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I propose that it is appropriate to develop an accounting standard on financial performance measurement. This type of standard would offer a framework for the consistent evaluation and reporting of key financial metrics, such as return on investment (ROI), gross profit margin (GPM), net operating profit margin (NOPM), earnings per share (EPS) and cash conversion cycle (CCC). These metrics provide invaluable insights into the overall health of a business and are essential in making sound business decisions.
By having one consistent accounting standard, companies will be able to compare their own performance against industry standards more effectively. Furthermore, investors and other stakeholders in businesses can rely on these established measures when evaluating the potential success or failure of an organization. The accounting standard should also include guidance regarding how these metrics should be calculated, reported and interpreted in order to ensure accuracy and transparency in financial reporting.
In conclusion, by developing a comprehensive accounting standard for measuring financial performance, organizations will have greater clarity when making decisions about their operations. This leads to better decision-making with higher chances of success which benefits both shareholders and stakeholders alike.