Question

1. Discuss both financial measures (i.e., market & accounting) in terms of 1) timeliness, 2) preciseness, 3) objectivity, 4) congruence, and 5) cost-effectiveness.

2. How can the myopia problem, often caused by financial measures, be overcome? Please provide at least 5 remedies for the myopia problem and briefly explain each remedy.

Answer 1

1. financial measures in terms of market and accounting are differently defined as they have different meaning and different goals

A. Timeliness-timeline is related to the the market measure is flexible in nature but timeline is regarding to accounting nature is highly time-bound because various books of accounts have to be submitted before certain time for different audits.

B. Preciseness-accounting is more precious than marketing because accounting has to be more precise as it has to comply with various rules and regulation which have been specified by general accounting standard.

C.objectivity of accounting is to maintain the books of accounts that will be reflecting true value of the company where as objectivity of marketing is to add new and potential customers in order to explain the business

D. Congruence-accounting is highly congruent in nature of synchronising various departments of the company whereas marketing is not that congruent it is just nearly focused at a particular group.

E. Cost effectiveness of accounting is not that important for the company because it cannot be reduced significantly whereas the marketing cost can be reduced significantly and the cost-effectiveness will be having a lot of impact in the profit and loss account of the company.