Why should we balance financial indicators and non-financial indicators?

The traditional financial accounting model can only measure what happened in the past (backward result factor), but can't evaluate the forward-looking investment of the organization (leading driving factor). In today's information society, the traditional performance management methods are not comprehensive, and organizations must obtain the motivation for sustainable development through investment in customers, suppliers, employees, organizational processes, technology and innovation. Based on this understanding, organizations should examine their performance from four perspectives: innovation and learning, business processes, customers and finance.

Brief introduction of financial indicators

I. Solvency indicators

Short-term solvency index

(1) current ratio = current assets/current liabilities × 100%

Generally speaking, the higher the current ratio, the stronger the short-term solvency. From the creditor's point of view, the higher the current ratio, the better; From the point of view of business operators, too high turnover rate means an increase in opportunity cost and a decrease in profitability.

(2) quick ratio = quick assets/current liabilities × 100%

In which: quick assets = monetary funds+transactional financial assets+accounts receivable+notes receivable. Generally speaking, the higher the quick ratio, the stronger the solvency of the enterprise; But it will greatly increase the opportunity cost of enterprises because they occupy too much cash and accounts receivable.

Long-term solvency index

(1) Asset-liability ratio = total liabilities/total assets × 100%

Generally speaking, the smaller the asset-liability ratio, the stronger the long-term solvency of enterprises; From the perspective of business owners, the index is too small, indicating that financial leverage is not used enough; The business decision-makers of enterprises should combine the indicators of solvency and profitability for analysis.

(2) Property right ratio = total liabilities/total owners' equity × 100%.

Generally speaking, the lower the proportion of property rights, the stronger the long-term solvency of enterprises, but it also shows that enterprises can not give full play to the financial leverage effect of liabilities.

Second, the operational capacity indicators

Operational capacity is mainly measured by asset turnover rate. Generally speaking, the faster the turnover rate, the higher the efficiency of asset use and the stronger the operational ability. Asset turnover rate is usually expressed by turnover rate and turnover period (turnover days).

The calculation formula is:

Turnover rate (turnover times) = turnover amount/average balance of assets

Turnover period (turnover days) = calculation period days/turnover times = average balance of assets * calculation period days/turnover amount