Wiley CPA excel Exam Review 2014 Study Guide, Business Environment and Concepts

Module 45: Performance Measures and Management Techniques

Overview

Organizational performance measures (including financial and nonfinancial measures) are used for a variety of purposes including: resource allocation, incentive compensation, divisional and business unit evaluation, budgeting and planning, and setting targets. Performance measures are used to manage and monitor performance in many areas of the organization including: financial, customer, internal processes, employees, and suppliers.

Organizational performance measures should be aligned to the strategy of the organization and useful in executing that strategy.

Strategy describes how an organization uses its activities and resources to achieve its objectives. For a business, the objective is to ethically maximize financial value. Execution includes the performance measures used (1) to ensure the strategy of the organization is being executed and (2) to monitor performance. To be successful, an organization must have an effective strategy and an effective execution system in place, including performance measures that closely link to the strategy. Before beginning the reading you should review the key terms at the end of the module.

A. Financial and Nonfinancial Performance Measures

B. Balanced Scorecard and Performance Measures

C. Value-Based Management (VBM) and Financial Performance Measures

D. Choosing among Different Performance Measures

E. Traditional Financial Statement Analysis

F. Benchmarking and Best Practices ...