What Are Financial Indicators?

What are financial indicators?

Financial indicators refer to the collection and pmission of financial information, statements of capital activities, and reflection of the production and operation processes and achievements of enterprises.

Advantages and disadvantages of financial indicators

Traditional performance evaluation mostly uses financial indicators, and uses financial indicators to evaluate performance.

However, there are the following defects in using financial indicators to evaluate managers' performance:

(1) financial indicators face the past but do not reflect the future, which is not conducive to evaluating the ability of enterprises to create future value.

(2) financial indicators are easy to manipulate and pay too much attention to accounting profits in corporate financial reports, so that the management of enterprises can manipulate profits in various ways.

(3) financial indicators mainly come from financial statements, and do not contain most factors that affect the long-term competitive advantage of enterprises, such as product quality, staff quality and skills, nor can they reflect the business process and customer satisfaction.