Limitations of financial data in assessing business performance

  • Financial ratios tend to be historic
  • Financial ratios focus on measures that are more important to shareholders than business managers
  • Financial data is not the best way of understanding how the business is performing in terms of key competitive performance

Key non-financial measures of performance


  • Efficiency (unit costs)
  • Labour productivity
  • Capacity utilisation
  • Break-even output
  • Quality (reject rate)
  • Quality (lead time)


  • Labour turnover
  • Labour productivity
  • Unit labour costs
  • Absenteeism rate
  • Revenue per employee
  • Staff retention rate
  • Job satisfaction


  • Market share
  • Sales per employee
  • Sales growth (volume)
  • Customer retention rate
  • Brand reputation and awareness

Other relevant non-financial measures

  • Environmental performance
  • Compliance regulation
  • Health & safety record
  • Social media reach

Making connections between financial and non-financial measures

  • Financial measures and non-financial measures are closely linked.
    • If you want to improve your operating profit margins, taking non-financial measures to improve employee satisfaction could aid in achieving this goal
    • Improved product quality may cost no extra money, but could allow the goods to be sold at a higher price and more quickly.