Financial measures Essay Example | Topics and Well Written Essays - 500 words

Financial measures - Essay ExampleFinancial measures are the traditional ones for evaluating operating performance, benchmarking competitors, and comparing sedulousness results. To determine whether a company is profitable, profitability ratios like return on equity, return on assets and boodle profit margin may be used. Other companies or competitors unremarkably use the same ratios overly so that comparison and benchmarking are possible among companies (Meigs, Meigs & Meigs, 1995). However, it does not mean that non-financial measures are not useful since normally they are the underlying explanations of the conflict in performance measures. To illustrate in the case of two equal companies in the industry, it is possible that one has more revenues or higher profitability than the other does. What could explain the difference between the two companies may be in the more leal and active sales drive of one company over the other. Upon investigation, it can be found that persona l objectives of the workforce or concourse of the more profitable company are tied with the corporate financial objectives. The human resource contribution, which is fundamentally non-financial, is normally not emphasized in the financial statements but they could constitute the competitive receipts on one company over the other company. After knowing that a company has more loyal and hard working sales force, the same company could sustain profitability or further the usefulness and that makes the non-financial measure very useful. Of course they are other non-financial measures such as bankrupt customer service, better attendance of employees in meeting, zero absences in important activities, timely submissions of reports by concerned employees or departments (Streetdirectory, 2010).The advantage and disadvantage of each measure can be drawn from the example given. Financial measures are quickly measurable and are closer to measuring attainment of measurable financial objecti ves. It is easier to