financial performance management

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Financial Performance Measurement

Motif every effort to achieve maximum financial benefit the bottom line. In order to fulfill the same thing, the company has come up with a financial performance measurement techniques. The idea is to ensure that whatever resources are doing and how they function, they must show gains in the income statement. This is done generally in three different steps. They have been mentioned as follows:

First, it includes selecting the organization's goals.

Second, and also as the most important part, is to consolidate information on performance measurement.

Finally, necessary changes are made by managers so as to serve as a drug in a weak link in corporate financial charts. So, it can be said that the financial aspects of performance measurement is basically driven sales. There are certain milestones set for company employees. A deficiency can meet the specific process can be dangerous even for the position. Thus, performance measurement methods are also known to show the sense of insecurity for certain employees. Therefore, it is impossible to give the most confirmed. Business Performance Management is generally measured with the financial aspects of performance measurement. Special techniques for the same thing has been mentioned as follows:

Approach to Measuring Financial Performance

Economic Value Added

This method is directly related to the economic benefits from the organization that went directly to the balance sheet. This method, in other words can be used to measure the Net Operating Profit after Tax. There are also certain adjustments made in calculating the economic value so that companies can make more synchronized with the inclusion of income in the income statement. This method is generally used by companies incorporated under the lower today. The same reason was that at the moment, companies are able to see a business that works only from a financial perspective. There are many more to achieve.

Activity-Based Costing

Basic economic law that says that management must make a minimum of resources available to them. In the case to keep with the statement, public companies to identify the processes that are in the system, and then classify them as separate activities. Followed by this, the company set a separate fee for each activity. This can be done in the form of direct and indirect costs.

Reasons to switch from Non-Financial Financial aspects

In other words, we can say that this is also a form of performance measurement based on the financial aspects. One can determine the cost of each activity, but always there, barring the use of a very expensive activity. Once, again, this method will not be valid in the long-term. For the same reason is that this method is to form a barrier to long-term investment. We must understand that the investment for certain activities could lead to the development of certain other people in the long term. This may be related to labor and equipment needed to perform activities. So, as the recovery effort, we should switch to a better method that important non-financial. (Activity Based Costing (ABC), 2010)

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