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Provoked attack.

Document Cited in Related
Vincent
AuthorBentley, Robert
PositionLetters - Letter to the Editor

David Allen's article used one-liners, generalisations and specific examples intended, I am sure, to encourage debate, but his reference to earnings per share (EPS) increasing overtime while the business collapses only serves to confirm that the wrong measure is being considered. EPS is an external reporting requirement and has nothing to do with good performance management. Measures such as free cash flow, EBITDA and many operational measures truly enable one to measure and establish the health of a business.

The article makes interesting and provocative observations on the view that management accountants must look forward, but I criticise some of Allen's assumptions:

* "If you can measure something, it must have already happened and therefore cannot be changed." Most businesses are involved in repeated activities to produce a product or provide a service. Analysing past activities and reasons for success or failure provide the basis for change to improve future performance.

* "If you can measure something, then so can the competition." I agree that competitive advantage cannot be gained as a result, but not measuring and not improving will result in competitive disadvantage.

* "The prevention, as opposed to the detection, of crime cannot be measured." Prevention can be measured, whether it is crime or any other society-wide problem. The actions that cause the prevention require greater judgment.

* "Since there are no facts about the future, decisions are based on judgments." This does not invalidate measurement of the past. Judgments are based on experience.

* "Many things cannot be measured because they...

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