APM Technical Article Podcast: Divisional Performance Management

In a divisional organisation, how do you measure performance the right way, without encouraging short-term thinking? For your ACCA APM exam, you need to understand these 3 key financial performance measures: • Return on Investment (ROI) – easy to compare but can lead to dysfunctional decisions • Residual Income (RI) – supports goal congruence and NPV logic • Economic Value Added (EVATM) – adjusts for accounting distortions to give a clearer view of value creation 📌 Tip: Use controllable profit for assessing managers and divisional profit for assessing the division overall. 📚 Example: A project with 12% ROI might be wrongly rejected if the division’s current ROI is 16%. Even though 12% exceeds the 10% cost of capital. That’s why RI gives better insights. 👉 Get exam-focused ACCA resources and practice questions on Learnsignal: https://www.learnsignal.com/ #ACCA #APM #ACCAExamPrep #PerformanceMeasurement #DivisionalPerformance #Learnsignal #ResidualIncome #EconomicValueAdded #AccountingStudents #ManagementAccounting