What non-financial factors should management consider?
Here are three non-financial factors to consider, whether you are the business owner or a potential buyer.
- A strong management team. Take time to consider whether the business would come to a standstill without the owner’s involvement.
- Diversified human capital risk.
- Growth potential for customers, markets and products.
What are financial and non-financial factors?
Financial factors consist of leverage, liquidity, fixed asset intensity, firm size, and firm value. Nonfinancial factors consist of managerial ownership, government ownership, and independent board of commissioners.
Why are non-financial factors important?
By tracking non-financial factors early, executives and managers make better decisions regarding needed adjustments. They can decide to continue for example, whether a customer service seminar is necessary. If the problem is drastic enough, they can even decide who should be let go.
What nonfinancial factors influence capital budgeting?
The study also revealed that many financial and nonfinancial factors influence the selection of capital budgeting technique such as the size of the company, revenues, profitability, leverage level, expenditure, familiarity with the project, availability of cash, and the level of education of decision makers.
What are non-financial measures of performance?
Non-financial metrics are quantitative measures that cannot be expressed in monetary units. Outcome-based measures such as customer satisfaction, market share, category ownership, and new product adoption rate fall into the non-financial metrics.
What does non-financial mean?
: not of or relating to finance or financiers : not financial rarely argued about nonfinancial matters For the first time in eight years, the balance sheets of nonfinancial corporations will end the year with more equity relative to debt than they had when the year started.—
