Answered: Explain why both financial and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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-Explain why both financial and non-financial measures are required to evaluate and manage a company’s strategy.

Expert Solution

Step 1: Financial Measures & Non-Financial Measures

Financial Measures:

$Financial measures, often known as financial ratios, are commonly used to describe the performance of a firm or investment . They can beused to analyse year - over - year performance as well as to compare and set norms for a specific sort of business or investment because they are simple to compute .$

Non-Financial Measures:

$Q u a n t i t a t i v e m e a s u r e m e n t s t h a t c a n n o t b e s t a t e d i n m o n e t a r y u n i t s a r e k n o w n a s n o n - f i n a n c i a l m e a s u r e s . N o n - f i n a n c i a l m e a s u r e s i n c l u d e c u s t o m e r h a p p i n e s s, m a r k e t s h a r e, c a t e g o r y o w n e r s h i p, a n d t h e r a t e a t w h i c h n e w p r o d u c t s a r e a d o p t e d .$