Page 450 - F2 - MA Integrated Workbook STUDENT 2018-19

Chapter 16

Test your understanding 9

Production/volume ratio 3,502/3,630 × 100 = 96.5%

Capacity ratio 3,471/3,630 × 100 = 95.6%

Efficiency ratio 3,502/3,471 × 100 = 100.9%

Test your understanding 10

Tick

With financial performance measures there is a risk that managers 
will take a more short-term view

Financial performance measure tend to be more forward looking
than non-financial performance measures

A disadvantage of non-financial measures is that it can be costly and 
time consuming to gather the information required.

Non-financial measure are not affected by inflation and are therefore 
directly comparable year on year

Financial measures are more applicable to manufacturing industries

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