Financial modelling terms explained

Corporate Performance Management

Corporate Performance Management (CPM) is a business intelligence (BI) application that allows organizations to improve performance, increase efficiency and make better business decisions.

What is Corporate Performance Management?

Corporate Performance Management (CPM) is a process that organizations use to track and manage their performance against specific goals. The goals can be strategic in nature, such as increasing market share or becoming more profitable, or operational, such as improving customer satisfaction or reducing costs. CPM involves the use of performance metrics, performance dashboards, and performance reports to track progress and identify areas of improvement. Organizations can use CPM to improve decision-making, make better use of resources, and achieve their strategic goals.

How Do You Perform Corporate Performance Management?

There is no single answer to this question as corporate performance management (CPM) can be performed in a variety of ways, depending on the needs of the organization. However, some of the most common methods of CPM include financial statement analysis, budgeting and forecasting, performance metrics and key performance indicators (KPIs), and variance analysis.

Financial statement analysis is a process of reviewing a company's financial statements to assess its financial health and performance. This can include studying trends in revenue, expenses, profits, and other key metrics, as well as comparing the company's performance against industry benchmarks.

Budgeting and forecasting is the process of creating a plan for how the company will achieve its desired performance goals. This usually includes setting specific targets for revenue, expenses, and other key metrics, and then creating a timeline for reaching those targets.

Performance metrics and KPIs are a way of measuring how well the company is performing against its budget and forecast. These metrics can be used to track progress over time, and can help identify areas where the company is underperforming or overperforming.

Variance analysis is a process of examining the differences between actual results and budgeted or forecasted results. This can help identify causes of financial variance, and can help managers make informed decisions about how to correct any negative trends.

Who Uses Corporate Performance Management?

There are a variety of different users of corporate performance management (CPM) systems. The most obvious users are the senior executives of a company, who use CPM systems to help them make strategic decisions about the future of the company. CPM systems can help executives to measure and track the performance of different parts of the company, as well as compare the performance of the company against its competitors.

Other users of CPM systems include financial analysts, who use the data in CPM systems to help them make investment decisions, and managers of different parts of the company, who use CPM systems to track the performance of their divisions and make sure that they are meeting their targets.

In short, CPM systems are used by a variety of different people in a company, from senior executives to financial analysts to managers of different divisions. CPM systems provide these people with a tool to help them make better decisions about the future of the company.

What Do You Have to Watch out for When You're Performing Corporate Performance Management?

There are a few things to watch out for when performing corporate performance management. One of the most important is ensuring that all data is accurate and up-to-date. This means regularly updating your models to reflect any changes in the company's performance or outlook. It's also important to be realistic in your assumptions, and to avoid over-optimism or pessimism. Additionally, it's crucial to have a good understanding of your company's business model and how it works. This will help you to correctly identify trends and drivers of performance. Finally, it's important to be aware of the limitations of financial models, and to use them as just one tool in your analysis arsenal.

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