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CMA Final · Strategic Performance Management and Business Valuation · Introduction to Performance Management

Which of the following is a lead (forward-looking) indicator rather than a lag indicator in an organisation's performance management framework?

Training hours completed this quarter is a lead indicator because it measures an activity that drives future customer satisfaction and financial results. Net profit, ROCE and reported revenue growth describe outcomes already achieved, so they are lag indicators that report the past.

  1. ANet profit for the previous year
  2. BReturn on capital employed for the quarter just ended
  3. CNumber of hours of customer-service training completed this quarterCorrect
  4. DRevenue growth reported in the last annual report

Explanation

Lead indicators measure drivers that influence future results, such as training hours that affect later service quality. Profit, ROCE and reported revenue growth describe outcomes already achieved, so they are lag indicators.

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