Roger Standing Find out how our site works. The author is an English chartered accountant who trained in the City of London and has passed most of his business life working for multinational companies in Switzerland. Now semi-retired, he lives close by the Lake of Geneva.
Conventional accounting produces very limited management performance information.
A profit figure is reported which reconciles with the balance sheet s increase in net assets over a period, but that does not provide much information as to the efficiency of use of capital. Whatever interpretations are made are often misleading, not only at company level but also in the areas of analysis of products and customers viability. Products profitabilty analysis aroused the author s interest many years ago, when he saw managers judging the merits of products by their profit returns on sales. He reckoned that for many of those products the profit would not be enough to cover the interest cost of financing covering production, long periods in inventory and slow payment by customers. The time dimension was not being taken into account.