective?
Answer: Learning and growth
The fourth perspective in Kaplan and Norton's balanced scorecard is learning and growth.
If a firm's times-interest-earned ratio falls below 1.0, it indicates that:
Answer: Operating earnings cannot cover interest expense
A ratio below 1.0 means EBIT is insufficient to pay interest, signaling solvency risk.
Which metric measures how many days, on average, it takes to collect receivables?
Answer: Days sales outstanding
Days sales outstanding (DSO) measures the average collection period for receivables.
Residual income is calculated as net operating income minus:
Answer: A capital charge on invested assets
Residual income subtracts a minimum required return (capital charge) from operating income.
A high gross profit margin combined with a low net profit margin most likely indicates:
Answer: High operating or overhead expenses
When gross margin is high but net margin is low, operating and overhead costs are eroding profit.
Which of the following is a leading indicator of future financial performance?
Answer: Customer satisfaction scores
Customer satisfaction is a leading (predictive) indicator, while the others are lagging measures.
The cash conversion cycle is computed as DSO plus inventory days minus:
Answer: Days payable outstanding
The cash conversion cycle = DSO + inventory days − days payable outstanding.