Sanjivani College of Engineering, Kopargaon

Department of MBA

205 Enterprise Performance Management

Unit No.5 PERFORMANCE EVALUATION
PARAMETERS

Presented By:
Prof.Pooja.S.Kawale
MBA(Financial Management), B.com(Cost & Works
Accounting)
Assistant Professor, Dept. of MBA
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 Contents
• Performance Evaluation parameters for BANKS
• Customer Base, NPAs, Deposits, ROI, Financial Inclusion,
Spread, Credit Appraisal, Investments-
• Performance Evaluation parameters for Retail-ABC Analysis,
Sell through Analysis, Multiple Attribute Method,
• Gross Margin Return on Investment (GMROI), GMROI as Gross
Margin/Average Inventory at Cost.
• Performance Evaluation parameters for Non-Profit
Organization
• Features of Non-profit Organizations, Fund Accounting,
Governance, Product Pricing, Strategic Planning and Budget
Preparations, Social Audit

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 Performance Evaluation parameters for BANKS

1. Profitability: Measures the bank's ability to generate profits. Key metrics include
net interest margin, return on assets (ROA), return on equity (ROE), and earnings
per share (EPS).
2. Asset Quality: Evaluates the quality of the bank's loan portfolio and the level of
non-performing assets (NPAs). Parameters include non-performing loan (NPL)
ratio, provision coverage ratio (PCR), and loan loss reserves.
3. Liquidity: Assesses the bank's ability to meet short-term obligations. Parameters
include the loan-to-deposit ratio, current ratio, and liquidity coverage ratio (LCR).
4. Capital Adequacy: Determines the bank's ability to absorb losses and support its
operations. Key ratios include the capital adequacy ratio (CAR), tier 1 capital ratio,
and leverage ratio.
5. Efficiency: Measures the bank's operational efficiency and cost management.
Parameters include cost-to-income ratio, operating expenses ratio, and cost per
transaction.

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 Performance Evaluation parameters for BANKS

6. Customer Satisfaction: Evaluates the bank's performance in delivering quality

customer service and meeting customer expectations. Surveys, feedback, and
customer complaints can be used as indicators.
7. Risk Management: Assesses the bank's ability to identify, measure, and manage
various types of risks, such as credit risk, market risk, and operational risk.
8. Market Share: Analyzes the bank's position in the market relative to its competitors.
Parameters include market share in terms of deposits, loans, and assets.
9. Regulatory Compliance: Determines the bank's adherence to regulatory guidelines
and compliance requirements. Parameters include the frequency of regulatory
violations, penalties, and audits.
10. Innovation and Digitalization: Assesses the bank's adoption of new technologies,
digital channels, and innovative products/services to enhance customer experience
and operational efficiency.

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 Basic Concepts
• Customer Base: Measures the number of customers the bank has. It can be evaluated in
terms of the growth rate of the customer base, customer acquisition and retention
strategies, and customer segmentation.
• Non-Performing Assets (NPAs): Evaluates the quality of the bank's loan portfolio by
assessing the percentage of loans that are not being serviced or are in default. It indicates
the bank's credit risk management. Parameters include NPA ratio, gross NPA, and net
NPA.
• Deposits: Measures the amount of money held by the bank in customer deposits. It
assesses the bank's ability to attract and retain funds from customers. Parameters include
the growth rate of deposits, deposit mix (savings, current, term deposits), and deposit
mobilization strategies.
• Return on Investment (ROI): Measures the profitability of the bank's investments. It
evaluates the bank's ability to generate returns from its investment portfolio. Parameters
include the ROI on investments, investment income, and investment yield.

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 Basic Concepts
• Financial Inclusion: Assesses the bank's efforts to provide banking services to
underserved and unbanked populations. It evaluates the bank's initiatives to promote
financial literacy and inclusion. Parameters include the number of accounts opened
under financial inclusion schemes, outreach to rural areas, and availability of basic
banking services to marginalized groups.
• Spread: Measures the difference between the interest earned on loans and investments
and the interest paid on deposits. It reflects the bank's net interest income. Parameters
include the net interest margin (NIM), interest spread, and interest rate risk management.
• Credit Appraisal: Evaluates the bank's process of assessing the creditworthiness of
borrowers. It assesses the bank's risk management practices in extending loans and
managing credit risk. Parameters include credit appraisal procedures, loan approval rate,
and loan loss provisions.
• Investments: Assesses the bank's investment portfolio and its performance. It evaluates
the bank's asset allocation and investment strategies. Parameters include the quality of
investment portfolio, diversification, and investment returns.

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 Retail-ABC Analysis:

• Retail-ABC Analysis:
– Sales Revenue: Measures the total revenue generated by each category
or product. It helps identify the top-selling categories/products and
their contribution to overall sales.
– Gross Margin: Evaluates the profitability of each category or product
by assessing the difference between sales revenue and the cost of goods
sold. It helps identify high-margin categories/products.
– Inventory Turnover: Measures how quickly inventory is sold within a
given period. It helps identify fast-moving and slow-moving
categories/products.
– Contribution Margin: Evaluates the profitability of each category or
product after deducting variable expenses. It helps identify
categories/products with high contribution margins.

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 Sell-through Analysis:

• Sell-through Analysis:
– Sell-Through Rate: Measures the percentage of inventory sold within a given
period. It helps assess the efficiency of inventory management and identify
categories/products with high sell-through rates.
– Days of Inventory: Evaluates the average number of days it takes to sell the
inventory. It helps identify categories/products with slow inventory turnover
and potential stock management issues.
– Seasonal Analysis: Assesses the sales performance of categories/products
during different seasons or time periods. It helps identify seasonal trends and
optimize inventory planning.

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 Multiple Attribute Method
• Multiple Attribute Method:
– Weighted Average Score: Assigns weights to different attributes based on their
relative importance and evaluates the performance of each category/product
against those attributes. It helps identify categories/products that excel in
specific attributes.
– Customer Satisfaction: Measures the satisfaction level of customers with each
category/product. It can be assessed through surveys, feedback, or customer
reviews.
– Brand Perception: Assesses the perception of the brand associated with each
category/product. It can be measured through brand surveys or brand
reputation analysis.
– Price Competitiveness: Evaluates the competitiveness of the prices of each
category/product compared to competitors in the market. It helps identify
categories/products that offer good value for money.
– Product Quality: Assesses the quality of each category/product based on
parameters such as durability, reliability, and performance.

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Thank You
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