What is weighted score in SAP PPM-PFM - Portfolio Management?

SAP Term: weighted score

• Component: PPM-PFM

• Component Name: Portfolio Management

• Description: A value that defines the relative importance of criteria in scoring models/questionnaires.

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• Key Concepts: 
  Weighted score is a metric used in SAP Portfolio Management to measure the performance of a portfolio. It is calculated by assigning weights to different criteria, such as risk, cost, and return, and then combining them into a single score. This score can then be used to compare different portfolios and make decisions about which ones to invest in.
  
  How to use it: 
  Weighted score can be used to evaluate the performance of a portfolio. To calculate the weighted score, first assign weights to each criteria that you want to measure. For example, you might assign a weight of 0.5 to risk, 0.3 to cost, and 0.2 to return. Then, calculate the weighted score for each portfolio by multiplying the weight of each criteria by its corresponding value for that portfolio. Finally, compare the weighted scores of different portfolios to determine which one is performing best.
  
  Tips & Tricks: 
  When assigning weights to criteria, it is important to consider how important each criteria is in relation to the others. For example, if cost is more important than return, then you should assign a higher weight to cost than return. Additionally, it is important to ensure that all of the weights add up to 1 so that the weighted score accurately reflects the performance of the portfolio.
  
  Related Information: 
  Weighted score is similar to other metrics used in portfolio management such as Sharpe ratio and alpha. However, weighted score is more flexible since it allows you to customize the weights assigned to each criteria according to your own preferences. Additionally, weighted score can be used in combination with other metrics for a more comprehensive evaluation of a portfolio's performance.