Question

Part 1: Provide an explanation for the financial perspective. Include a business example which demonstrates how a company would measure its performance to determine if its overall business strategies were a success. Explain how the company's quantitative performance on its financial statements affects the company's value to stockholders.

Answer 1

Solution :- Financial perspective is related to the probability of an organisation. How the company is functioning over a period of time from the Revenue and profitability Perspective is the study matter of Financial Perspective - profit and share holder's wealth maximisation are the primary purpose of Business and same are covered within Financial perspective which makes it even more important study point . Business Example: - Trend Analysis may be helpful for Business to analyse the Financial perspective

Year 4 year 3 year a year I Year o Total Revenue 1510 1420 1150 1070 1050 Net 160 income 150 130 120 100 year y Year 3 yeara year I year o Total 1510/1050) X100 (142/050) X00 (15/050) X100 Revenue 1070/1050) (05/050) xiz 143% 135% 109 % 101% 100%. Net Income 16/00)x100 (150/100)x100 (130/100)x100 120/10/8100 (0% OO 00 ) 160% 150% 130% 120% 100% Earning per share and price to earning ratio, book value per shate, market value per share may be used to . analyse the value of share holder's wealth - The same are derived using Financial perspective. - increase in profit which increases share holder's Book value per share due to increased profit Reserves. Increase in Revenue reads to increase in e