Question

Which of the following statements is most correct about the selection of performance measures? a. The key stakeholders are the owners of the firm and therefore financial performance measures will always be the most crucial. b. In today's environment firms are likely to have an appropriate mix of both financial and non-financial performance measures. c. All firms must use financial performance measures such as ROI if they wish to maximise the value of the firm. d. In the contemporary manufacturing environment it is likely that non-financial performance measures will replace financial performance measures. e. Because of the focus on critical success factors, it is likely that non-financial performance measures will replace financial performance measures.

Answer 1

a) The key stakeholders are the owners of the firm and therefore financial performance measures will always be the most crucial.

Performance measures such as cash flow statement or operating income or total unit sales are required to understand about growth of organisation and debts included.

In an organisation there are different types stakeholders ,such as trade creditors, bond holders, investors, employees and management. Each group has its own purpose in seeking the financial performance of a company.

Obiviosly at the end of the day results or profits are more important to shareholders and for creditor to know about their security to collect amount from organisation etc. Purpose of Financial performance measures is mainly to report about company's financial performance to stakeholders.

I hope you will understand.