Advanced Performance Management · Management reports

Financial and Non-Financial Information in Management Reports

Updated 11 October 2026 · Fact-checked

A good management report combines financial measures (profit, cash, ROI) with non-financial measures (quality, customers, staff, environment) so users see both results and the drivers behind them. To answer APM questions, pick relevant KPIs, link them to strategy and the user, choose a clear format, and critique balance and reliability.

Understand Financial and Non-Financial Information in Reports

Financial measures tell you what has happened in money terms. Profit, revenue, cash flow, ROI and residual income are objective, comparable and linked to owners' interests. But they are lagging. They show the result, not why it happened, and they can encourage short-termism.

Non-financial measures explain and predict the results. Examples are customer satisfaction, defect rates, delivery times, staff turnover, innovation rate and carbon emissions. They are often leading indicators. A fall in customer satisfaction today usually means lower revenue later. Their weakness is that they can be subjective, hard to compare and hard to link to profit.

A balanced report uses both, aligned to strategy. The balanced scorecard is the standard model, with financial, customer, internal process, and innovation and learning perspectives. Other frameworks, such as the performance pyramid and the performance prism, follow the same idea. Each KPI should link to a critical success factor. Too many KPIs create noise, so report a small set that matters to the user.

Presentation matters. A dashboard shows a handful of KPIs visually, with targets, trends and traffic-light flags, so managers can spot exceptions fast. Dashboards suit operational and senior managers who need speed. They lose detail, so allow drill-down or supporting notes. Good reports also show variances, comparisons to target, prior period and benchmarks.

Integrated reporting (the IIRC framework) extends this to external reporting. It explains how an organisation creates value over time using the six capitals: financial, manufactured, intellectual, human, social and relationship, and natural. It links strategy, governance, performance and prospects. In APM you may be asked to apply the same thinking to internal reports so management considers all capitals, not only profit.

Key rules to remember

Six capitals (integrated reporting): Financial, manufactured, intellectual, human, social and relationship, natural; Use them to structure a value-creation discussion. Not every capital is relevant to every organisation.
Balanced scorecard perspectives: Financial | Customer | Internal business process | Innovation and learning; Each perspective asks a question and needs measures, targets and actions.
Variance to target: Variance = Actual − Target (state favourable or adverse); Apply to financial and non-financial KPIs alike. For defects, a lower figure is favourable.
Percentage change: % change = (Current − Previous) ÷ Previous × 100; Useful for trend columns in a dashboard.

How to solve Financial and Non-Financial Information in Reports questions

Use this method for any question on financial and non-financial information in reports.

1Identify the user and the purpose of the report (board, divisional manager, investors, regulator). This decides detail, frequency and format.
2Link to strategy. Identify the critical success factors the organisation needs to achieve.
3Select KPIs for each CSF, mixing financial and non-financial, leading and lagging. Give a target for each.
4Apply the scenario figures. Calculate variances, trends or ratios, and say what they mean, not only what they are.
5Choose the format: dashboard, scorecard, narrative or integrated report. Justify it for this user.
6Evaluate the report: balance, reliability, controllability, information overload, manipulation risk and cost of collection.
7Conclude with clear recommendations or actions, written in the style asked for (report, memo, email) to earn professional skills marks.

Quickest way: User, CSF, KPI, evaluate

When to use it: When you have little time and the question asks you to suggest or critique KPIs in a report.

Write the user and purpose in one line.
List two or three CSFs from the scenario.
Give one financial and one non-financial KPI per CSF, each with a target.
Add one comment on balance and one on reliability or overload.
Finish with a one-line recommendation.

