Analyzing Financial Efficiency and Performance Ratios (Completed)

The concept of ratio analysis is a topic covered in most college curriculum. However, we often concentrate too hard on the “calculation” rather than working to understand the meaning of the ratio results. It is critical to understand what a ratio is telling you in order to appropriately use it within strategic planning and operations.

Managers use ratio analysis to pinpoint strengths and weaknesses from which strategies and initiatives can be formed. Shareholders may use ratio analysis to measure your company's results against other organizations or make judgments concerning management effectiveness and mission impact.

Important ratio 'groups' that assist in analyzing a business and its viability are efficiency and performance ratios. Performance ratios measure the function of core operations for a company. These ratios reveal information about how efficiently resources are used to generate sales and cash, among other things.

Who Should Attend
Accountants and Finance professionals, Operational and budget managers, Internal auditors, Legal and Compliance professionals.

Topics Covered

• Interpret "math" concepts in ratio analysis
• The types and purpose of efficiency ratios
• Purpose of performance ratios
• Various performance ratios and how to analyze the results

Learning Objectives

• Identify how to interpret "math" concepts in ratio analysis
• Recognize the types and purpose of efficiency ratios including: Sales and Inventory, Accounts Receivable (AR) turnover, Asset turnover, and Inventory turnover
• Describe and apply the purpose of performance ratios
• Identify various performance ratios and how to analyze the results including: Days sales, outstanding, Cash Conversion Cycle, Days payable outstanding, Days inventory outstanding, and Days payables outstanding

Level
Basic

Instructional Method
Group: Internet-based

NASBA Field of Study
Accounting (2 hours)

Program Prerequisites
None

Advance Preparation
None