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Balanced scorecard and fund flow statement
• The Balanced Scorecard is a set of performance
targets and results relating to four dimensions of
performance – financial, customer, internal
process and innovation.
• It is used as a tool which improves the
communication and feedback process between the
employees and management and to monitor
performance of the organizational objectives.
Balanced scorecard and fund flow statement
Financial Perspective
This consists of costs or measurement involved, in
terms of rate of return on capital employed and
operating income of the organization.
Customer Perspective
Measures the level of customer satisfaction,
customer retention and market share held by the
organization.
Business Process Perspective
This consists of measures such as cost and
quality related of the business processes.
Learning and Growth Perspective
It consists of measures such as employee
satisfaction, employee retention and knowledge
management.
For each perspective balanced scorecard of
following things are measured:
1. Objectives
2. Measures
3. Targets
4. Initiatives
Need for a balanced Scorecard
Increases the focus on the business strategy and
its outcomes.
Leads to improve organizational performance
through measurements.
Improves level of communication in relation to
organization strategy and vision.
Advantages of balanced Scorecard
It looks at performance from the point of view of
the four perspectives, not just from the narrow
view of the shareholders.
Managers are unlikely to be able to distort the
performance measure.
It should lead to the long-term success of the
business rather than focusing on short-term
improvements.
It focuses on key performance indicators. The
process of identifying these indicators can
make senior managers question strategy and
focus on the core elements of the business.
Disadvantages of balanced Scorecard
It involve large number of calculations which
may make performance measurement time
consuming and costly to operate.
The selection of performance indicators under
each of the four perspective is subjective
Balanced scorecard and fund flow statement
Fund flow statement describes the sources from
which additional funds were derived and the uses
to which these funds were put.
It is a method by which we study changes in the
financial position of a business enterprise between
beginning and ending financial statements dates.
Balanced scorecard and fund flow statement
Uses of
Fund flow
statement
Helps in
analysis of
financial
statements
Acts as a
future
guide
Helps in
proper
allocation
of
resources
Helps
knowing
the credit
worthiness
Helps
appraising
the use of
working
capital
Procedure for
preparing a fund
flow statement
Statement of
change in working
capital
Statement of
sources and
application of
funds
Statement of change in working capital
It is prepared to show the changes in working
capital between the two balance sheet dates.
Balanced scorecard and fund flow statement
Statement of sources and application of
funds
It is a statement which indicates various sources
from which funds have been obtained during a
period of time and the use and applications to
which these funds have been put during that
period.
Balanced scorecard and fund flow statement
Fund from operations
Balanced scorecard and fund flow statement
Balanced scorecard and fund flow statement
Balanced scorecard and fund flow statement

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Balanced scorecard and fund flow statement

  • 2. • The Balanced Scorecard is a set of performance targets and results relating to four dimensions of performance – financial, customer, internal process and innovation. • It is used as a tool which improves the communication and feedback process between the employees and management and to monitor performance of the organizational objectives.
  • 4. Financial Perspective This consists of costs or measurement involved, in terms of rate of return on capital employed and operating income of the organization.
  • 5. Customer Perspective Measures the level of customer satisfaction, customer retention and market share held by the organization.
  • 6. Business Process Perspective This consists of measures such as cost and quality related of the business processes.
  • 7. Learning and Growth Perspective It consists of measures such as employee satisfaction, employee retention and knowledge management.
  • 8. For each perspective balanced scorecard of following things are measured: 1. Objectives 2. Measures 3. Targets 4. Initiatives
  • 9. Need for a balanced Scorecard Increases the focus on the business strategy and its outcomes. Leads to improve organizational performance through measurements. Improves level of communication in relation to organization strategy and vision.
  • 10. Advantages of balanced Scorecard It looks at performance from the point of view of the four perspectives, not just from the narrow view of the shareholders. Managers are unlikely to be able to distort the performance measure.
  • 11. It should lead to the long-term success of the business rather than focusing on short-term improvements. It focuses on key performance indicators. The process of identifying these indicators can make senior managers question strategy and focus on the core elements of the business.
  • 12. Disadvantages of balanced Scorecard It involve large number of calculations which may make performance measurement time consuming and costly to operate. The selection of performance indicators under each of the four perspective is subjective
  • 14. Fund flow statement describes the sources from which additional funds were derived and the uses to which these funds were put. It is a method by which we study changes in the financial position of a business enterprise between beginning and ending financial statements dates.
  • 16. Uses of Fund flow statement Helps in analysis of financial statements Acts as a future guide Helps in proper allocation of resources Helps knowing the credit worthiness Helps appraising the use of working capital
  • 17. Procedure for preparing a fund flow statement Statement of change in working capital Statement of sources and application of funds
  • 18. Statement of change in working capital It is prepared to show the changes in working capital between the two balance sheet dates.
  • 20. Statement of sources and application of funds It is a statement which indicates various sources from which funds have been obtained during a period of time and the use and applications to which these funds have been put during that period.