Thursday, February 24, 2011

CEO performance measurement - A case study

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With additional RM3 million investment of assets, the CEO of a company was able to increase sales to RM13 million from RM12 million last year.

The annual profit has also increased from RM2.9 to RM3.0 million behind a shareholding of RM10.2 million and a total assets of RM4 million last year.

However, costs has gone up from RM9.10 to RM10.0 million.

How do you measure the performance of the CEO?.

Answers:

            last yr       current yr
ROS    0.242        0.231
ROA   0.207        0.176
ROE    0.284       0.229

Conclusion:  The CEO has not performed.  ROS has dropped from 24% to 23%
The ROA has dropped by 3% and ROE by 5%.

Net Profit margin has dropped by 1% while turnover has reduced by 0.10 and equity multiplier has dropped by 0.07.

Arriffin Mansor 012-2786282

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