How many of the following questions can you answer for your last stock trade?
a. What has the Asset Turnover been over the past year?
b. How about Net Profit per employee?
c. How does the stock compare on such parameters compared to its competitors?
d. Does the management have credible plans in place to improve efficiency ratios over the next 12 months?
Congratulations if you are satisfied with your answers. An unusually long spell of unbroken world economic growth has diverted stock investor focus from productivity to gross revenue and net profit growths at virtually any costs. Things have changed abruptly since the sub-prime drama sparked doubts about fundamental stock market regulation. Rocketing energy and food prices have not helped rebuild market confidence. Productivity has come into Business Management fashion once again.
Frederick W. Taylor was an engineer and pioneer of scientific business management in the aftermath of the First World War. He must have foreseen the transition from the Industrial Revolution to the Great Depression, for productivity was his gospel. Taylor went beyond the mere numbers of getting more outputs from restricted resources. He saw it as a meeting ground to resolve conflicts between executives and unionized blue collar workers.
More than nine decades have passed since Taylor made epochal addresses on concepts of productivity. His thinking is remarkably fresh for investors in search of top stock picks in the current market.
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