Before deciding whether a measure is a leading or lagging indicator, a manager should be sure to know
A)to what event the measure is related.
B)whether the measure is used by companies in the industry.
C)whether the measure is financial or non-financial.
D)the effect the indicator will illustrate.

Question

Quizplus · Accepted Answer

Knowing to what event the measure is related is crucial in determining whether it is a leading or lagging indicator. Leading indicators predict future performance and are related to events that occur before a change in performance, while lagging indicators measure past performance and are related to events that have already occurred. Without knowing to what event the measure is related, it is impossible to determine whether it is leading or lagging. The other options may be important considerations, but they are not as essential in determining whether a measure is leading or lagging.

Before Deciding Whether a Measure Is a Leading or Lagging