Chapter 12
? To Define Operations Management
? To Discuss Profit Planning
? To Describe Asset Management
? To Examine Retail Budgeting
? To Examine Resource Allocation
? Profit & Loss (Income Statement)
– Net Sales
– Cost of Goods Sold (COGS)
– Gross Profit (Margin)
– Operating Expenses
– Net Profit Before Taxes
? Balance Sheet
? Assets
– Fixed
– Hidden
? Liabilities
? Net Worth
? Net Profit Margin
? Asset Turnover
? Return on Assets (ROA)
? Financial Leverage
Return
on
Net
Worth
Financial
Leverage
Net Profit
Margin
Asset
Turnover X X =
Net Profit
Net Sales X
Net Sales
Total Sales X
Total Assets
Net Worth
Net Profit
Net Worth =
? Quick Ratio
? Current Ratio
? Collection Period
? Accounts Payable to Net Sales
? Overall Gross Profit
? Initial Public Offerings (IPO)
? Leveraged Buyout (LBO)
Who Develops
the Budget(s)?
What is the Budgeting
Time Frame?
How Often Are Budgets
Planned?
What Cost Categories
Are Used?
Preliminary
Budgeting
Decisions
? Capital Expenditures
? Operating Expenditures
? Fixed Costs
? Variable Costs
? Direct Costs
? Indirect Costs
? Natural Account Expenses
? Functional Account Expenses
Who Develops
the Budget(s)?
What is the Budgeting
Time Frame?
How Often Are Budgets
Planned?
What Cost Categories
Are Used?
How Flexible Are
Budgets?
What Level of Detail
is Used?
Adjustments
Monitoring
Results
Actual
Expenditures
Planned
Expenditures
Performance
Standards
Goals
Preliminary
Budgeting
Decisions
Ongoing Budgeting Process
? Costs
– Capital Expenditures
– Operating Expenditures
– Opportunity Costs
? Productivity
? The Definition of Operations
Management
? The Profit Planning Process
? A Description of Asset Management
– Strategic Profit Model
– Business Ratios
– Financial Trends in Retailing
? Retail Budgeting
? Resource Allocation
Questions?