What is a limitation of financial performance measurements?
A) They are not useful for benchmarking.
B) They do not motivate managers.
C) They tend to focus on long-term performance.
D) They tend to be lag indicators.

Question

Quizplus · Accepted Answer

Financial performance measurements, such as financial statements, balance sheet, and profit and loss statements, can be lag indicators, meaning they report past performance rather than current or future performance. This limitation can make it difficult for an organization to respond in a timely manner to changes in the market or to implement necessary adjustments to improve financial performance.

What Is a Limitation of Financial Performance Measurements