Practices of performance measurement in companies in the Republic of Serbia

Abstract

Return), ROE (Return On Equity), ROA (Return On Assets) etc. are in use nowadays. In practice, managers cannot and do not want to apply all of these metrics and managers' choice does not necessarily rely on what theory emphasizes as their advantages and disadvantages. We surveyed 64 CFOs in order to explore the corporate practice in the Republic of Serbia. The DCF-based capital budgeting metrics are dominant compared to the traditional metrics, and the one that is used the most is the profi tability index, only to be followed by the IRR and the NPV. The Payback Period is yet frequently used. The earnings-based corporate performance metrics are still the most important. However, the presence of EVA and balanced scorecard is not negligible. Large companies use them signifi cantly more than small companies. The orientation towards EVA and balanced scorecard increases with the internationalization of a fi rm as well. Finally, companies using sophisticated capital budgeting metrics are prone to using sophisticated corporate performance metrics.

The role of financial and non-financial performance indicators in enterprise sustainability evaluation

“…On the territory of the Republic of Serbia, there has been no extensive empirical research on measurement and evaluation of company performance (Domanović, 2010(Domanović, , 2013Todorović et al, 2015). Research results indicate that companies in the Republic of Serbia predominantly use the metrics of discounted cash flow in investment decisionmaking, while the index of profitability and return period are used to the largest extent, and internal rate of return is applied to a greater extent than the net present value (Todorović et al, 2015).…”

“…Research results indicate that companies in the Republic of Serbia predominantly use the metrics of discounted cash flow in investment decisionmaking, while the index of profitability and return period are used to the largest extent, and internal rate of return is applied to a greater extent than the net present value (Todorović et al, 2015). A large number of companies in the Republic of Serbia use solely accounting, although different criteria for evaluating the company performance identified on the basis of information in the financial statements.…”

“…In this context, the emphasis is on profit, contribution margin, return on investment, and earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation, and amortization (EBITDA), realization and average salary per employee in Euros. Accounting profit and accounting rates of return are still dominant in relation to the modern measures (Todorović et al, 2015). Managers of companies in the Republic of Serbia, in general, do not apply modern integrated models for evaluating the performance of companies for a variety of reasons: lack of information, knowledge, lack of understanding, lack of financial resources for the introduction and implementation of the model, unwillingness regarding change and management innovation, etc.…”