Performance Measurement Techniques For Company Analysis Essay.

1. You are required to produce a financial analysis of Unilever plc group financial statements. For both the years 2015 and 2016. This analysis should assess the absolute level of and changes in profitability and financial gearing of the group. Comparisons to relevant peer companies and to the macro-economic background should be made.
This should be based on the following 5 ratios
Return on Capital Employed
Gross profit margin
Operating profit margin
Gearing
Interest Cover

2. Critically discuss what budgetary techniques might be most useful to a large global company to allow it to best understand the operational performance of one of its divisions

3 Discuss various performance measurement techniques and their appropriateness in a range of environments.

4. If you were a managing director of a large public company and received a detailed financial proposal for significant expenditure from one of your divisional directors, explain what key issues you would consider in making your decision.

Performance measurement techniques

In this report, various measurement techniques have been analyzed which makes it easier for every organization to evaluate the various micro and macro factors which could make an impact over the functions and the performance of the company (Damodaran, 2011).

Performance measurement is a procedure to collect, analyze, report the information related to the financial performance of an organization. Performance management makes it simple for the organization to study various strategies, process etc. It assists the organization to achieve the goals and manage the performance in a better way. There are various methods through which performance measurement could be done. These methods help the organization into evaluating the position and performance of the organization in industry and marketplace in a better way.

These performance measurement techniques help the organization and its competitor companies to analyze the performance of the companies. The position and performance of a company is objective factor that is evaluated against the goals, objectives and the benchmark of the company. It is quite necessary for every company to measure and evaluate the position and the performance of an organization on the bases of variables so that the factors could be evaluated in a better way and good decision could be made (Kinsky, 2011). This technique also explains the management of the company that why is it important for an organization to evaluate the performance, what is the main criteria to evaluate the performance of an organization, how the performance of an organization could be evaluated and who could analyze and evaluate the performance of an organization.

Performance appraisal methods are used by an organization periodically so that the required changes could be done in the organization. Further, it offers excellent criteria and bases to evaluate the position of an organization. Various factors whether it is financial or non financial, are used by the companies to measure the performance of the company. Further, these techniques also assist an organization to measure the non financial and financial data. Further, it also offers various bases to organization to make better decision about the performance of the company.

There are various methods of performance measurement techniques. The performance measurement techniques mainly have been divided into two parts which are financial performance measurement techniques and non financial performance measurement techniques. Financial factors also measure the financial figures and the information of organization and on the basis of other data; organization’s position and performance are analyzed. Following are performance measurement techniques:

Financial performance measurement techniques

Financial factors measure the financial figures and the information of organization and on the basis of other data; organization’s position and performance are analyzed. Following are few performance measurement techniques that evaluate and analyze the performance and the position of a company (Madhura, 2011).

Vertical analysis is used by the organizations to evaluate the financial performance of an organization. This analysis is done to mainly evaluate by the management and analyzes it identify the changes in the financial health of a company (Bryson, 2012). This study is conducted over the financial statement of a company in which all the figures of financial statement are divided by the base financial figures of the financial reports which are total assets, total liabilities and equity and total revenue of a company. This study is mainly done to analyze that how much change shave taken place into the performance of the company in comparison of last year on in comparison with the financial performance of the competitive comapny.

Horizontal analysis is used by the organizations to evaluate the financial performance of an organization. This analysis is done to mainly evaluate by the management and analyzes it identify the changes in the financial health of a company. This study is conducted over the financial statement of a company in which the figures are analyzed through a base year’s figures. This study is mainly done to analyze that how many changes have taken place into the performance of the company in comparison of last year and in comparison with the financial performance of the competitive company.

Ratio analysis is done to mainly evaluate by the management and analyzes it identify the changes in the financial health of a company. This study is conducted over the financial statement of a company in which various figures of the statements are analyzed. This study is mainly done to analyze that how much change shave taken place into the performance of the company in comparison of last year on in comparison with the financial performance of the competitive company (Deegan, 2013).

Share position analysis is used by the organizations to evaluate the market performance of an organization. This analysis is done to mainly evaluate the market and changes in the industry. This study is conducted over the stick exchange and the market to identify the worth of the stock. This study is mainly done to analyze that how many changes have taken place into the performance of the stock in comparison of last year and in comparison with the financial performance of the competitive comapny.

