Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388,please register!
Calculated as:This is a measurement of a company's profitability after all expenses and reinvestments. It'sone of the many benchmarks used to compare and analyze financial health.A positive value would indicate that the firm has cash left after expenses. A negative value,on the other hand, would indicate that the firm has not generated enough revenue to cover itscosts and investment activities. In that instance, an investor should dig deeper to assess whythis is happening - it could be a sign that the company may have some deeper problems.
c. Management control process in organization:Ans:
Management control is the process by which managers influence other members of the organization to implement the organization’s strategies. Management control processinvolves informal interactions between one manger and another manager and his or her subordinates. Informal communications occurs by means of memoranda, meetings,conversations, and even by facial expression. The informal interactions take place within aformal planning and control system. Such system includes the following activities:1] Strategic planning,2] Budget preparation,3] Execution,4] Evaluation of performance.Each activity leads to next in a regular cycle.
1] Strategic planning:
it is process of deciding on the major programs that organizationundertakes to implement its strategies and appropriate amount of resources that will bedevoted to each. The output of the process called as strategic planning. This is the first stepin management control cycle.
2] Budget planning:
budget represent fine tuning of the strategic planning, incorporatingmost current information. In budget, revenue and expenses are rearranged from programme tothe responsibility centre, thus budget shows the expenses that each managers expected tooccur. The process of budget preparation is essentially one of the negotiations between themanagers of each responsibility centre and their superior.
managers execute the programme or part of the programme for which they areresponsible and also report on what has happened in the course of fulfilling thatresponsibility. Reports on responsibility centre may show budgeted and actual information,financial and non-financial performance measures, internal & external information.