What gets measured, gets managed ~ Peter Drucker
Performance Measures should be linked to Value. Managers are evaluated based on these measures.  Of course, there are extremely important non-performance measures like Customer Satisfaction, Quality, Cycle Time which is important and not captured in the objectivity of the financial measures.
So what are the financial performance of measures which are commonly used….
There are four main categories of financial measures, which are used for performance:
CASH
INCOME
RETURN
VALUE
CASH FLOW MEASURES
Gross cash flow
Earnings before interest, tax and depreciation/amortization (EBITDA)
INCOME MEASURES
Earnings before interest and tax (EBIT)
EBITDA – Depreciation/Amortization
Net operating profit after tax (NOPAT)
EBIT ( 1- tax rate)
Net Income (NI)
EBIT + Interest Income – Interest Expense
Earnings per share (EPS):
Net Income/ # of shares outstanding
RETURN MEASURES
Return on Equity (ROE):
Net income/Total common equity
Dupont ratio:
(NI/Sales) x (Sales/TA) = ROI
Identify value drivers based on different components of ROE
Return on Capital Employed (ROCE) or Return on Net Assets (RONA):
NOPAT/ Net Assets (TA-Current Liabilities)
SINGLE PERIOD VALUE ADDED MEASURES
Residual Income (RI):
EBIT minus a charge for assets
Economic Value Added (EVA):
Stern Stewart measure of economic profit minus a charge for capital employed
Net Operating Profit After Taxes (Stern Stewart) –  (Weighted Average Cost of Capital)  X (Capital  Employed)