Balanced Score Card

There are several ways to measure the performance of a business, both financially as well as non-financially. This article is based on a form of measure, the “BALANCED SCORE CARD”.

The Balanced score card concept was developed by, Dr Robert Kaplan and Norton. Balanced cord categorizes the performance of a business into four parts:

1.       Financial Perspective

2.       Customer Perspective

3.       Internal business

4.       Innovation and learning

Financial Perspective:

          Financial perspective as the name suggests, looks at how the business has done financially in a certain time period. Financial performance can be measured with the help of different, profitability, liquidity and other relevant ratios, like:

1.       ROCE

2.       ROI

3.       Net profit margin

4.       Gross profit margin

5.       Quick ratio

Customer Perspective:

        The customer perspective can be split into many different parts, like customer satisfaction, customer loyalty, customer complaints etc. Basically the customer perspective overall measures, how the customers views the business and how can the business retain them.

Internal Business:

       Internal business measures the internal efficiency of the business. How the business is carrying out its main objectives, for which the business was made in the first place.

Innovation and learning:

1.       How many Products has the company launched in a certain time period?

2.       Has the launch of the new product increased the sales?

3.       When did the recent training take place?

4.       How efficient are the employees?

These are some few examples of innovation and learning, which are focused upon.