| Turnover | Sales divided by average operating assets |
| Throughput time | The amount of time required to turn raw materials into completed products |
| Return on investment (ROI) | Net operating income divided by average operating assets. It also equals margin multiplied by turnover. |
| Responsibility center | Any business segment whose manager has control over costs, revenues, or investments in operating assets. |
| Residual income | The net operating income that an investment center earns above the minimum required return on its operating assets. |
| Profit center | A business segment whose manager has control over cost and revenue but has no control over investments in operating assets. |
| Operating assets | Cash, accounts receivable, inventory, plant and equipment, and all other assets held for operating purposes |
| Net operating income | Income before interest and income taxes have been deducted |
| Margin | Net operating income divided by sales. |
| Manufacturing cycle efficiency (MCE) | Process (value-added) time as a percentage of throughput time. |
| Investment center | A business segment whose manager has control over cost, revenue, and investments in operating assets. |
| Economic Value Added (EVA) | A concept similar to residual income in which a variety of adjustments may be made to GAAP financial statements for performance evaluation purposes. |
| Delivery cycle time | The elapsed time from receipt of a customer order to when the completed goods are shipped to the customer. |
| Decentralized organization | An organization in which decision-making authority is not confined to a few top executives but rather is spread throughout the organization. |
| Cost center | A business segment whose manager has control over cost but has no control over revenue or investments in operating assets. |
| Balanced scorecard | An integrated set of performance measures that are derived from and support the organization’s strategy. |
