Welcome to Class 18
Analyzing, Synthesizing, Scoring
&
Reporting
Corporate Performance
Chapters 12 - 14
Performance Scorecard
Grading
There are 44 categories and you should
determine a grade for most, if not all of them. You will
grade the company on the basis of 1 to 5.
Grade 1: Very bad
Grade 2: Bad
Grade 3: Don’t know?
Grade 4: Good
Grade 5: Very Good
Try to avoid 3 because it means you have no opinion.
Some 3s may be necessary but too many will make
your analysis worthless.
Scoring Performance
Reminder:
There are two major measurement areas:
Financial Measurements
Qualitative Measurements
These are divided into six (6) independent categories
and each of the subcategories has multiple points of
assessment.
It is, of course, possible to perform well on some
measurement points while performing poorly on others.
JUDGE EACH POINT INDEPENDENTLY.
6 categories of the Performance Scorecard:

Profit, Equity, and Share Value Management
Debt Management
Cash Management

Asset Management (effective use of non-cash assets)

Organizational Citizenship

Strategic Positioning (for continued growth)


(Relationship Management)
The 60 Measurement points…
The 60 measurement items are divided into:
(1) 44 Financial measurement points for most industries
(2) 16 Qualitative measurement points
Not all of the financial measurement items will apply to every
company.
If one does not apply, simply leave the cell blank in your
PSC software. The program is prepared to compensate.
When assigning grades, take into consideration how well the
company performed compared to the previous year and
how well it did when compared to the benchmark.
By factoring the benchmark, you effectively integrate economic
fluctuations and normal business cycles.
When assessing…
Compare each of the six categories to each other.
Does one category reflect better performance than another?
Does performance seem lopsided when comparing categories?
For example, has the corporation performed well with the
profit ratios but poorly with the cash ratios?
How well are assets utilized?
Is leverage a problem?
Compare equity financing to debt financing.
When assessing…
Look for linkages.
Create a list of questions and search for answers.
Consider: Did the TMT appear to have a clear, consistent,
and successful strategy?
Was strategy different from its competitors? If so, was it
better or not as good as the competitors strategy?
What do corporate achievements or lack thereof say about
strategic effectiveness?
New questions may arise as you compare the grades in each
category. Search for answers to all questions.
You may ask questions such as:
Are the grades higher in:
(1) Profit, Equity, and Share Value management
and lower in:
(2) Debt management?
This could reveal a strategy focusing on growth and
profitability while de-emphasizing the dangers of
accumulating debt.
What are the long-term implications of this?
In addition to comparing one category to another, be sure to
analyze the individual elements within a category.
For example, if item 4.43 (Inventory Turnover) is reflecting a
poor performance while item 4.42 (Average Collection Period)
is reflecting a positive performance it could indicate that
inventory management is not a high priority but collecting
outstanding customer accounts is important.
In a sense this would be an externally focused strategy rather
than an internally focused strategy.
It might represent a “hardnosed” approach to customers and
this may represent problems in the future.
Items in categories 5 and 6 represent qualitative
performance areas and are extremely important.
These will have as much influence on long-term viability as
any of the financial measures.
Consider each element within each category carefully.
Look for connections between these and financial results.
Assess the corporate culture.
Evaluate the relationship of the corporation with its
various stakeholders.
Are they harmonious or confrontational?
Does the company have a well-defined mission?
Is it positioning itself so that it can grow stronger and expand
its reach in its chosen markets?
Completing the Item Analysis is simply a matter of reviewing each
of the Performance Scorecard categories and assigning a grade.
When assigning a grade, take into consideration how well the
target company performed when compared to:
 Their performance during the previous year, and
 The performance of the benchmark company
By factoring the benchmark, you effectively integrate economic fluctuations and normal
business cycles.
Very Poor
(1)
Poor
Average
Good
Very Good
(2)
(3)
(4)
(5)
Try to avoid using the grade of
“3”
because it is indecisive and the
more 3s you have the less
valuable your report.
You must evaluate and
you must judge performance.
Financial Performance
&
Qualitative Performance
Judge: You
Target Company
Overall Performance -- Graded by PSC User
4.50
3.91
4.00
3.83
3.60
3.53
3.50
3.00
3.00
2.50
2.00
1.50
1.00
0.50
0.00
3.91
2.00
Target Company
Overall Performance -- Graded by PSC software
4.50
4.23
3.91
4.00
3.60
3.59
3.50
3.00
3.00
3.08
2.50
2.50
2.00
1.50
1.00
0.50
0.00
Overall Grade
Profit
Debt
Cash
Asset
Citizenship
Positioning
Evaluate the firm’s social
behavior…
Organizational Citizenship
Employee
Customer
5
4.5
4
Competitor
Directors
3.5
Government
3
Environment
2.5
2
1.5
1
0.5
Community
Stockholder
Communication
Persona
0
Vendor
Evaluate the ability to plan for
the future…
Strategic Positioning
5
4.5
Vision and Mission
4
3.5
3
2.5
2
Competitive Advantage
General Environment
Innovation
1.5
1
0.5
0
Plans and Progress
Be sure your writing focuses on
OBJECTIVITY…
Focus on Objectivity
When writing, consider each
statement carefully.
Do you have data to support your
statement?
Exactly what data led you to your
conclusion?
Investigate closely, areas that concerns
you. When identifying organizational
problems do so with an open mind to
help ensure objectivity.
(1) Think carefully about each situation and do not jump
to conclusions too quickly. What at first
appears to be the problem may simply be a
symptom.
(2) Your report should propose solutions to problems
but if you have incorrectly identified the
problem your recommendation will be of no
value.
(3) Novices often try to find a solution without fully
understanding the actual problem.
Be Methodical and Thorough in your analysis,
evaluation, and summary.
Use holistic approach to drawing your conclusions.
The Performance Scorecard helps you organize your research
into evaluation centers.
The evaluation centers are:
 Profit, Equity, and Share Value Management
 Debt Management
 Cash Management
 Asset Management
 Organizational Citizenship (Relationship Management)
 Strategic Positioning (Preparation for future growth)
Be sure to Propose Solutions
Remember, it is not enough to identify a
problem, you must also propose a
solution(s). Try to identify some area
that needs improvement in each of the
evaluation centers and then PROPOSE
A METHOD TO STRENGTHEN that
area.
The absence of a proposed solution is often a
reflection of weak analyses or lack of creativity
and imagination. This is not an impression
that you want to give.
Go Beyond Proposing Solutions
After proposing a solution, you should recommend
a specific course of action.
In other words, if a firm has a liquidity problem
you should not stop at saying that it should
increase its liquidity.
State how you would accomplish this. For
example, debt restructuring, or speeding the
average collection period of customer accounts,
adopting JIT inventory management, etc.
The quality of your report will be
measured in 6 categories and
multiple subcategories.
6 Categories for evaluation






