1.1 Margin- this measures how well the company is


Management performance means achievements or outcomes
achieved in relation to organizational goals set. How successful the management
has achieved the organizational objectives which are therefore involves a clear
evaluation of performance.

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Performance Measures

Financial performance is the achievements or
outcomes achieved in relation to monetary/economic terms. In evaluating the
financial performance, users are normally intended to analyze the financial
health of the organization for a specified period of time normally a year.
Users of financial information may have different perspectives in evaluating
the financial performance of the company, but the most common financial
measures specific to profitability includes;

Profit Margin- this measures how well the company is able to
generate profit and producing at low cost as it involves money earned after
deducting the cost of sales (direct cost).

Profit Margin- this measures the organizational strength on
generating profit after deducting all cost relating to production also
associated cost for bring the product to the market.

on Capital Employed- it is the most common measure used to analyze
the profitable investments, as it influence on investors’ decision in analyzing
a profitable investment among alternatives.

on Asset- this measures how the company is able to utilize the asset to
generate profit as it includes net income with total assets of the company.

The measures above comprises
the profit generated from operations, and the profit itself is realized after
deducting all cost in all level, it is therefore worthy to classify it as cost
measures as well.

Performance Measures

Studies have been conducted on the contribution
non financial measures to organizational performance, with other researchers
argues that this measures have a significant impact on firm performance while
other still believing on the traditional approach. But studies supporting this
approach have recognizing the significant impacts made by product quality,
customer satisfaction, product innovation and leadership in firm
performance.  In the study conducted by Gijsel
(2012) argued that, managers have been increasing reliance on non financial
measures by revealing that these measures are better off during the economic
crises and are also vital in evaluating firm future performance.

Based Objectives

Result Based on objectives is a management
strategy that is aimed at achieving a significant change in the way the company
operates as the central target is to improve performance through expected
results (objective set).  This approach
provides a framework to management for strategic plans, risk management and how
to monitor and evaluate the performance. 
The primary purpose of this model is to improve efficiency and
effectiveness through accountability and performance reporting. For a company
to succeed in this approach then they must ensure that every stakeholder is
involved in the cycle and be defined according to the expected results. This
approach borrow from the system theory as it follow a consequential
relationships as the terms involved are not used interchangeably nor out of the

Inputs ? Activities Outputs ?
Shot-term outcome ? Medium term outcome ? Long-term outcome

The success of this approach is
the ability of the organization to create a management culture that focus on
results as the model require more than the adoption of new administrative and
operational system. This involves designing a results oriented management

Score Card (BSC)

The BSC created by Kaplan is one of the best
known and widely used multidimensional models for measuring performance
worldwide. Its contributions to measure performance on a balanced and
integrated system  using four
perspectives of an organization has made a significant stem from the old
financial performance measure. The importance of this model is that it recognizes
customers and employees as crucial to organizational achievements. The model
also has given opportunity to use non financial measures by succeeding the
previous metrics such as the Economic Value added (EVA). (Kumar, 2004)

This model has been used by
governments, non-profit organizations and wide business industry. Unlike the
traditional approach which analyzes the past performance, BSC has able to
supplement both past and future performance with objectives and measures
derived from the organizations’ vision and strategy.






Financial; this
include measures, objectives and initiatives on how to succeed financially and
appear healthy to their shareholders.

Customer; this
includes measures, initiatives and objectives on how should the company appear
to the customer and achieve their vision (customer satisfaction)

Business Processes; this includes measures, initiatives and
objectives on which business processes must the company excel at to satisfy
their customers and shareholders.

and Growth; this includes measures, targets, initiatives
and objectives on how will the business sustain and the company ability to
improve and achieve their vision.

According to Kaplan (1992), the
BSC model gives the top manager a fast and wide view of the organization’s
business. The model includes measures that analyze past performance and future
actions by establishing a balanced and integrated form between customer
satisfaction, financial performance, innovations, improvements and the internal
processes- with all measures derived from the organization’s vision and

The critic of this approach
from various researchers is that, the model is incomplete as it lacks a formal
dependence on some theory of the company behavior. But the mention limitation
cannot set off the positive contribution made by this approach. In a study
conducted by Dowing (2001), reveal that 52% of companies worldwide were using
the BSC, with 21% planning to use and 23% considering using.

for Money

Value for money is a performance measurement
approach that has been mostly used by donors and government authorities
particularly in procurement and implementation of programs. The model has
brought debate among stakeholders as cost and value has been a major
concern.  This approach involve a
relationship between efficiency, economy, effectiveness and currently equity;
the 4Es.

