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Micro Manufacturers uses a performance reporting system that combines both financial and nonfinancial measures to evaluate division performance. All of the following measure operational efficiency, except:
Suggested Answer: D
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Choice 'd' is correct. Residual income measures profitability in excess of a target rate of return.
Operational efficiency is not considered.
Choices 'a', 'b', and 'c' are incorrect. Operating leverage, days' sales in accounts receivable, and inventory are all measures of operational efficiency, specifically, efficiency in managing working capital.
11 comments · newest first
JE
Jesse
11 months ago
Operating leverage is more about fixed costs, not efficiency.
AL
Alberto
11 months ago
Days' sales in accounts receivables is definitely about efficiency!
CA
Cathrine
12 months ago
Wait, are we sure about that? I thought all of these were efficiency metrics.
JO
Josphine
12 months ago
Totally agree, it's more of a profitability measure.
NO
Noelia
12 months ago
Residual income isn't really about operational efficiency.
DO
Dominga
1 year ago
I recall that operating leverage relates to fixed costs and how they impact profits, so it might not be about operational efficiency directly.
MO
Mose
1 year ago
I practiced a similar question where we had to identify which metrics were financial versus operational. I feel like days' sales in accounts receivables might not fit.
SH
Shayne
1 year ago
I think I remember that operational efficiency measures focus on how well resources are used, but I'm not sure about residual income.
NI
Nieves
1 year ago
I’m leaning towards residual income as the odd one out since it’s more about profitability than efficiency. But I could be wrong!
AR
Arleen
1 year ago
The question is asking about an organization's statement of what it wants to become, so I think the answer is corporate vision. That seems to be the best fit based on the options provided.
LA
Lasandra
1 year ago
I've worked with data extensions before, so I feel pretty confident about this. Using data retention and limiting custom fields are definitely the way to go. The other options don't seem as relevant.