Question

Define Key Performance Indicators (KPI) and dashboards. What is their value? How are KPIs and dashboards used in financial condition analysis?

Answer 1

A Key Performance Indicator (KPI) is a value that demonstrates how effectively a organisation is achieving main business objectives. Organizations use KPIs to evaluate their success at reaching targets.

Dashboard enables businesses to turn data into analytics and insights. The dashboard allows companies to enter their data into one specially designed system, or connect external services for faster and more accurate data collection. This type of dashboard allows businesses to visualize and understand data from a number of KPIs that represent different areas of a business, all in one place.

Value

Organisation benefits from faster and more accurate data collection, instant reports on performance, and alerts when a KPI is over or under achieving. Dashboard software centralizes businesses data, while simplifying real-time reporting to always give them a competitive edge.

KPI and dashboards help managers analyze and interpret how well their organizations function. Choosing just a few operational data points to include in a review reduces complexity. By examining performance levels, managers can see where problems lie and develop improvement strategies. Additionally, company executives review KPI reports to monitor the overall business and make strategic management decisions. In some cases, KPI reports produced as part of annual financial statements also allow companies to demonstrate compliance with reporting regulations.