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Performance measurement relies on both financial and nonfinancial metrics from "summary" of Management & Cost Accounting by Colin Drury
Effective measurement of organizational success encompasses a blend of financial and nonfinancial indicators. Financial metrics, such as profit margins, return on investment, and revenue growth, provide quantifiable insights into an entity's economic health. These figures are crucial for assessing short-term performance and guiding investment decisions. However, an overreliance on financial data can obscure the broader picture of operational efficiency and long-term sustainability. Nonfinancial metrics, on the other hand, delve into aspects such as customer satisfaction, employee engagement, and product quality. These indicators are vital for understanding the underlying drivers of financial performance. For instance, high customer satisfaction can lead to repeat business and foster brand loyalty, ultimately impacting profitability. Measuring factors like ...
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