Business Performance Analysis: Key Financial and Non-financial Metrics

This essay discusses the financial and non-financial indicators of business performance, emphasizing their importance in strategic planning and overall business success. Financial indicators such as gross profit margin, net profit, net profit margin, and current ratio are examined for their roles in measuring a company's financial health and profitability. The essay also explores non-financial indicators like company reputation, brand preference, customer retention, innovation, and market share, highlighting their contribution to a holistic performance evaluation. Furthermore, the role of HR in business planning and change management is discussed, emphasizing the importance of strategic input, stakeholder partnerships, and employee motivation in achieving organizational goals and adapting to change.

0Running head: BUSINESS PLANNING
Business Planning
Name of the Student
Name of University
Author’s note

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Financial and Non-financial Indicators of Business Performance
Financial Indicators of Business Performance
Gross Profit Margin Gross profit margin = (revenue – cost of products sold)/ revenue
The gross profit margin must be large enough in order to
accommodate the fixed expenses like manufacturing cost and
operational cost. Gross Profit Margin is thus defined as the financial
measurement of how a company regulates its overall costs. Under
the gross profit margin there lies EBITDA (Earnings before
interest, taxes, depreciation and amortization) that measures how a
company controls its operating expenses, along with other
associated costs (Delen, Kuzey and Uyar 2013).
Net Profit Net Profit = Total revenue – total expenses
The increase in the net profit margin is a direct indicator of business
success (Sauaia 2014).
Net Profit Margin Net profit margin = net profit/total revenue
Net profit margin is effective as leverage in terms of explaining the
variance. The Operating Expense-to-Net Sales Ratio cast maximum
positive loading over Net Profit Margin. The Net Profit Margin also
imparts significant positive loading value on this factor. Thus these
factors are mutually exclusive and an important determinant of a
company’s profitability which is relative to its sales revenues
(Delen, Kuzey and Uyar 2013).
Current Ratio Current ratio = current assets/current liabilities. Current ratio

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measures the liquidity of the business according to Mehta (2012),
liquidity has a positive effect dividend policy
Non-Financial Indicators of Business Performance
Reputation of the company in the contemporary market and among the target customers
Brand preferences among the target customers
The rate of customer retention and new customer attraction
Innovation in the grounds of new product launch
The total market share (Sauaia 2014)
Role of HR in Business Planning
Proper strategic planning helps an organisation to make promising business choices in the
domain of what it needs to achieved and the gaols that are requirement to be accomplished in
order to fetch the aspiring target. The main role of the HR is business planning is to provide
strategic input. This strategic input mainly comes in the form of proper human resource
development. Like other operating functional strategies of an organisation, HR strategy is also
driven via vision, mission and values that directs and motivates the human resource of an
organisation towards the right path and thereby achieving the target (Cascio 2018). Other role of
HR in the domain of business planning include building partnership and alliances with the key
stakeholder both inside and outside the organisation and thereby providing insightful suggestion
and feedbacks to the management (Cascio 2018).

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Role of HR in Change Management
HR department deals with recruiting, training monitoring the performance of the
employee and hence plays a vital role in change management. It is the role of the HR to ensure
that the employees are motivated enough to participate and welcome the change in the
organisation whole heartedly. So in order to make this happen, HR professionals need to recruit
right people for the right position. The meaning of the term right people emphasize overt the
group of population who are capable of thinking out of the box and thus successful in bringing
fresh perspective to the conference table. This intelligent people always strive for something
better and innovative and thus remain motivate to deliver their best. Their positive approach
towards work influences the overall work ethics of the team and thereby facilitating change
management (Bratton and Gold 2012).

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References
Bratton, J. and Gold, J., 2012. Human resource management: theory and practice. Palgrave
Macmillan.
Cascio, W., 2018. Managing human resources. McGraw-Hill Education.
Delen, D., Kuzey, C. and Uyar, A., 2013. Measuring firm performance using financial ratios: A
decision tree approach. Expert Systems with Applications, 40(10), pp.3970-3983.
Mehta, A., 2012. An empirical analysis of determinants of dividend policy-evidence from the
UAE companies. Global Review of Accounting and Finance, 3(1), pp.18-31.
Sauaia, A.C.A., 2014. Evaluation of performance in business games: financial and non financial
approaches. Developments in Business Simulation and Experiential Learning, 28.