Understanding Performance Indicators: Financial and Non-Financial

Understanding Performance Indicators: Financial and Non-Financial

Learning Objective

At the end of the lesson you will be able to define financial and non-financial performance indicators and give examples of each.

What do you already know about financial and non-financial performance indicators?

Introduction to Performance Indicators

Performance indicators are measures used to assess how well a company is performing. They can be financial or non-financial.

Financial Performance Indicators

Financial performance indicators are quantifiable metrics used to measure a company's financial health, such as revenue, profit margin, and return on investment.

Non-Financial Performance Indicators

Non-financial performance indicators are qualitative measures that assess aspects such as customer satisfaction, employee engagement, and environmental impact.

Importance of Financial Indicators

Financial indicators provide valuable insights into a company's profitability, liquidity, and efficiency, helping stakeholders make informed decisions.

Importance of Non-Financial Indicators

Non-financial indicators offer a holistic view of a company's performance, reflecting its social and environmental impact, as well as customer and employee satisfaction.

Examples of Financial Indicators

Examples of financial indicators include net profit margin, return on assets, and earnings per share.

Examples of Non-Financial Indicators

Examples of non-financial indicators encompass employee turnover rate, customer retention, and environmental sustainability initiatives.

Distinguishing Characteristics

Financial indicators are typically expressed in monetary terms, while non-financial indicators are often qualitative and non-monetary in nature.

Interactive Activity: Matching Game

Engage in a matching game where students pair different performance indicators with their respective categories (financial or non-financial).

Application in Business

Financial indicators are crucial for financial analysis and investment decision-making, while non-financial indicators are vital for assessing corporate social responsibility and sustainability.

Challenges and Limitations

Financial indicators may overlook long-term sustainability, while non-financial indicators can be subjective and challenging to quantify.

Balanced Scorecard Approach

The balanced scorecard integrates both financial and non-financial indicators to provide a comprehensive view of a company's performance.

Evaluation Criteria

Financial indicators are evaluated based on profitability and financial stability, while non-financial indicators focus on customer satisfaction, employee engagement, and sustainability.

Importance of Both Indicators

A combination of financial and non-financial indicators provides a holistic view of a company's performance, addressing both financial and non-financial aspects.

Review and Recap

Recap the key points about financial and non-financial performance indicators and their significance in evaluating a company's performance.

Interactive Discussion: Real-World Examples

Engage in a discussion about real-world companies and their use of financial and non-financial indicators to drive performance and sustainability.

Conclusion

Summarize the key learnings about financial and non-financial performance indicators and their role in assessing company performance.

Quiz Time!

Conduct a short quiz to assess students' understanding of financial and non-financial performance indicators, including examples and characteristics.

Q&A Session

Open the floor for any questions or clarifications regarding financial and non-financial performance indicators.

Write down 3 things you learned in this lesson.

Have students enter three things they learned in this lesson. With this they can indicate their own learning efficiency of this lesson.

Write down 2 things you want to know more about.

Here, students enter two things they would like to know more about. This not only increases involvement, but also gives them more ownership.

Ask 1 question about something you haven't quite understood yet.

The students indicate here (in question form) with which part of the material they still have difficulty. For the teacher, this not only provides insight into the extent to which the students understand/master the material, but also a good starting point for the next lesson.

What is the purpose of using non-financial performance indicators?

1. To evaluate return on investment.
2. To assess financial stability.
3. To measure aspects like customer satisfaction and employee engagement.
4. To analyze market share.

What is an example of a non-financial performance indicator?

1. Operating cash flow.
2. Customer retention rate.
3. Revenue growth.
4. Gross margin ratio.

Why are financial performance indicators important for businesses?

1. They help in evaluating profitability and financial health.
2. They assess employee engagement.
3. They analyze market trends.
4. They measure customer satisfaction.

Which of the following is a non-financial performance indicator?

1. Employee satisfaction level.
2. Return on investment.
3. Net profit margin.
4. Earnings per share.

What is a financial performance indicator?

1. A measure used to assess market share.
2. A measure used to assess customer satisfaction.
3. A measure used to assess a company's financial health.
4. A measure used to assess employee turnover.