Last updated: August 7, 2019
Topic: BusinessAdvertising
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performance is a process of communicating, planning and monitoring organization
resource between managers and employees to achieve desired objectives. It is
therefore important to review the performance as it reveals the capability of
producing desired objectives.

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Financial Performance Measures

performance involves how well the firm can communicates plans and monitors
organizational resources to achieve their monetary goals /targets. Different
stakeholders may have their own interest in evaluating the financial strengths
of the company but most known used measures to analyze include: profitability,
liquidity, leverage and efficiency.  In this
study the focus is on Profitability measures.

Net Profit Margin

measures the ability of the company to generate more income by excluding all
expenses arises during the production and distribution of the products. It
measures the sales force employed by the company as well as controlling all the
const associated with it with higher ratios indicating a healthier business.

Return on Equity

ratio measures the company total incomes in relation to equity funds raised. It
also measures how well the firm has been able to utilize the funds from equity
holders to generate more income.

Return on Assets

measures the company ability to effectively and effectively to utilize the
asset to generate more income. With low ratio indicating that the company is
less effective in asset utilization, thus poor financial performance 



Operating profit

measures the ability of the company to generate income as well as ability of
the company to control operating cost. As a higher ratio indicates that the
company has increased sales and decrease operation cost.

Since profit is associated with cost
then this profit measures is also contributed by cost measures

Non-financial Performance Measures

non- financial measures has gained more attention as in today’s business
operations. Previous studies have revealed that the traditional approach of
financial measures only have failed to respond to the newly development in
technology and the increased market competition.  Managers now days have to focus on product
quality customer satisfactions, innovation, distribution channel, employee
satisfaction in order to attain its objectives. Van der stede et al (2006) in
his study argued the importance of including both financial and non financed
measures as non- financial measures in today business are of better important
in predicting the future performance of financial performance. This was also
argued by Banker et al (2000).

Evaluation of Results Based Objectives

based management is an approach/measures designed to ensure that employee focus
on their work to ensure that organization objective.  Because it performance against objective, the
organization therefore need a follow up of accomplishments against objectives
in order to determine the appropriate corrective measure in case of deviation.
The model is very effective as it provide feedback on the work in progress all
employees involved as accomplishment of task base on clear designed goals and

Key focus for RBM

It provide a form of continuous

Enable measurement of results

Involve full engagement of all employees

Keep awareness through a clear
information communication system

Result to strong leadership and
management support.

process may be categorized into;-

Performance planning and commitment

Performance monitoring and coaching

Performance review and evaluation

Performance rewarding and planning

Evaluation of Balance Score Card

Traditionally, organization has been
analyzing their performance under financial measures, a situation argued by
Kaplan and Norton as failing of the organization to consider other stakeholders
on their business than shareholder. According to them the traditional approach
does not provide the full perspective of how effectively an organization can be
managed. Therefore they complement other prospects such as internal process,
customers, learning and innovation. By balancing these measures in an
organization, it helps managers to have a complete picture on how to improve
their business. Therefore they established the balanced score card approach.
Kaplan and Norton argued that this approach give the manager fast but very
comprehensive view of the whole organization.

Information gathered from this
perspective includes;

Customers Perspectives

Here manager put measures that ensure
their customers are satisfied with the company products. Key performance
indicators include; the market share, number of lost customers, customer
loyalty, advertising campaigns etc.


Financial Perspectives

This are measures taken to ensure that
the company generate profits and at any point in time the company is
financially health. Therefore the company being health is able to satisfy their
shareholders. Key performance indication includes, operating profit, return on
assets, return on capital employed and return on equity.

Innovation and learning perspective

For an organization maintain its status
and to continue being one of the market leader, this perspective is helpful as
it is what create value to the organization. With changing technology and therefore
consumer preferences/taste, then the organization must be able to adapt the
situation. And that can be achieved through investment in training of their key
employees to add them skills and knowledge. This also require the company to
invest in research and development too

Internal business process

There are measures to ensure that
businesses are conducted in a way that meet the customer expectations by
focusing on critical internal operations. Key performance indicator includes; Average
decision making time, ratio of timely complete orders, efficiency of
information system etc.

Evaluation of Value for Money

for money (VFM) is a strategy used for firm performance which involves the art
of gaining the best value from the limited funds available. The 3Es: Value
for money is interpreted as providing an economic, efficient and effective

Economy – an input measure. Are the
resources the cheapest possible for the quality desired

Efficiency – here link inputs and
outputs. Is the maximum output being achieved from the resources used

Effectiveness – an output measure looking at
whether objectives are being met. 

