The Effects of Cfo Balanced Scorecard

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The responsibilities of CFO include maintaining the financial stability of the organization, ensuring both short-term and long-term obligations such as adequate capital for operations and capital investment decision, and supporting potential expansion. We are also responsible for external financial reporting such as SEC filings, and federal, state and local tax compliance. “The CFO scorecard is a management tool that does more than collect and report key performance metrics… with the proper design, the scorecard reduces the time spent on discussing the issues and allots more time on solutions” (Toppazzini, 58). For the scorecard, there are four major levels to which the CFO is evaluating on. The financial level of Hedrick Company includes the return on total assets ratios, return on common stockholders’ equity, the financial leverage, the quick ratio, the working capital and other ratios explained in this paragraph. We ask, “to succeed financially, how should we appear to our shareholders? ” (Saraiva, 55) We found that the return on total assets rose from 5.1% to 6.8%, meaning that assets this year are better employed by management; the return on common stockholders’ equity rose from 4.94% to 9.21%, indicating that our company is getting more returns this year on common stockholders’ equity; the financial leverage went from negative to positive over the year, which is a good sign because the company is getting more return on assets than what the company paid to creditors; working capital also increased from $1,060,000 to $1,300,000, which implies the company can pay its current liabilities more easily using only its current assets. The company has better abilities to make interest payments this year because the times interest earned ratio rose from 3.4 to 4.33. The retained earnings had an increase 36.4% over the year. However, the company also has problems with increasing liabilities, which had a 30.2% increase over the year while stockholders’ equity had only...
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