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Methodologies Used to Measure Performance of the New Product Essay Example

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Methodologies Used to Measure Performance of the New Product

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Methodologies Used to Measure Performance of the New Product. Overall performance is analyzed by analyzing the different variances. This method generally is not used for non-financial factors. Necessary information includes the currents costs and income of Pharmafin, and the costs and income from the new product line. Expected costs and income from a period of time before the introduction of the new product line is also needed.Financial Statement Analysis is yet another method that can be used to evaluate performance. In this method, the financial status of the company is analyzed by the calculation of many different ratios, such as the Debt to Equity Ratio and the Inventory Turnover Ratio. It does not cover anything that is not related to finances.To use this method , the current debt-to equity ratio, asset turnover ratio, operating profit margin ratio, and possibly some other ratios need to be known.

There are some significant differences between the two traditional and the two traditional methods of analyzing performance. Both the Balanced Scorecard Method and EVA allow more types of measurements than the two older methods. The Balanced Scorecard method allows any types of measurements to be used, while the other methods cannot be used to analyze factors that are not financial. The EVA method shows whether the rate of return for a company is adequate for shareholders and shows whether a company is able to cover both its accounting and capital costs. The two older methods (Variance Analysis and Financial Statement Analysis) only show whether a company is covering accounting costs, and they cannot be used to measure any objectives that are not financial.Pharmafin should use the balanced scorecard method. Although this method requires the most information of any of the methods, it will show the performance of the company and the new product line from multiple angles, it can show customer satisfaction and other performance factors that are not financial, and any measurements that are convenient and accurate can be used to measure performance in this. Methodologies Used to Measure Performance of the New Product.

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References

(2007). Calculating Economic Profit: EVA. Value Based Management.net. Retrieved Nov 6, 2007, from http://www.valuebasedmanagement.net/methods_eva.html

Financial Statement Analysis. UNiXL. Retrieved Nov 6, 2007, from http://www.unixl.com/dir/business_and_economy/accounting/financial_statement_analysis/

Spafford, George. (2003). The Power of Variance Analysis. gantthead.com. Retrieved Nov 6, 2007, from http://www.gantthead.com/article.cfm?ID=177431

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preview essay on Methodologies Used to Measure Performance of the New Product
  • Pages: 2 (500 words)
  • Document Type: Essay
  • Subject: Business
  • Level: Masters
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