As per the U.S. accounting standards, R&D expenditures as well as marketing costs needs to be charged for during the time span they are incurred, thus trimming down the profit levels (Maines et. al., 2003). However, successful research perks up the future profits in case if it could be introduced in the marketplace. Likewise, investments done in consumer satisfaction could perk up following economic performance through augmenting revenues and faithfulness of present buyers, catching the attention of new buyers and trimming down the transaction expenses (Said et. al., 2003). Further, non-financial data could offer the missing gaps amid such advantageous practices and financial outcomes through making available forward-looking information related to stock performance or accounting.
Lastly, the selection of measures should be grounded upon offering information related to managerial acts along with the amount of “noise” within the measures (Lev, 2001). Noise implies towards the modifications in performance measure, which are beyond manager or company’s control, varying from alterations within the economy to luck (bad or good). Supervisors need to be aware about how much achievement is due to their acts or they wouldn’t have the signs they require for maximizing their efforts on performance. Since several non-financial measures are less vulnerable to outside noise as compared to the accounting measures, their utilization might enhance managers’ performance through offering more specific assessment of their acts (Maines et. al., 2003). This also trims down the risk faced by the managers at the time when deciding pay.
To conclude, this particular paper attempted to examine Tesco from two perspectives. First of all, formal recognition of Tesco’s business model within the Annual Report and the problems involved in interpreting the concept within accounting conventions. Secondly, the role of non-financial measures in reporting Tesco’s business model. The paper has been quite successful in doing so.