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Capstone Experience (Business Metrics) 2 - Assignment Example

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The calculation is done by comparing on-hand inventory against the demand and deliveries expected. This helps the organization to anticipate whether they have…
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Capstone Experience (Business Metrics) 2
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Download file to see previous pages Current ratio helps in calculating the firm’s ability to pay its short-term liabilities. It is calculated by dividing the current liabilities with the current assets (Mowen, Hansen, & Heitger, 2011).
Using the on time delivery indicator to predict stock-out helps in measuring the operational efficiency of the business unit (Bidgoli, 2010). This follows from the derivation of information that ensures that the unit maintains sufficient stock for its operations. The gross operating profit per available room measures the competitiveness of the unit. This follows from the use of the rates to give measures that can maximize profitability of the unit. The current ratio seeks to measure the decision-making capacity. It gives insight into the prevailing financial situation, thus prompting appropriate actions to safeguard financial stability.
The business unit seeks to maintain good relations with creditors. Therefore, the current ratio helps the business unit to preserve the trust of the organization’s creditors, by showing when there is need to negotiate with them on payment. The gross operating profit per available room assists the business in seeking a competitive edge in its operations. More to these, the stock-out predictor aligns to the unit’s strategy of promoting customer satisfaction (Stair & Reynolds, ...Download file to see next pagesRead More
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