21. Return on assets equals net profit margin times asset turnover.
22. The balanced scorecard provides the framework for conducting return on assets analysis by incorporating revenues and expenses to generate net profit margin, as well as inclusion of assets to measure asset turnover.
23. A reduction in inventory would increase inventory turnover, which means an increase in that organization’s return on assets (ROA).
24. Operationally, net profit margin is net profit divided by cost of goods sold.
25. With respect to net profit margin, the most relevant categories for logistics managers to consider are sales, costs of goods sold, and asset turnover.
26. The primary influence of logistics activities on sales would be through the improvement of customer service.
27. Asset turnover is computed by dividing return on assets by total assets.
28. With respect to asset turnover, inventory is typically the most relevant logistics asset.
29. A decision to invest in an electronic data interchange system that would increase invoice accuracy should result in a lower amount of accounts receivable.
30. The balanced scorecard is based on the belief that management should evaluate their business from five different perspectives.
31. According to the balanced scorecard approach, the financial perspective is considered the best indicator of whether or not logistics strategy is being properly implemented and executed.
32. The measures associated with the balanced scorecard can be at a strategic or tactical level.
33. Best in Class companies tend to use transportation scorecards less frequently than other companies.
34. The cash-to-cash cycle looks at how long an organization’s cash is tied up in receivables, payables, and inventory.
35. When applying performance measures to logistics activities, determination of the key measures should be tailored to the individual organization and level of decision making.
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