Definition
Performance indicators are used to determine the success of a company and are oriented either to profit (e.g. gross profit, profit before tax, cash flow) or to enterprise value (e.g. EVA, Economic Value Added). They emerged from the shareholder value approach and the frequent criticism of profit-oriented ratios such as ROI. Since performance indicators are always based on the processed balance sheet figures, the underlying valuation decisions as well as one-off special movements, their informative value must be put into perspective when comparing them with other organisations.
Bettina Dirks
