One of the Signs That a Firm's Performance Measurement System

question 21

Multiple Choice

One of the signs that a firm's performance measurement system is inadequate is when performance measures show improvement but this is not translated into profit. In which of the following circumstances may this occur?
i. Resources freed up through improvements may not have been utilised to improve profitability.
ii. Factors being measured are not critical success factors.
iii. Too many similar measures are used.
iv. There is a time lag between improved performance and improved profitability.

• A) i, ii and iii
• B) ii, iii and iv
• C) i, ii and iv
• D) i, iii and iv

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Definitions:

Hedge Risks

Strategies or financial instruments used to offset potential losses or gains that may be incurred by a companion investment.

Significant Liability(ies)

Refers to considerable financial obligations or debts that a company or individual has, which may impact their financial stability or creditworthiness.

Loans And Leases

Financial arrangements where loans involve borrowing money that must be repaid with interest, while leases involve paying for the use of an asset for a specified period.

Deposits

Funds placed into an account at a financial institution for safekeeping and potential interest earnings.