Strategic Decision-Making Supported by Traditional Financial Indicators

Abstract

Traditional financial indicators calculated from financial statements cannot provide adequate information for the management, do not support strategic decisions. The reason for this is the methodology used in producing financial statements and the operational logic of financial accounting. Financial accounting thinks in terms of business year that is 12 months. It deals with events of the past, more accurately, with so called economic activities. Financial accounting evaluates such economic activities in terms of monetary processes, which means that the traditional financial indicators have their limits in application. Could it mean that traditional financial indicators cannot be used in the long-term strategic decision making? In our study we point out two connections between financial indicators and strategic decision making. Firstly, we focus on financial indicators used in supported strategic decision making, in strategic indicator systems. Secondly, we focus on cases in which financial indicators complement the methods of strategic decision making, add something to the tools available in strategic management.

Accounting Data and the Balanced Scorecard - Goals and Indicators

“…This is achieved by the Balanced Scorecard (BSC) indicator system. (Musinszki -Süveges, 2019) The BSC is a balanced strategic evaluation system based on performance indicators.…”

Analysis of Corporate Financial Statements Based on Strategic Perspective - Taking BYD Company Limited as an Example

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