ACCA Performance Management (F5) Certification Practice Exam

What is a key characteristic of non-financial performance indicators?

1. They solely depend on financial outcomes.

2. They provide a holistic view of company performance.

3. They focus only on customer satisfaction.

4. They measure past financial performance exclusively.

The correct answer is: They provide a holistic view of company performance.

A key characteristic of non-financial performance indicators is that they provide a holistic view of company performance. These indicators encompass various aspects of a business's operations that are not directly tied to financial metrics, such as customer satisfaction, employee engagement, operational efficiency, and environmental impact. By incorporating these dimensions, organizations can assess their overall health and performance beyond just revenue and profit. Non-financial performance indicators help in understanding how well a company is performing in areas that contribute to long-term success. For example, high employee morale might lead to increased productivity, while strong customer satisfaction could lead to repeat business and positive word-of-mouth, ultimately impacting financial results over time. This comprehensive perspective allows businesses to make informed strategic decisions aimed at improving overall performance and achieving sustainable growth. In contrast, the other options focus on limitations or narrow views that are not representative of the broader scope that non-financial indicators aim to address.