Financial Perspective

Financial Perspective

by D5371 – Atok Sugiarto

Financial perspective becomes aware of how the business wishes to be sighted by its shareholder (Norreklit, 2000). It has been noted that the traditional technique of evaluating managerial success and influence but the desires for financial measure is still tremendously strong element to establish success (Niven, 2002). It essentially consist of those measure coping with corporation profitability, (Maltz et al., 2003) recommended the following measures: profit margin, revenue growth, cash flow, net operating income, retune on investment (ROI), revenue per employee, profit per employee, stock price, economic value added (EVA), earning per share (EPS), retune on equality (ROE), and growth in common equality. But these measures are vary from one firm to another and that mean there is no a clear criterion set of financial measure which could be apply across different contextual organizational framework and environment. According to Kaplan and Norton (2013), targets the financial perspective is divided into three stages in the business cycle:

1. Growth, The first step in business cycle. In this step, the business already running with the product and services they produce with growth potential. In this step, the business needs the financial supports in doing the investment, product development, and new market. The purpose is to emphasizing sales growth in new markets and new customers.
2. Sustain, the second step in business cycle. In this step the business is doing the investment with the best rate returns. The business is trying to maintain and increase the existing market share. The purpose of investment is to facilitate the company’s operations by making continuous improvements. In this step, the business measure the business performance based on profit margin, which is directed in terms of rate returns of the investment made.
3. Harvest, the third step in business cycle. The main purposes is to maximize the cash flow into the company so the business capable to return the investment made.