ACCA Strategic Professional · Advanced Performance Management · Management reports

Veltron Ltd's monthly management report to its board contains only profit, revenue and cash balance figures. The board says it cannot tell whether the company is keeping its customers or whether future profits are at risk. Which change to the report would best address this concern?

Adding non-financial measures such as customer retention and complaint levels is best, because they are leading indicators of future results. Purely financial figures look backward and cannot show whether customers are being kept, so more financial ratios or variances would not answer the board's concern.

1. AAdd lagging financial ratios such as return on capital employed for the past five years
2. BAdd non-financial measures such as customer retention rate and complaint levels alongside the financial figuresCorrect
3. CReplace the cash balance with a more detailed analysis of administrative expenses
4. DAdd a comparison of reported profit with the prior-year budget variance