1.7 Evaluation
of Stakeholder Based Measures and Environmental Performance.

Normally stakeholders have different
objectives when evaluating the performance of the organization as other evaluates
the environmental performance as another means of evaluating financial
performance. But often the objective of the environmental performance is to
screen risk investments by sorting out entities that are exposed to
environmental risks. When evaluating the environmental performance some
investors may be interest on the past performance but others may be interested
in the future performance but based on the current measures.

In general to measures
environmental performance is difficult as there is limited data to compare
among firms. With this scarcity of publicly available data, some investors have
been matching the Toxic Release Inventory (TRI) data with analysis of the
company, but others have been asking directly the management of the company
about their environmental management measures and performance although the so
given information is not often comparable across industry with other firms
unwilling to respond to give information.

Evaluation of Suitable Approach

From the evaluation, I propose the
balance score card as the best evaluation modal, this modal has been effective
in firm performance as it involves broad perspectives of the business
environment. The approach considers perspectives such as customer
satisfactions, internal business processes, financial strengths and learning
and innovations.

How Transfer Price Distort Performance Evaluation

are situation where the cross border transaction affects company profits.
Companies tend to sell internally to avoid tax.  Transfer price is applicable to two companies
of the same ownership normally the parent company and the subsidiary company or
sometimes to divisional or department of the organizations where one division
serves the interest of the other.  The
main reason for transfer pricing is to maximize profit as a group and not
necessary to each division or company. How do they profit; Company A may supply
products to company B which is running at a country with high tax rates, to
offload the tax burden company A overstate their price when supplying to
company B as a technique to reduce their profit due to high expenses thus
company A report high revenue because of selling at high price while company B
pay low tax since realized low profit, but as a group they maximize their

is the effect of transfer pricing on performance evaluation

 The effect of the transfer pricing normally
will depend on the transfer pricing methods since transfer may be depending on
market price negotiation or full cost price.

in general, the transfer of price should be comfortable to both divisional
managers as any fluctuations have a significant impact on the profitability of
the division and hence poor performance. If the transfers price is too high
then supplying division will have high profit and the vice versa is true as a
result it can lead to misleading profit

Analysis of Financial and Non-financial Performance

This part of financial and non financial
analysis uses Tanzania Portland Cement Company (TPCC) as a case study. The data
collected from the company financial statements and analysis includes
statements from year 2014 to 2016


The findings shows that the company is
financially healthier as all profitability ratios is above 10% which shows that
the company is efficient in utilizing its asset to increase revenue as well as
cost management. Despite that performance, the ratios show a decreasing trend which
is not a good sign to investors and lending institutions.


The finding shows that
the firm ability to meet short term obligations has been fantastic during the
year 2014 where the current assets was able to cover current debts two times.
But this performance has been deteriorating over time as the findings shows that
in 2016 the company was unable to meet short term obligations without selling
their stocks. This is not a good indicator to supplier and other stakeholders
such as employees.





Capital Ratios

The findings from company activity
ratios show that they are inefficient in utilizing the company assets to
increase sales. The company has been efficient in receivable turnover compared
to other activity ratios such the inventory turnover and fixed assets turnover.
This tells us that the company use less days in collecting their receivable
than turning their inventory into sales.


As the earnings of the company decrease
over time, this has affected the company earnings ratios as in 2014 the company
had an earnings per share of 302 compared to 221 in 2016. But this fluctuation
has no big impacts on the declared dividend as the dividend per share increased
from 267 in 2014 to 270 0n 2016on average.


finding shows that the company is less leverage as the gearing ratios was less
than 50% which implies that still the company can borrow to finance their
investments. . Financial leverage ratios (debt ratios) indicate the ability of
a company to repay principal amount of its debts, pay interest on its
borrowings, and to meet its other financial obligations


Banker R.D. (2000). An empirical investigation of an
inceptive plan that includes non-financial performance measures. The
Accounitng Review.

Bernstein, d.J (2001). Local government measurement use to
focus on performance and results. In
Evaluation and Program Planning.

Norton, D & Kaplan, R. (1996). The balanced scorecard:
translating strategy into action. Boston: Havard Business School Press.

Penny J. (2012). Value for Money and Internationa

Werner M. (2003). Result Based Management: Towards a common
understanding among development cooperation agencies