Lecture 3 Perf.ppt

Ian Martin School of Business Systems Semester 2, 2000 Measuring Performance School of Business Systems BUS3600 and BUS5600Business Case Development Measuring Performance Contents External Measurement Benchmarking The Need For Change Internal Measurement Data Issues Success Story External Measurement External Measurement Published Financial Statements How do we interpret them ? Ratio Analysis Relationship between 2 or more figures are used to evaluate performance External Measurement Performance Ratios Financial Status Ratios Investor Ratios Performance Ratios Return on Capital Employed Profit Margin Stock Turnover Debtor Turnover Creditor Turnover Financial Status Ratios Working Capital Liquid (Acid Test) Gearing Interest Cover Investor Ratios Price Earnings Ratio Earnings per Share Dividend Yield Dividend Cover Bank Ratios Earnings Per Share Trend National Australia Bank Results Nine Months to June 30, 1999 $2.1 billion up or 21% on 1998 Full Year Forecast $2.85 billion 14% up on 1998’s $2.5 billion Good Result Share Price Dropped 22 Cents “Age” Analysis of NAB Results Net Interest Margin down 12 basis points (steady in Australia) Interest Income fell 2% in the Quarter Small Fall in Bank Fees Strong Growth in Loan Fees Strong Growth in Trading Income “Age” Analysis of NAB Cost Control Impressive Cost to Income Ratio fell from 54.5% to 52.9% for the nine months to June Successful Income Securities Issue Tier One Capital Ratio rose 1.1% to 7.6% over the quarter Age July 23, 1999 Benchmarking Benchmarking Definitions The Need for Change The Benchmarking Process Who, What, When of Benchmarking Benchmarking A continuous systematic process to develop business and work processes that incorporate “best practices” and establish rational performance goals. Best Practices The methods used in work processes whose outputs best meet customer requirements Benchmarks Performance measurement standards derived from definition or quantification of best practi