American Journal of Economics and Business Administration

Comparison between Financial Ratios Analysis and Balanced Scorecard

Khalad M.S. Alrafadi and Mazila Md-Yusuf

DOI : 10.3844/ajebasp.2011.618.622

American Journal of Economics and Business Administration

Volume 3, Issue 4

Pages 618-622

Abstract

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.

Copyright

© 2011 Khalad M.S. Alrafadi and Mazila Md-Yusuf. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.