Explain how to go about evaluating the overall performance of a firm.

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wordprof | College Teacher | (Level 1) Educator Emeritus

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There are four factors in play in evaluation of a firm's "performance." The two most obvious ones are stock value (for public companies) or current market value (if private), and the curve (hopefully upward) of the cost/profit ratio, that is, the manufacturing efficiency is increasing.    

Less obvious for measuring "performance" are the flexibility and efficiency of the firm's expansion capabilities, either through acquisitions or product line expansion. For a firm to thrive in the future, it must perform on this scale as well.  Finally, and the most diffult to measure as performance (because many factors lie outside the firm's ability to change) is the curve of the market share percentage.  Here, advertising and comparison surveys only partially measure a firm's "performance" because several negative factors--competitors' problems, natural disasters, and the like, can change that market ratio without saying anything about the firm itself.

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