Home Solutions Potential Balanced Scorecard with At Least Two Measures at Gilead
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Under the financial measure, the scorecard targeted liquidity that focused on two major aspects a current ratio of between 1.2 and 2.0, which was considered sufficient, and a quick ration of 1.1 will indicate that the business can be able to meet its short-term obligations without selling the inventory. There was also the profitability, which focused on a return on assets better than industrial average will indicate good performance and a return on equity ratio compared to less risky investments shows how organization is compensating its shareholders.
The second aspect, which was customer satisfaction, focused on what Becker (2013) called the likelihood of a referral and the likelihood that a customer will make a repurchase indicated by the growth in revenue over previous year. Another two aspects that were reviewed in the operation efficiency revealed an operating self-sufficiency ratio of one will show that the business does not depend on grants to run its operations. This aspect was coupled to a net profit margin, which indicates ability of the company of converting every sales unit into profit. Continuous process improvement also had to issues to address. These were the reduction in cost over the previous year and the improved management decision-making process.
8.0 Company Findings on the Balanced Score Card
In this review, liquidity on Gilead Sciences, Inc. revealed two aspects, one there was a current ratio of 5.53, 1.45, and 1.15 in years 2011 through 2013 indicating that it has sufficient cash and that the company had a quick ratios of 4.98, 1.04 and 0.82 indicating reducing efficiency in the ability to meet short term obligations. Profitability also offered two major aspects a return on assets was 36.36%, 36.09% and 14.06% compared to average of 42.2% of the industry showing low return on assets and a return on equity of 42%, 28% , 27% compared to 33.2% of the industry showing low performance.
Customer satisfaction in this reviewed indicated that customer loyalty was high because the estimated number of customers increased probably due to referrals and as per the likelihood of a customer to make a repurchase increased as indicated by growth in sales over the years. Operational efficiency also showed Gilead had ratio of 1.2, 1.01, and 1.32 in 2011 through 2013, indicating better performance and a net profit margin of 0.33, 0.27, and 0.27 indicating that it had high ability of turning unit sale into profit. An overall review of the continuous process improvement showed operating expenses increased significantly compared to increase in sales showing poor continues process improvement and an improved management decision making process as indicated by the growth in business.
According to Gilead Inc (2015), the companies cost of sales increased from US $ 2471 million in 2011 to US $ 3788 million in 2013 an increase of 26.1% compared to 24.2% growth in sales, which showed high cash out than cash in. this lead to the reduction in the cash from operating from US $ 3639 million to US $ 3105 million. In effect, this led to the reduction in profitability as indicated by the balanced scorecard.
The net income of the company increased from US $ 2592 in 2011 to US $ 12101 million in 2013, however, well explained in the increase in operating self-efficiency from 1.2 to 1.32 as indicated in the balanced score card. However, as Renner (2011) notes, the company’s net cash reduced from 8975 million to 309.1 million, which lead to the reduction I both return on assets and return on equity as well as the liquidity of the company. This was caused by an increase in cost of sales and expenses of the company (Gu & Lev, 2004).
Becker, G. K. (2013). The competitive edge of moral leadership. In Dimensions of Teaching Business Ethics in Asia (pp. 9-28). Springer Berlin Heidelberg.
Gilead Inc. (2015).Financial statements from 2013-2015. Retrieved from http://investors.gilead.com/phoenix.zhtml?c=69964&p=irol-fundsnapshot
Gu, F., & Lev, B. (2004). The information content of royalty income. Accounting Horizons, 18(1), 1-12.
Renner, A. (2011). Does carbon-conscious behaviour drive firm performance an event study on the Global 500 companies. Wiesbaden: Gabler.