Managers use ratio analysis to identify strengths and weaknesses, forming the basis for strategic decisions and operational initiatives. Shareholders often apply ratio analysis to compare a company’s results with those of other organizations or to assess management effectiveness and mission impact.
Two important ratio categories for evaluating a company’s viability are efficiency ratios and performance ratios.
Performance ratios measure the effectiveness of core operations, revealing how well resources are used to generate sales, cash flow, and other key outcomes.
Efficiency ratios assess how effectively a company manages and utilizes its assets and liabilities internally.
When tracked over time, ratio analysis becomes a powerful tool for understanding financial performance. It provides essential indicators that help both internal and external stakeholders evaluate an organization’s operational health and strategic direction.
This course focuses on specific efficiency and performance ratios and their use.
Who Should Attend
Financial and accounting analysts, internal auditors, compliance analysts, investor analysts and anyone interested in having a better comprehension of a company’s performance.
Topics Covered
- Performance Ratio (Profit % Returns):
- Gross Profit Margin
- Operating Margin
- Net Profit Margin
- Return on Assets
- Return on Equity
- Return on Capital Employed
- Efficiency ratios (Operational Effectiveness):
- Inventory Turnover
- Receivables turnover
- Asset Turnover
- Payables Turnover
- Working Capital Turnover
- Fixed Asset Turnover
Learning Objectives
- Identify the types and purpose of efficiency ratios
- Identify the purpose of performance ratios
- Identify various performance ratios and how to analyze the results
Level
Basic
Instructional Method
Group: Internet-based
NASBA Field of Study
Auditing (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructor
Lynn Fountain
Lynn Fountain has over 38 years of experience spanning public accounting, corporate accounting and consulting. 20 years of her experience has been working in the areas of internal and external auditing and risk management. She is a subject matter expert in multiple fields including internal audit, ethics, fraud evaluations, Sarbanes-Oxley, enterprise risk management, governance, financial management and compliance. Lynn has held two Chief Audit Executive (CAE) positions for international companies. In one of her roles as CAE, she assisted in the investigation of a multi-million-dollar fraud scheme perpetrated by a vendor that spanned 7 years and implicated 20 employees. The fraud was formally investigation by the FBI and resulted in 5 indictments estimating a $13M fraud loss.
Ms. Fountain is currently engaged in her own consulting and training practice. She is a highly sought-after trainer and international speaker. In addition, Ms. Fountain has assisted numerous companies with enterprise risk management frameworks, internal audit processes and financial accounting. She also serves as a discussion leader for the AICPA for numerous classes finance, accounting and risk management topics.
Ms. Fountain is the author of three separate technical books. Her first book released in 2015 by the Institute of Internal Auditors Foundation is entitled “Raise the Red Flag – The Internal Auditors Guide to Fraud Evaluations”. Her second book “Leading the Internal Audit Function” was released in October 2015 by Taylor & Francis Publications. This book serves as the initial launch for a series of leading practice internal audit and information technology publications. Her third book “Ethics and the Internal Auditor’s Dilemma” was released in December 2016.
Ms. Fountain obtained her BSBA from Pittsburg State University and her MBA from Washburn University in Kansas. She has her CPA, CGMA, CRMA credentials.