SELF TEST #24: Identifying Shortfalls in Financial Performance

Test #1:

How does the Company know that it has achieved a low-cost position?

Test #2:

How does a company measure Return on Investment?

Test #3:

When would a company use each of the various measures of Return on Investment?

Test #4:

Companies in an industry charge somewhat different prices for their products. Wouldn’t a difference in pricing affect Return on Investment?

Test #5:

Do the industry’s largest competitors usually lead their industries in Return on Investment?

Test #6:

What are reasonable targets for Return on Investment?

Test #7:

What measures would a company use to evaluate its relative position on operating costs, that is costs of People and Purchases?

Test #8:

What are median figures for operating margins?

Test #9:

How would the Company measure its capability at using capital?

Test #10:

What levels of Capital indicate that an industry is capital intensive?