How did the business team score? Where was performance strong or weak?
The Income Statement is the cumulative score achieved by everyone in the business for a set period. In this decision area, Finance must be able to quickly identify, analyze and communicate important budget variances. This ability determines how quickly the company can capitalize on a new situation for better performance.
With the Income Statement decision area, you can set planning goals and scorecarding metrics for performance management elements such as:
- Actual versus plan variance ($ and %).
- Net sales and profit ($ and %).
- Operating profit / EBIT ($ and %).
- Fixed, marketing and material costs ($ and %).
- Gross profit ($ and %).
- Interest ($ and %).
- Material margin ($ and %).
- SG&A ($ and %).
You can analyze these goals and metrics by a number of dimensions to find the trends and opportunities in the data:
- Fiscal month / year.
- Division / department.
- Plan / actual.
- Brand and product line.
Using the Income Statement decision area
You set targets based on your goals and metrics in Income Statement. You monitor your success by looking at how you measure up against your targets. Further, you dive into your results to find out more about these elements driving performance management.
- Actual versus plan variance ($): Do these revenue spikes mean we need additional resources to continue growth?
- Net sales ($): What are our revenues and net income this period? How does this compare to the same time last period?
- Material costs ($): Do we need to adjust selling prices or find new markets to offset increasing costs?
