Principles of Managerial Accounting · free preview
Characteristics of Effective Performance Measures
Effective measures are aligned with strategy, controllable, timely, accurate, understandable, and balanced across perspectives, and the criteria trade off against each other in practice.
1. The criteria list
The criteria list
2. Controllability and accuracy in tension
Controllability and accuracy in tension
3. Balance across perspectives
Balance across perspectives
4. Redesigning a flawed measure
Redesigning a flawed measure
5. Criteria list member
Which of the following is a characteristic of an effective performance measure?
6. Controllability-accuracy trade
Why might a company report a segment margin excluding allocated common costs for evaluation purposes?
7. Lagging versus leading
Why does a balanced measure set include nonfinancial measures?
8. Balance meaning
What does balance mean in measure design?
9. Timeliness trade
Faster measures are usually less ____, so organizations set different latency standards for operational and financial data. One word.
10. Understandability test
A measure passes the ____ test when the person being measured can explain what it means and how to influence it. One word.
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