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Comparison between Financial Ratios Analysis and Balanced Scorecard

Author(s): Khalad M.S. Alrafadi | Mazila Md-Yusuf

Journal: American Journal of Economics and Business Administration
ISSN 1945-5488

Volume: 3;
Issue: 4;
Start page: 618;
Date: 2011;
Original page

Keywords: Financial tools | financial ratios analysis | balanced scorecard

Financial ratios have long been used as a tool to evaluate the overall financial performance of a company. However, in early 1990s, a new method called Balanced Scorecard has been introduced by Robert Kaplan and David Norton to evaluate the overall controlling of a company. Problem statement: To the best of my knowledge at present there are no letrature review comparing between Financial ratios and Balanced Scorecard. Approach: This study is a conceptual paper comparing between the financial ratios analysis and balanced scorecard method. The objective of this paper is to compare between the benefits and problems of using financial ratios analysis and Balanced Scorecard method in evaluating the overall control of the company. Results: As a result, we found that the Balanced Scorecard is more efficient than financial ratios analysis. Conclusion/Recommendations: Both the balanced scorecard and financial ratios analysis are important tools for evaluating performance. So, we cannot ignore either of them.

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