What is Financial perspective?

Business & Management
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#1

The balanced scorecard uses financial performance measures, such as net income and return on investment, because all for profit organizations use them. Financial performance measures provide a common language for analyzing and comparing companies. Financial measures by themselves do not provide incentives for success. Financial measures tell a story about the past, but not the future.

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#2

For most for-profit organisations, money comes up tops. (We’ll get to non-profits later in the article.) Therefore, the very top perspective is all about financial objectives.

Essentially, any key objective that is related to the company’s financial health and performance may be included in this perspective. Revenue and profit are obvious objectives that most organisations list in this perspective. Other financial objectives might include:

  • Cost savings and efficiencies (for example, a specific goal to reduce production costs by 10% by 2020)

  • Profit Margins (increasing operating profit margins, for instance)

  • Revenue sources (for example, adding new revenue channels)