Under What Conditions Are Multiple Measures of Performance Beneficial

question 7

Multiple Choice

Under what conditions are multiple measures of performance beneficial?

• A)if they are all financial measures
• B)if they include nonfinancial operating measures
• C)if they focus only on short-run factors
• D)if they focus only on continuous improvement

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Definitions:

Consolidated External Revenues

The total revenue generated by a parent company and its subsidiaries, excluding transactions among them, reported in the consolidated financial statements.

Asset Test

A measure used to evaluate whether an entity has enough liquid assets to cover its short-term liabilities, indicating financial stability.

Reportable Segments

Parts of a business that can be separately identified by the products or services they offer or by their geographical areas, and about which separate financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

Operating Profit

The profit from business operations before deducting interest and taxes, indicative of the core profitability of business activities.