Question

Section 1]
MCQS
Which is the yard stick for the efficiency of buisness​

Answer 1

Profitability is an index of efficiency; and is regarded as a measure of efficiency and management guide to greater efficiency. Though, profitability is an important yardstick for measuring the efficiency, the extent of profitability cannot be taken as a final proof of efficiency.

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Answer 2

Answer:

The correct answer is “profit”. Profit is the yard stick for the efficiency of business.

Explanation:

• Profit is the benchmark for a company's effectiveness.

• ROCE (Return on Capital Employed), a metric for gauging business success, identifies the efficiency and profit expansion of a company's capital investments.

• For instance, capital items like computers and vehicles must boost productivity, cut expenses, and boost revenues for the company.

• The ROCE % also suggests whether the business makes enough money to utilise its capital assets effectively.

• The better, the bigger the proportion.
• Operating Profit Percentage: This metric reveals how much money a business is producing through routine business operations.
• Ask yourself, "Is this percent holding stable, growing, or decreasing?" when searching for indicative factors.
• Additionally, you might look at the trailing 12-month average.
• Working Capital as a Percent of Your Revenue: According to Iverson, business owners frequently ignore this key financial set of indicators.
• They are aware to check the income statement.
• But there won't be enough cash flow to expand the business if all that operating profit is going towards working capital, he claims.
• Investments include inventories and receivables. (Likewise, your vendors have a stake in you.)
• Working capital should represent as little of your revenue as feasible.
• Hold onto your money as long as you can by turning your accounts receivable into cash and your inventory into billing.

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