• The Balanced Scorecard is a set of performance
targets and results relating to four dimensions of
performance – financial, customer, internal
process and innovation.
• It is used as a tool which improves the
communication and feedback process between the
employees and management and to monitor
performance of the organizational objectives.

Financial Perspective
This consists of costs or measurement involved, in
terms of rate of return on capital employed and
operating income of the organization.

Customer Perspective
Measures the level of customer satisfaction,
customer retention and market share held by the
organization.

Business Process Perspective
This consists of measures such as cost and
quality related of the business processes.

Learning and Growth Perspective
It consists of measures such as employee
satisfaction, employee retention and knowledge
management.

For each perspective balanced scorecard of
following things are measured:
1. Objectives
2. Measures
3. Targets
4. Initiatives

Need for a balanced Scorecard
Increases the focus on the business strategy and
its outcomes.
Leads to improve organizational performance
through measurements.
Improves level of communication in relation to
organization strategy and vision.

Advantages of balanced Scorecard
It looks at performance from the point of view of
the four perspectives, not just from the narrow
view of the shareholders.
Managers are unlikely to be able to distort the
performance measure.

It should lead to the long-term success of the
business rather than focusing on short-term
improvements.
It focuses on key performance indicators. The
process of identifying these indicators can
make senior managers question strategy and
focus on the core elements of the business.

Disadvantages of balanced Scorecard
It involve large number of calculations which
may make performance measurement time
consuming and costly to operate.
The selection of performance indicators under
each of the four perspective is subjective

Fund flow statement describes the sources from
which additional funds were derived and the uses
to which these funds were put.
It is a method by which we study changes in the
financial position of a business enterprise between
beginning and ending financial statements dates.

Uses of
Fund flow
statement
Helps in
analysis of
financial
statements
Acts as a
future
guide
Helps in
proper
allocation
of
resources
Helps
knowing
the credit
worthiness
Helps
appraising
the use of
working
capital

Procedure for
preparing a fund
flow statement
Statement of
change in working
capital
Statement of
sources and
application of
funds

Statement of change in working capital
It is prepared to show the changes in working
capital between the two balance sheet dates.

Statement of sources and application of
funds
It is a statement which indicates various sources
from which funds have been obtained during a
period of time and the use and applications to
which these funds have been put during that
period.

Fund from operations