(1) Physical Characteristics & Technical Inclusions
(2) Syntax, Grammar, Punctuation, Spelling, etc.
(3) Strength of Introduction
(4) Technical correctness/completeness (Financial)
(5) Body of Project (Basic Content)
(6) Conclusion/Recommendations
(1) Physical Characteristics & Inclusions:
Your “outside” Cover
Select a thin metal or
plastic binding. DO
NOT use a three-ring
binder.
 Your cover page
should be apparent
when the report is
flat.

Your Name
Course # ????
Security Code: 999
PIN # 12
(1) Physical Characteristics
(continued):
Your “inside” Cover
Be sure to create a professional
looking cover page.
 It should be creative and eye catching.
 It should describe your project.
 It should contain your complete
identification.
 You MUST have your individual
security number

(1) Physical Characteristics
(continued):
Size of Binder
Please keep binding as small as possible
while still maintaining a professional
appearance.
 Most office supply stores will bind your
report for you for a very small charge.
 You can also use “Rapid Copy” on the
University campus

(1) Physical Characteristics
(continued):
&


Technical Inclusions
maintain high quality printing
use 12 font (except on headings)
INCLUDE:






Table of contents
Numbered pages
Appropriate spacing (do not engage in excessive spacing)
Works Cited page
ALL tabs from the PSC
Financial statements from your target & benchmark
companies (balance sheet, income statement, cash flow statement)
(2) Syntax, Grammar, Punctuation,
Spelling, etc.








Appropriate Capitalization
Logical framing of sentences
Ease of reading: Lack of choppy sentences
Proper punctuation
Spelling
Grammar
Sentences flow into each other
Paragraphs have connecting
sentences
(3) Strength of Introduction






The report provides an adequate outline of the
order in which the material and analysis will be
presented.
Explains the reason for and/or importance of the
study
Captures Attention
Engages the Reader (reinforces interest)
Introduction has sufficient depth
Introduction remained focused
(4) Technical correctness/completeness
(Quantitative/Financial Data)









Avoided unnecessary minus signs
No unallocated expenses
No unallocated Assets – for correct reasons (do not plug numbers)
No unallocated Liabilities – for correct reasons
Correct amounts in Statement of Cash Flows
Correct number of shares outstanding
Includes complete grading (bar chart – overall performance
should be complete in ALL six sections)
Interest Expense included (as instructed)
Include the Balance Sheet, Income Statement, & Cash Flows
from BOTH the target and benchmark companies
(5) Primary Body (Basic Content)
 Content was meaningful in terms of Strategic Management
 Ideas were clearly expressed and carefully considered.
 Comments were clear & sufficiently supported by
research (facts)
 Sufficient attention paid to:
1. Profit, Equity, & Share Value
2. Debt Management
3. Cash Management
4. Asset Management
5. Organizational Citizenship
6. Strategic Positioning
Paint an interesting picture as you write your project report.
(6) Conclusion/Recommendations
Project concluded with finality and
RECOMMENDATIONS
 Conclusion included sufficient attention to
each of the six areas of focus (financial four and

OS and SP)

Summary is clear, complete, and convincing
(In other words, hammer out your positions)
(6) Conclusion/Recommendations
Project concluded with finality and
RECOMMENDATIONS
 Conclusion included sufficient attention to
each of the six areas of focus (financial four and

OC and SP)

Summary is clear, complete, and convincing
(In other words, hammer out your positions)
Caution:

PLEASE: Review these slides carefully.

Ignoring the data on any of these slides will
automatically COST you a grade.

How to get a bad grade! Click
Good Luck!
Management
Strategy & Performance
Research, Analyze, and Report
Raymond K. Van Ness
5th Edition