Financial and Non-Financial Metrics Summary

Financial and Non-Financial Metrics
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Financial and Non-Financial Metrics
An excellent example of a financial metric is the liquidity ratio. In particular, the liquidity ratio shows a firm’s ability to settle its debt obligations, which is done by calculating other financial metrics, such as quick, cash flow, and current ratios (Dossi & Patelli, 2010). On the contrary, an example of a non-financial metric is customer satisfaction. Businesses should hold clients’ surveys to know whether the products or services they offer fulfill consumers’ needs.
The primary similarity of financial and non-financial metrics is that they help a company know whether it performs well or poorly. Additionally, these indicators enable a firm to identify its strengths and weaknesses and implement effective strategies to improve its performance. Nevertheless, the difference between financial and non-financial metrics is that the former shows the company's financial position while the latter portrays qualitative aspects that affect business operations.
Specifically, it is crucial to use the correct type of metric when evaluating performance to avoid confusion and misinterpretation. Besides, the m...