Management Ability & Depth Components - Part II

The Management Ability & Depth Components - Part II worksheet is divided into three sections:

Employee Turnover

Management Depth and Related Components

Other Considerations

Employee Turnover

Start by gathering the following data from the subject business:

The number of W2 forms reported to the IRS for each year listed in the worksheet less one year at the end and plus one year preceding. For example, to complete the inputs for 2002 to 2006, you would ask the company for the number of W2s reported for 2001 through 2005.

The number of employees terminated for each year listed in the worksheet.

The number of employees hired for the last year shown in the worksheet.

To calculate the Employee Turnover Component:

The number of W2s reported for a given year is the beginning number of employees for the following year. Enter these numbers in the column labeled "Beginning Number of Employees". Continuing the example from above, you would enter the number of W2s reported for 2001 as the beginning number of employees for 2002, the W2s reported for 2002 as the beginning number of employees for 2003, and so on.

Enter the number of employees terminated for each year in the column labeled "Number Terminated".

Enter the number of employees hired in the last year in the white cell in the column labeled "Number Hired".

Review the figures calculated from the data you entered.

Enter a risk number for employee turnover in the cell labeled "Selected Risk".

Management Depth and Related Components

To calculate the risks for the components in the Management Depth and Related Components Group, follow these steps for each component:

Enter the negative and positive responses for the risk component in the columns labeled "Negative" and "Positive". The worksheet will calculate the risk for the component based on the responses and display the result in the column labeled "Calculated Risk".

Evaluate the calculated risk. Does it seem appropriate to you? Decide what seems to be the appropriate risk for the component based on the calculation and your own analysis.

Enter the risk you want to assign to the component in the column labeled "Selected Risk".

Other Considerations

You use the Other Considerations Component to calculate a risk for any relevant risks pertaining to management's ability and depth that are not specified elsewhere on the Management Ability and Depth Components worksheets.

Enter a description and a risk for each component.

Enter a total risk for these components in the cell labeled "Selected Risk".