The best measures that should be captured and reported to managers relate to corporate strategy and are SMART: specific,measurable,actionable,relevant,and timely.Below are examples of poorly constructed performance measures for each of these.For each component of SMART,provide two better measures than the poorly constructed measures provided.
Definitions:
Accounts Receivable
Sums due to a company from its clients for products or services that have been supplied or utilized but remain unpaid.
Net Income
The residual income of a company after total revenue has been diminished by all costs and taxes.
Cash Flows
The net amount of cash being transferred into and out of a business, especially considered important for assessing liquidity, flexibility, and overall financial health.
Indirect Method
An approach to preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate cash from operating activities.
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