Common mistakes in Financial and Non-Financial Information in Reports

Listing generic KPIs with no link to the scenario.
Students memorise scorecard lists and reproduce them.
Fix: Tie each KPI to a stated CSF or strategy in the case and say why it suits that organisation.
Calling non-financial measures better than financial ones.
Textbooks stress the limits of financial measures.
Fix: Argue balance. Each type has strengths and weaknesses, and non-financial KPIs should still link to financial outcomes.
Describing a dashboard without commenting on the data.
Students focus on format and forget analysis.
Fix: Interpret the figures: trend, variance, cause and action. Use the numbers given.
Including too many KPIs.
Students think more measures show more knowledge.
Fix: Choose a small relevant set and explain that overload hides what matters.
Ignoring who the report is for.
Students treat all reports as the same.
Fix: State the user first. Operational managers need frequent detail. Boards need summary and strategic KPIs.
Treating integrated reporting as only sustainability reporting.
Both deal with non-financial information.
Fix: Explain that integrated reporting focuses on value creation across the six capitals and connects strategy, governance and performance.

Worked examples

Example 1

A hotel group's board report shows only revenue and operating profit. Revenue rose 8% but customer complaints rose from 40 to 60 per month, and staff turnover rose from 15% to 24%. Suggest two non-financial KPIs to add and explain what the figures indicate.

Show the solution

Complaints rose by (60 − 40) ÷ 40 × 100 = 50%.
Staff turnover rose by 9 percentage points, from 15% to 24%.
Customer perspective KPI: complaints per 1,000 guests, with a target. This tracks service quality.
Learning and growth KPI: staff turnover rate, with a target. This tracks staff stability.
Interpretation: revenue growth hides a likely service decline. Higher turnover can mean less experienced staff, which may explain the complaints.
Risk: complaints and turnover are leading indicators, so future revenue and reputation may fall if nothing changes.

Answer: Add complaints per 1,000 guests and staff turnover rate. Complaints are up 50% and turnover is up 9 percentage points. Together they warn that current profit may not be sustainable, so management should investigate staffing and service quality.

Example 2

A manufacturer's monthly dashboard shows: defect rate target 2.0%, actual 2.6%; on-time delivery target 95%, actual 92%; operating margin target 12%, actual 13%. Comment on performance for the production director.

Show the solution

Defect rate: 2.6% − 2.0% = 0.6 percentage points above target, which is adverse.
On-time delivery: 92% − 95% = 3 points below target, which is adverse.
Operating margin: 13% − 12% = 1 point above target, which is favourable.
Pattern: the financial result is favourable but both operational KPIs are adverse.
Possible explanation: margin may be helped by cost-cutting or reduced inspection, which could be harming quality and delivery.
Recommendation: investigate causes of defects and late deliveries, and track customer returns and repeat orders in case revenue is at risk.

Answer: Margin beats target by 1 point, but defects are 0.6 points worse and on-time delivery is 3 points worse. The favourable profit may be short-term and at the expense of quality and service. The director should investigate root causes and add customer retention measures.

Exam tips

Always name the user of the report and shape your KPIs and format around them. This earns professional skills marks.
Use the scenario's numbers. Calculate variances or trends and interpret them.
Show balance. Explain why a financial-only report misleads and why non-financial KPIs need targets and a link to profit.
For integrated reporting, name the capitals relevant to the case and explain value creation. Do not just list all six.
If asked to evaluate a report, cover relevance, reliability, timeliness, clarity and overload before suggesting improvements.

Practice questions from Management reports

Financial and Non-Financial Information in Reports in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Financial and Non-Financial Information in Reports: frequently asked questions

What is the difference between financial and non-financial performance indicators?

Financial indicators measure results in money, such as profit, ROI and cash flow. Non-financial indicators measure things such as quality, customer satisfaction, staff and environmental impact. Non-financial indicators often predict future financial results.

How should I present KPIs in a management report for APM?

Say who the user is, choose a small set of KPIs linked to strategy, and show targets, actuals and variances. A dashboard with trends and exception flags works well. Add short commentary and recommended actions.

How does a balanced scorecard relate to a dashboard?

The balanced scorecard is a framework that decides which perspectives and measures to use. A dashboard is a way to display the measures visually. You can show a scorecard on a dashboard.

What is integrated reporting in APM?

It is reporting that explains how an organisation creates value over time using several capitals, not just financial ones. It links strategy, governance, performance and prospects. In APM you may use its ideas to broaden the information in a report.