The Modern Performance Indicators – Important Instruments in the Financial Management of the Companies

Ioan Popa-Lala and Cecilia-Nicoleta Anis
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Ioan Popa-Lala: West University of Timisoara, Faculty of Economics and Business Administration, Romania
Cecilia-Nicoleta Anis: West University of Timisoara, Faculty of Economics and Business Administration, Romania

Timisoara Journal of Economics, 2010, vol. 3, issue 1(9), 49-56

Abstract: The information about the performances of an institution is needed in order to assess potential changes of the economic resources which the entity will be able to control in the future, to anticipate the ability to generate cash flows with the present resources, to formulate judgments about how efficiently it can engage and use new resources. To assess the economic performance of an enterprise four indicators are commonly used: return on investment, residual income, economic value added and profitability of sales. The performance analysis is a constituent of any managerial control system. Strategic planning and control decisions require information on how different subunits of the enterprise worked. To be efficient, performance indicators and remuneration have to motivate the managers and the employees from all enterprise levels to make sustained efforts to implement strategies and to attain business objectives. Taking into account the practices of companies one can observe that companies use varied financial indicators for performance evaluation.

Keywords: performance; profitability; value added; residual income; financial management (search for similar items in EconPapers)
JEL-codes: M21 (search for similar items in EconPapers)
Date: 2010
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