Economic Horizons, January - April 2015, Volume 17, Number 1, 45 - 58 © Faculty of Economics, University of Kragujevac UDC: 33 eISSN 2217-9232 www. ekfak.kg.ac.rs Original scientific paper UDC: 005.21:005.336.1(497.11) doi: 10.5937/ekonhor1501045T INTRODUCTION All decisions of a company can be classified into three categories: strategic, tactical and operational. Strategic decisions concern the business portfolio, the level of the vertical integration and markets in which the company will run its bu–sinesses. Tactical decisions relate to investment projects (i.e. capital budgeting) that implement a pre-formulated strategy. Operational decisions are made in daily operations for the purpose of the implementation of approved projects and business plans. The ultimate criterion in all decisions should be the maximization of the company value. In a simplified interpretation, all decisions should be directed toward improving a company’s performance. In order to improve performance, it is necessary to choose the measures or metrics that will credibly indicate the level of its achievement. Hence the great importance of performance measures - since what PRACTICES OF PERFORMANCE MEASUREMENT IN COMPANIES IN THE REPUBLIC OF SERBIA Miroslav Todorovic*, Djordje Kalicanin and Aleksandra Nojkovic Faculty of Economics, University of Belgrade, Belgrade, the Republic of Serbia A large number of acronyms which indicate different performance metrics, such as EBIT (Earnings Before Interest And Taxes), EBITDA (Earnings Before Interest, Taxes, Depreciation, And Amortization), ROIC (Return On Invested Capital), NPV (Net Present Value), EVA (Economic Value Added), IRR (Internal Rate Of Return), ROE (Return On Equity), ROA (Return On Assets) etc. are in use nowadays. In practice, managers cannot and do not want to apply all of these metrics and managers’ choice does not necessarily rely on what theory emphasizes as their advantages and disadvantages. We surveyed 64 CFOs in order to explore the corporate practice in the Republic of Serbia. The DCF-based capital budgeting metrics are dominant compared to the traditional metrics, and the one that is used the most is the profitability index, only to be followed by the IRR and the NPV. The Payback Period is yet frequently used. The earnings-based corporate performance metrics are still the most important. However, the presence of EVA and balanced scorecard is not negligible. Large companies use them significantly more than small companies. The orientation towards EVA and balanced scorecard increases with the internationalization of a firm as well. Finally, companies using sophisticated capital budgeting metrics are prone to using sophisticated corporate performance metrics. Keywords: performance measurement, capital budgeting metrics, corporate performance metrics JEL Classification: G31, M21 * Correspondence to: M. Todorovic, Faculty of Economics, University of Belgrade, Kamenicka 6, 11000 Belgrade, the Republic of Serbia; e-mail: todorovic@ekof.bg.ac.rs