Page 80 - BA1 Integrated Workbook STUDENT 2018
P. 80
Chapter 8
Financial and non-financial measures
2.1 Financial measures
These concentrate on the revenue, profits, cash and capital position of the
organisation. They are typically measured through ratio analysis.
Advantages Disadvantages
Culturally expected Distorted by inflation
Help focus on financial objectives Can lead to short-termism
Comparable with other companies Understood by the ‘select few’
Cheap and easy to calculate Subjectivity can exist in the calculations
2.2 Non-financial measures
These are measures of performance that can be used by operating
departments without any accounting input.
Advantages Disadvantages
Wider view Can be difficult to calculate
Easy to understand Often subjective
Not distorted by inflation Expensive to monitor
Positive motivational implications Can lead to indicator overload
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