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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Communication

 The senior management of Tungston Company has proposed the following three performance measures for the company:

 1.    Net income as a percent of stockholder’ equity

 2.    Revenue growth

 3.    Employee satisfaction

 Management believes that these three measures combine both financial and nonfinancial measures and are thus superior to using just financial measures.

 Write a brief memo to David Tungston, the company president, providing suggestions on how to improve the company’s performance measurement system.

To determine

To write: A brief memorandum to the company president, providing suggestions on how to improve the company’s performance measurement system.

Explanation

Prepare a memo to Person DT providing suggestions to improve the company’s performance measurement system.

Memo

From,

ABC

To,

Person DT

Re:  Performance measurement system

Dear Sir,

Still there are some serious omissions in the performance measurement system, even though the performance measurement system of Company T uses both financial, as well as nonfinancial measures. The net income as a percentage of stockholder’s equity, and revenue growth are the good measures of the financial performance of the company. Similarly, the employee satisfaction also provides a good vision into the morale of the employees, which is necessary for the overall success of the business...

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