From the course: Balanced Scorecard and Key Performance Indicators
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Financial goals and measures
From the course: Balanced Scorecard and Key Performance Indicators
Financial goals and measures
- Traditional accounting measures have only included financial measures. And in a strict, ruthlessly capitalistic sense, that's all that matters. So, in that sense, you can view the other three dimensions of the balance scorecard as being dimensions that ultimately feed into improving long-term profitability. Now here are just a few examples of those traditional financial measures. Well, profit margin. How many dollars of profit does a company make from each $100 in sales? For example, for Walmart, this number is 4. For Microsoft, it's 25. These companies track these numbers from year to year and also benchmark with their competitors. Another financial measure, average collection period. How many days does it take a company to collect its cash from its credit customers? If that number's too big, meaning that the collection period is too long, then cash that could be used to pay bills is still in the pockets of the…
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