ACCA APM cheat sheet

Mission states purpose and scope; goals are open-ended aims; objectives are quantified, time-bound targets derived from goals.

SMART test for objectives: Specific, Measurable, Achievable, Relevant, Time-bound.

Ansoff matrix: existing/new products against existing/new markets gives market penetration, product development, market development, diversification.

Porter's generic strategies: cost leadership, differentiation, focus (cost focus or differentiation focus); being 'stuck in the middle' yields below-average returns.

BCG matrix: cash cows (high share, low growth) fund stars (high/high); question marks need investment decisions; dogs are candidates for divestment.

Porter's five forces: rivalry, buyer power, supplier power, threat of new entrants, threat of substitutes.

Mendelow matrix classifies stakeholders by power and interest: high power/high interest = key players, manage closely; low power/low interest = minimal effort.

Balanced scorecard perspectives: financial, customer, internal business process, learning and growth; each needs objectives, measures, targets and initiatives.

Strategic drift occurs when incremental change lags environmental change; it can end in transformational change or demise.

ROI = controllable (or divisional) profit / capital employed; RI = divisional profit less (notional interest rate x capital employed).

ROI can drive dysfunctional behaviour: managers may reject projects earning above the cost of capital but below the current divisional ROI.

RI reduces the ROI rejection problem but is an absolute measure, so it is harder to compare divisions of different size.

EVA = NOPAT less (WACC x invested capital); it charges for the full cost of capital including equity.

Variance analysis: material price variance = (standard price - actual price) x actual quantity purchased.

Material usage variance = (standard quantity for actual output - actual quantity used) x standard price.

Labour rate variance = (standard rate - actual rate) x actual hours paid; efficiency variance uses hours worked.

Transfer pricing rule: minimum = marginal cost (or variable cost) plus opportunity cost of the transferred unit; maximum = external market price.

The Fitzgerald and Moon building blocks: dimensions (financial and non-financial), standards (ownership, achievability, equity) and rewards (clarity, motivation, controllability).

Gross profit margin = gross profit / revenue; operating margin = operating profit / revenue; both are expressed as percentages.

Asset turnover = revenue / capital employed; ROCE = operating margin x asset turnover (DuPont decomposition).

Current ratio = current assets / current liabilities; quick ratio excludes inventory from current assets.

Gearing = debt / (debt + equity) or debt / equity; state which convention is used when interpreting.

Interest cover = operating profit / finance cost; a low cover signals financial risk.

Dividend cover = profit after tax (or distributable profit) / dividends paid; dividend payout is its reciprocal.

When comparing ratios across years, distinguish changes in profitability, efficiency, liquidity, gearing and investor ratios.

Limitations of ratio analysis: inflation, differing accounting policies, creative accounting, and single-year snapshots without trend or benchmark context.

Non-financial indicators (quality, customer satisfaction, cycle time) explain the drivers behind financial results.

Not-for-profit organisations lack a profit motive; value for money is assessed as economy (inputs), efficiency (input-output ratio) and effectiveness (outputs against objectives).

Public sector performance is often judged on the 3Es plus equity; targets may create gaming or output distortion.

Service organisations have intangible outputs, simultaneous production and consumption, and heterogeneity, so quality measures must include customer perception.

In divisionalised groups, transfer prices affect divisional profit and therefore divisional manager motivation and reported performance.

Multi-national performance evaluation must separate controllable from uncontrollable factors, including exchange-rate movements and local inflation.

Information systems for performance management should be timely, accurate, relevant and cost-effective relative to the value of the decisions they support.

Risk management frameworks classify risk as strategic, operational, financial and hazard; controls are preventive, detective or corrective.

In shared-service or project contexts, use earned value: cost variance = earned value - actual cost; schedule variance = earned value - planned value.

Sustainability reporting extends the balanced scorecard to environmental and social measures, which may be hard to quantify and verify.