Balanced scorecard
A strategic performance measurement system that includes financial and non-financial performance measures. The measures are in the four perspectives of financial, customer, internal business processes, and learning and growth.

Cash flow ROI
The average real cash return on all existing projects is reflected in the financial statements. 

Continuous improvement
Seeks continual improvement of machinery, materials, labor, and production methods by soliciting suggestions and ideas from employees and customers.

Cost of quality
A technique that is based on the philosophy that failures have an underlying cause, prevention is cheaper than failures, and cost of quality performance can be measured.

Cross-sectional analysis
Involves benchmarking the firm’s ratios against ratios of similar firms at a point in time.

Economic profit
Accounting profit minus the cost of capital.

Economic value added
Net operating profit after taxes minus the after-tax weighted-average cost of capital multiplied by total assets minus current liabilities.

Free cash flow
Net operating profit after taxes plus depreciation and amortization minus capital expenditures minus the change in working capital requirements.

Horizontal analysis
Involves an evaluation of the firm’s ratios and trends over time.

Kaizen
The Japanese art of continuous improvement.

Pareto chart
A bar graph that ranks causes of process variations by the degree of impact on quality.

Strategy maps
Diagrams of the cause and effect relationships between strategic objectives.

Residual income
Net income minus a cost of capital based on capital invested in the project or division. 

Residual income profile
A graphical way to look at the relationship between residual income and return on investment.

Total quality management
Focuses on managing the firm to excel in quality in all dimensions of products and services for customers.

Value-based management
Involves the use of value-based metrics in a strategic management system.