Question: State the global performance measurements and operational performance measurements and briefly define each of them. How do these differ from traditional accounting measurements?

Performance measurement is typically defined as the regular assessment of outcomes and results that provides precise data on program efficiency and effectiveness.

Global performance measurement is a collection of measures that indicate the firm's financial performance. It consists of the net profit, the return on investment, and the cash flow.

1. Net profit: It is a financial statistic that identifies the amount of money made by a firm in terms of cash.
2. Return on investment: This term refers to the amount of income earned by a firm in relation to the amount of money invested. It is calculated by dividing the revenue by the amount invested.

Cash flow: This is the amount of cash available to the company for day-to-day operations.

Inventory is the number of items retained by the company for the purpose of sale.

Output: It indicates the firm's real pace of sales generation.

Operating expenditures may be defined as the amount of money spent to turn inventory into throughput. Traditional accounting systems function with standard costs, gross profits, burden allocation, cost centers, and so on that are based on standards and allocation. These are either true or false.

The difference is due to overhead allocation; inventory in the conventional system is carried as the cost of things sold, but inventory under operational management is carried as the cost of raw materials.