Economy:  management concern is
minimizing cost to the lowest level without reducing the product quality

produced ensure customer satisfactions

output with low cost measures without reducing the product quality.

obtained from the business is distributed equally to stakeholders.


Based Measures and Environmental Performance.

Environmental performance has currently become
one of the most important factor under the corporate social responsibilities
which consider the interest of stakeholders against their impacts on that
society. Companies are aware of the significance of environmental issues on
firm performance. The main reason to evaluate environmental performance is to
be ensured that the company is not exposed environmental risks.

Studies have been conducted to analyze the
impact of environment on firm performance with others with other researchers
argues that good environmental measures also produce economic benefits.

Environmental Indicators includes;

Environmental impacts from company’ activities

Regulatory compliance

Organizational processes (accounting, audit,


of Suitable Approach

From this evaluation I recommend Balance score
card as a significant to for performance evaluation as it considered important
stakeholders such as employees and customers as part and parcel of the company
success. Adding from the traditional approach, this model is able to evaluate
both past performance as well as future actions of the company.

Price and Performance Evaluation

Transfer pricing involves a mutual pricing
procedure on goods and service between tow companies or divisions of the
organizations. The term involves setting, analyzing, documenting and adjusting
for changes that are made between the two division on goods and services
supplied. Companies normally use transfer pricing for saving on tax, remittance
of dividend, changes in exchange rates and goal congruent decisions.

The problem caused by this practice includes; there
are situations where the market price is high compared to price of the division
this bring difficulties to decision making on division managers as they always
aim to sell at high price. Under some circumstances transfer price at market
value might provide incentives to use up the spare resources in order to
provide a marginal contribution to profit.

A Case
Study on Evaluation of Financial and Non-financial Performance.

This part uses Simba Cement Company to evaluate
the financial performance from 2013 to 2016


Source: Simba Plc Financial Statements

The findings reveal that the company profit has been
decreasing from 2013 to 2016. The reason behind this is inefficiency of the
company to use their assets to generate revenue as it keep on decreasing over
time. The NPM also shows the impact made the decrease in sales volume as the
company had a net profit margin of 17.76 in 2013 as compared to 2.55 in 2016.
According to chairperson statement of 2016, the market headwinds negatively
impacted the company which reduces the sales by 20% in 2015-2016, the continued
increase market competition and the lower infrastructure projects from the
government. Simba cement therefore has taken measures to increase operational
efficiency and reduce cost.


Source: Simba Plc Financial Statements

The current ability to meet short term obligation has
decreased from 4.42 times in 2013 to 1.31 times in 2016. This shows that the
company will be struggling in meeting immediate obligations as a ratio of 1.3
times in three consecutive years not a good sign to lenders. The findings show
that from 2014 the company was unable to meet their immediate obligations
without selling their inventories. The reason for this difficulty is the
company actions to raise funds through borrowing and the negative balance in
their overdraft accounts

Efficiency Ratios

Source: Simba Plc Financial Statements

decrease in company turnovers shows that the company had to extend their credit
limits to their debtors as findings shows that the company had a turnover of
19.41 xs in 2013 as compared to 10.73 xs in 2016. In other words the findings
reveal that the company took 18days to collects their receivable in 2013 as
compared to 34days in 2016 although the ratio maybe attributed by the decrease
in credit sales during that period. The company was less efficient in utilizing
the fixed asset to increase sales as the last three years the ratios was below
1. This inefficiency in sales also observed in inventory turnover as the low
ratios implies that the company is weak in sales.

Leverage Ratios

Source: Simba Plc Financial Statements

The leverage ratios show that as time goes on the company
was increasing the amount of borrowing to finance their operations. The company
was less leverage in 2013 as compared to 2016 where it was high leverage as the
debt to equity ratio was 1.37. in 2013 the company had no finance cost which
means that there was no borrowing during that year, but even when they borrowed
in 2014 they were able to pay interest cost by 287 times from their operating
profit. But in 2015 and 2016 shows that the company was high leverage and the
ability to pay interest was low as interest coverage ratio was 1.79 and 1.4 in
2015 and 2016 respectively.






Source: Simba Plc Financial Statements

The findings show that the amount of dividend paid per one
share decrease during the period under analysis as the company declared a
dividend per share of 110 TZS in 2013 as compared to 80 in 2016. The reason
behind this decrease is the decrease in profit for year, as resulted to the
company declares a minimum amount of dividend as sometimes the company may opt
to retain dividend to finance other project as the company is in short of
finance. The decision made on decrease in dividend actually affects the market
price stock at the stock market.