a) Evaluate the financial performance of this company using the financial information only. b) Evaluate the performance based on the non-financial information using the balanced scorecard approach c) Explain why the non-financial information may provide a better indication of the likely future success of Payday.
a) Evaluate the financial performance of this company using the financial information only. b) Evaluate the performance based on the non-financial information using the balanced scorecard approach c) Explain why the non-financial information may provide a better indication of the likely future success of Payday.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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Transcribed Image Text:Payday is a business providing short term loans. They have recently decided to evaluate the business using the Balance
Scorecard approach developed by Kaplan and Norton. Acting as a consultant you are tasked with identifying measures to
use in the four areas identified by the Balanced Scorecard, that are most appropriate for the business.
You are provided with the following information about its recent performance in order to choose your method.
Financial information
current year
previous year
Revenue
£27,000
£25,000
Gross profit
£14,000
£12,000
Net profit
£5,000
£6,000
Average cash balance
£3,000
£2,500
Average receivables
45 days
50 days
Internal processes
Error rates in loan applications
20%
15%
Average time to complete application
4 weeks
5 weeks
Customer services
Number of investors
100
82
Number of borrowers
545
674
Number of complaints
55
43
Innovation and learning
% from non-core work
2%
3%
Industry average % non-core work
25%
15%
Employee retention rate
50%
70%
Required:
a) Evaluate the financial performance of this company using the financial information only.
b) Evaluate the performance based on the non-financial information using the balanced scorecard approach
c) Explain why the non-financial information may provide a better indication of the likely future success of Payday.
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