What Are Financial Indicators?

What are financial indicators?

Financial indicators refer to the collection and pmission of financial information, the description of capital activities, and the reflection of financial activities.

Advantages and disadvantages of financial indicators

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

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

(1) financial indicators, facing the past but not reflecting the future, are not conducive to evaluating the performance of enterprises in the ability 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.