Analyzing Financial Ratios – Performance And Efficiency

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. 

Efficiency ratios are used to analyze how well a company uses its assets and liabilities internally. Ratio analysis is a useful tool that will improve understanding of financial results over time. It provides key indicators of organizational performance.

This course focuses on specific efficiency and performance ratios and their use.

Note: This course is also a part of The Controllership Series.