How to make financial and nonfinancial data add up.

Summary

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Management accountants are often asked to compare incompatible financial and nonfinancial data and so J.L. Riggs and G.H. Felix suggested using an index for the nonfinancial data in 'Productivity by Objectives.' The index establishes three nonfinancial benchmarks to be compared with financial data and uses this to create an overall gauge of performance. An index for nonfinancial data that weighs the company's finances using an objectives matrix approach is presented.

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How to make financial and nonfinancial data add up.

Here's a way to combine performance evaluations with quantifiable measurements.

Management accountants sometimes are asked to do the impossible. For example, how can a 10% reduction in operating cycle time be compared with a 12% reduction in repair costs? How is it possible to compare a 5% improvement in on-time deliveries with a 7% decrease in the amount of returned merchandise from customers? How can these data be dovetailed into a repo...

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