Financial measures tend to be lag indicators that report on the results of past actions.

Question

Quizplus · Accepted Answer

Financial measures such as revenue, profit, and return on investment are typically calculated based on past financial data and therefore cannot provide immediate feedback on the success or failure of current business strategies. They are considered lag indicators because they report on what has already happened, rather than what is currently happening in the business.

Financial Measures Tend to Be Lag Indicators That Report on the Results