Explain how R&D measures differ from more standard financial measures. Do they tend to be leading or lagging measures? Compare how R&D and financial measures can be used together to make management decisions.
Financial measures such as balance sheet data are lagging measures in the sense that they provide the state of the company as of today while R&D measures can be termed as leading in the sense that they can be used to forecast future performance.
Financial measures provide the information about the company's past performance, but are not well suited for predicting future performances or for implementing or controlling the firm's strategic plan. While it is useful for tracking the physical assets, it is not that useful in the scenario where intangible assets such as customer loyalty constitute an ever increasing proportion of a company's market value. ...
How R&D measures differ from more standard financial measures