Pev

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Hayman
Hayman Registered Posts: 36 Regular contributor ⭐
Can anyone help me with what is 'Lead and Lagging indicators' as I have searched on the AAT website, and it is not there. But it is in the syllabus for PEV. Any help will be appreciated. Thanks :001_smile:

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  • swampy1901
    swampy1901 Registered Posts: 50 Regular contributor ⭐
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    Had a look on the internet when I could nt find anything in my books. Very basic answer but I think can absorb it enough should it come up in the exam.

    """External financial reporting and internal operational control represent two fundamentally different functions. The former is guided by GAAP, tax laws, and the needs of stockholders and are lagging performance indicators. Operational control, on the other hand, is a leading performance indicator, and is guided by business strategy, and how well customer expectations are met. Satisfying these two needs are related but measured differently.

    Reporting that is focused only on investor results can have a counterproductive impact on the longer-term performance of the company (e.g., a focus solely on short-term financial metrics may force decisions that impede company agility to capture new market share). However, completely severing the tie between external financial numbers and day to day operating metrics is a mistake.

    Art Schneiderman, pioneer of the balanced scorecard concepts at Analog Devices, claims that there is not and can not be a quantitative linkage between non-financial and expected financial results - but there is a soft link. Empirical research supports his claim. Several longitudinal studies verified the lead-lag relationship at a point in time. For example, companies that achieve fast cycle times later reported triple the revenue growth and double the profits over industry average competitors. However, given the many complex interactions between parts of the organization and the external environment, a quantified linkage is a stretch."""

    I think the first paragraph should suffice!!

    Think I'd better read through the syllabus. Never heard of it and i'm on my
    3rd resit!!

    Swampy
  • Hayman
    Hayman Registered Posts: 36 Regular contributor ⭐
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    hayman

    swampy just to say thanks. I am on my 2nd resit as well, and just want to cover all bases. Thanks again and good good luck:001_rolleyes:
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