Organizations use various performance measures to motivate managers and other employees to invest their effort and skills into decision-making and work in general. When evaluating business units that have decision making authority over activities that impact revenues, costs, and investments (assets) in those units, organizations can use various performance measures. One of them is residual income, which we will discuss in this article.

Organizations often use various metrics to measure and benchmark their performance. Performance measurement is used to understand how organizational activities translate into profits or other indicators of success, make strategic and operational decisions for the future, and control (benchmark) performance.  Performance measurement can be done at multiple levels: individual manager, business unit, a set of business units, or entire organization. Performance measurement can include financial and non-financial performance measures. In this article, we will discuss a common financial measure used to evaluate performance: Return on Investment (ROI).

Fundamental analysis is used to estimate a true value of an asset such as a company or a stock. Financial statements prepared by accountants and tested by auditors are used extensively in fundamental analysis.

Key performance indicators are usually associated with organizational departments or units with highly visible outputs (sales, customer services, production, etc.). However, accounting and finance departments also have stakeholders to whom they provide services. It makes sense then to have KPIs for accounting and finance departments to measure and increase their performance.

Balanced scorecards have a long history in helping organizations become better at what they do. We have a brief review of balanced scorecards in this article.

Key performance indicators are important for the successful management of an organization.

This article provides some examples of how trend analysis can be used in accounting and auditing.

Trend analysis may be a helpful tool to analyze various financial data. In this article, we will review trend analysis and how it can be used in accounting and management.

Earnings per share (EPS) is a closely-watched business metric that tells analysts and investors how much a corporation is making on a per-share basis. In this article, we’ll describe basic EPS in detail, and then briefly describe the diluted EPS calculation.

In part 1 of this series, we learned how to calculate the cost of different forms of financing -- debt, preferred equity, and common equity. In this article, we’ll cover some ways that information can be used to make sound business decisions.