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Hello sir,
Sir I am confused about that when we measure the performance vertically and when we measure horizontally, I mean when we measure cost of sales as a percentage of sale and when we measure cost increase or decrease as a percentage of previous year cost of sale?
Thank you
Dilawar khanWhen measuring performance, the measure on their own don’t mean very much. We should always compare either with similar companies or with the previous year, to see whether or not the performance has improved.
Looking at something like cost on its own would not tell us very much – obviously if sales increase then we would expect costs to increase – so we usually look at ratios (e.g. cost as a % of sales, and then compare the ratio with either similar companies or with previous years.
Have you watched my free lectures on performance measurement? The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.
Yes sir thank you so much, I have watched it but I think I should watched it again,
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