Tag Archives | Performance Evaluation

9 Major Limitations of Ratio Analysis

The following points highlight the nine major limitations of ratio analysis. The limitations are: 1. False Results if Based on Incorrect Accounting Data 2. No Idea of Probable Happenings in Future 3. Variation in Accounting Methods 4. Price Level Changes 5. Only One Method of Analysis 6. No Common Standards 7. Different Meanings Assigned to […]

Meaning and Components of Performance Evaluation

In this article we will discuss about the meaning and components of performance evaluation. Meaning of Performance Evaluation: Performance evaluation is the basis of a management control system. Periodic comparisons of the actual costs, revenues and investments with the budgeted costs, revenues and investments can help management in taking decisions about future allocations. Performance evaluation […]

Top 10 Techniques of Performance Evaluation

The following points highlight the top ten techniques of performance evaluation. The techniques are: 1. Budgetary Control and Reporting 2. Balanced Scorecard 3. Variance Analysis 4. Contribution Margin 5. Return on Capital Employed (ROCE) 6. Residual Income (RI) 7. Value Added 8. Bench Marking 9. Ratio Analysis 10. Non-Financial Quality Performance Measures. Evaluation Performance: Technique […]

5 Main Types of Ratio Analysis

The following points highlight the five main types of ratio analysis. The types are: 1. Profitability Ratios 2. Coverage Ratios 3. Turnover Ratios 4. Financial Ratios 5. Control Ratios. Ratio Analysis: Type # 1. Profitability Ratios: Profitability ratios are of utmost importance for a concern. These ratios are calculated to enlighten the end results of […]

Top 6 Advantages of Ratio Analysis

The following points highlight the top six advantages of ratio analysis. The advantages are: 1. Useful in Financial Position Analysis 2. Useful in Simplifying Accounting Figures 3. Useful in Assessing the Operational Efficiency 4. Useful in Forecasting Purposes 5. Useful in Locating the Weak Spots of the Business 6. Useful in Comparison of Performance. Advantages […]

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