Using Budgets for Performance Evaluation

The video tutorial covers the core function of management planning, focusing on budgeting as a tool for resource allocation. It explains how budgets serve as performance indicators through metrics like budget variance, payroll headcount ratio, operational cash flow, and various financial ratios. The tutorial also discusses the importance of burn rate, net and gross profit margins, working capital, and inventory turnover in evaluating organizational performance and achieving objectives.

What is one of the core functions of management that involves allocating resources based on organizational goals?

• Controlling

• Leading

• Budgeting

• Planning

Which metric indicates how far the budget deviates from expected resource needs?

• Current Ratio

• Budget Variance

• Inventory Turnover

• Net Profit Margin

What does the payroll headcount ratio measure?

• The ratio of total workers to part-time workers

• The ratio of contractors to full-time workers

• The ratio of full-time workers to total workers

• The ratio of part-time to full-time workers

Which financial ratio is primarily a balance sheet ratio that compares current assets to current liabilities?

• Quick Ratio

• Net Profit Margin

• Current Ratio

• Gross Profit Margin

What does the burn rate measure in terms of budgeting?

• The efficiency of inventory turnover

• The ratio of current assets to liabilities

• The rate of revenue generation

• The speed of resource consumption

How is net profit margin calculated?

• Total revenue minus net profit

• Total revenue divided by net profit

• Net profit divided by total revenue

• Net profit minus total revenue

What does working capital represent in budgeting?

• The total assets of a company

• The ratio of inventory to sales

• The total liabilities of a company

• The difference between current assets and liabilities