What financial indicators?

Answer 1

Today's management accounting information is inappropriate for manager's planning and control. Many short term measures are appropriate for motivating and evaluating performance, but profitability based on requirements for external observers is not one of them. Bookkeeping has a long history, but was not expected to provide a form of management information until the 19th century. Many simple management accounting measures served the needs of both managers and owners. Others evolved to measure process performance, but not profit - though when firms had only one function - efficient performance of that task usually meant profitability. The development of conglomerate enterprises in the early 20th century required means for assessing performance of different divisions. Return on investment was developed. This has remained standard, though after the 1960s the competitive environment changed and this measure ceased to be the most relevant guide to future performance. US firms lost competitiveness because their actions were guided by ROI considerations which were inappropriate ways of assessing performance in the new environment

Answer 2

Some common financial indicators include profitability ratios (such as gross profit margin and net profit margin), liquidity ratios (such as current ratio and quick ratio), and solvency ratios (such as debt-to-equity ratio and interest coverage ratio). These indicators provide insights into a company's profitability, ability to meet short-term obligations, and long-term financial stability.