Vertical analysis

Capital structure position analysis is used by the organizations to evaluate the capital performance of an organization. This analysis is done to mainly evaluate the financial and capital performance and changes in the industry. This study is conducted over the financial statement to identify the optimal capital structure (Higgins & Higgins, 2012). This study is mainly done to analyze that how many changes have taken place into the performance of the stock in comparison of last year and in comparison with the financial performance of the competitive comapny. 

Cost of capital analysis is used by the organizations to evaluate the total cost of the organization which occurred while enhancing the financial funds of the company. This analysis is done to mainly evaluate the total cost of the company. This study is conducted over the financial statement and the market to identify the cost of capital. This study is mainly done to analyze that how many changes have taken place into the performance of the stock in comparison of last year and in comparison with the financial performance of the competitive company (Garrison, Noreen, Brewer, & McGowan, 2010)

Accounting changes are the main performance measurement techniques which are used by the organizations to evaluate the total cost and the changes in the accounting figures of the organization which occurred while preparing the accounting reports and the evaluation on the total worth of the company. This analysis is done to mainly evaluate the total changes in the accounting figures of the company. This study is conducted over the financial statement and the market to identify the various changes in the accounting figures. This study is mainly done to analyze that how many changes have taken place into the performance in comparison of last year and in comparison with the financial performance of the competitive company.

Non financial factors measure the economy, environment and the information of organization and on the basis of other data. Following are few performance measurement techniques that evaluate and analyze the performance and the position of a company.

This performance measurement technique assists the organization to manage the system and the process of the company. It takes the concern of various objectives, KPIs, actions, policies of the company and assists the company to measure the changes in the process (Hiller, Grinblatt, & Titman, 2011). The main drawback of this technique is huge cost. 

Further, this performance measurement technique assists the organization to identify and evaluate the changes in the organizations through identifying the changes into the key financial indicators. This study takes the current position of the organization in concern (Dixon & Monk, 2009) 

Horizontal analysis

Further, this performance measurement technique assists the organization to identify and evaluate the changes in the organizations and set a benchmark for the business through identifying the changes into the performance of the company. This study takes the current position of the organization in concern.

Further, this performance measurement technique assists the organization to identify and evaluate the corporate planning of the organizations through identifying the various factors related to the performance of the company. This study takes the current position of the organization in concern (Gitman & Zutter, 2012).

Further, this performance measurement technique assists the organization to identify and evaluate the employee motivation of the organizations through identifying the changes into the performance of the company. This study takes the current position of the organization in concern.

Further, this performance measurement technique, product life cycle assists the organization to identify and evaluate the level of the product and the services of the organizations through identifying the market position and the customer demand in the market. This study takes the current position of the organization in concern (Hiller, Grinblatt, & Titman, 2011).

Further, this performance measurement technique, value chain analysis assists the organization to identify and evaluate the strategies and the policies to manage the internal and external process in a better way. This study takes the current position, strategies and policies of managing the inventory in concern.

Further, this performance measurement technique would help the organization to identify and evaluate the target cost of the organizations through identifying the changes in the production aspects of the company. This study takes the current position of the organization in concern (Damodaran, 2011).

Conclusion:

Further, through the above study, it has been analyzed that performance measurement technique assists the organization to identify and evaluate the employee motivation of the organizations through identifying the changes into the performance of the company. This study takes the current position of the organization in concern. Further, this performance measurement technique assists the organization to identify and evaluate the impact of these techniques and factor on the business operations, functions, policies and the strategies. Lastly, it has been found that management must take a decision after evaluating all the related factors. 

Bryson, J. M. (2012). Strategic planning. The SAGE Handbook of Public Administration , 50.

Damodaran, A. (2011). Applied corporate finance. US: John Willey and sons.

Deegan, C. (2013). Financial Accounting Theory. Australia.: MC Graw Hill Education.

Dixon, A., & Monk, A. (2009). The power of finance: accounting harmonization's effect on pension provision. Journal Of economic geography , 9 (5), 619-639.

Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A. (2010). Managerial accounting. Issue in accounting edition , 25 (4), 792-793.

Gitman, L., & Zutter, C. (2012). Principles of managerial Finance. Prentice Hall.

Higgins, & Higgins, R. (2012). Analysis for financial management. Irwin: McGraw Hill.

Hiller, D., Grinblatt, M., & Titman, S. (2011). Financial markets and corporate strategy. McGraw Hill.

Kinsky, R. (2011). Charting Made Simple: A Beginner's Guide to Technical Analysis. John willey & sons.

Madhura, J. (2011). International Financial Managment . Cengage Learning.