Performance Management

Post Meeting Notes: Measuring Financial Performance

  • July 20, 2021

In companies, we often talk about financial performance – at company and business unit level. But what do we actually mean by financial performance and how do we measure it? The answer is often ‘it depends’ because companies may choose to focus on different measures depending on the specific challenges and priorities that they face.

However, an awareness of the broad range of financial performance measures and metrics is critical for any reward professional.

In this session, Alex Edmans, Professor of Finance at London Business School shared a critical understanding of the most important financial performance metrics and considered the strengths and weaknesses of each measure in different business contexts, their use by investment analysts and their deployment in acquisition models. He also looked at how and when these measures should be incorporated into specific performance and reward interventions.

The measures examined included:

  • Total Shareholder Return (TSR) – (both relative and absolute)
  • Earnings Before Interest, Tax, Depreciation & Amortisation (EBITDA)
  • Definitions of ‘Profit’: PBT / PAT / PBIT / Adjusted Operating Profit
  • Return on Capital Employed (ROCE)
  • Economic Value Added (EVA) and Economic Profit (EP).

Recap on the session’s learnings in these Post Meeting Notes and relive the session with the full video recording.

Login to access all PARC content or enter your details to access this exclusive resource

Join PARC today

  • Become part of our community of Senior Performance and Reward Leaders and their teams
  • Access facilitated connections and the opportunity for confidential, peer exchange and discussion
  • Attend an annual programme of in-person events, online events and peer exchanges relating to the operational context, organisational performance and reward
  • Gain network insight and timely perspectives via PARC’s member query service, Pulse Surveys, PARC research, and content from Partners and Associates
  • Offer team members access to our development programmes for future reward leaders
  • Receive invitations to off-programme, confidential, member-led discussion between our senior leader membership

Forgot your password?

Don’t have an account? Become a member and gain access to:

  • Research and resources for HR and Reward leaders
  • Regular online and in-person events on business and reward topics
  • Advisory support including member surveys, curated content and insights from experts
  • Brokered connections with HR and Reward leaders to share knowledge and good practice
  • Development programmes for future reward leaders