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.

Learning Objectives
  • Explore the types and purpose of efficiency ratios including:
    • Sales and Inventory
    • Accounts Receivable (AR) turnover
    • Asset turnover
    • Inventory turnover
  • Explore 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
    • Days payables outstanding
Last updated/reviewed: March 5, 2024

Included In Certifications

This course is included in the following Certification Programs:

18 CoursesFinancial Statement Preparation, Reporting and Auditing Certification

  1. Financial Statement Introduction
  2. GAAP Principles, Assumptions and Considerations
  3. GAAP Presentation of Financial Statements
  4. Management Discussion and Analysis (MD&A) Update
  5. Sarbanes Oxley Overview
  6. Sarbanes-Oxley Section 302: ICFR
  7. XBRL (Extensible Business Reporting Language) Introduction to Basics - Updated
  8. XBRL - Connection to SOX 302/404 and Critical Roles
  9. Analyzing Financial Ratios - Solvency, Liquidity and Debt
  10. Analyzing Financial Ratios - Leverage
  11. Analyzing Financial Ratios - Performance And Efficiency
  12. Financial Statement Audit in Accordance with GAAS - General Standards
  13. Financial Statement Audit in Accordance with GAAS - Conducting the Audit
  14. Financial Statement Audit in Accordance with GAAS - Auditors' Report and Opinion
  15. Introduction to Accounting for Income Taxes Based on Income
  16. Practical Application For Accounting For Income Taxes Based On Income Part 1
  17. Practical Application For Accounting For Income Taxes Based On Income Part 2
  18. FASB Codification Research System
18 Reviews (86 ratings)

Reviews

5
Member's Profile
Lynn, I must have taken 40 of your courses since joining Proformative/Illumeo. You are so easy to listen to and You have taught me so much. This is yet another fine course. I suggest students seek out your courses. They are jam packed with great case studies and content. Thank you, Larry
5
Anonymous Author
Great course. Stated learning objectives were met. Program materials were relevant and contributed to the achievement of the learning objectives
5
Anonymous Author
Good refresher on ratios (for all three of these courses). I like that she reviews variations on how these are typically calculated.
5
Anonymous Author
Such a helpful course and how to understand efficiency and performance ratios not just the calculation of them but what they show.
5
Anonymous Author
This review of important ratios for business was useful. The presenter has included relevant examples to aid understanding.
5
Member's Profile
A lot of information that was given in a very good manner. Enjoy Lynn Fountian's webinars she is very knowledgable.
5
Member's Profile
This was a good review for manufacturing and distribution companies. I would recommend to anyone in this space.
5
Anonymous Author
Excellent refresher course and reference for future use. Instructor and materials are also excellent.
5
Anonymous Author
I really enjoyed how you had this content put together. I learned something here.
5
Member's Profile
Very informative and organized in an easy to follow method. Enjoyed the training.
5
Anonymous Author
Course flowed smoothly with great business examples to support calculations.
4
Anonymous Author
Good review and refreshers on various ratios. Thanks for the great course.
3
Member's Profile
Use a split screen rather than flipping back and forth between pages.
5
Anonymous Author
Really good review of ratios and implications on managing a business.
4
Anonymous Author
Excellent presentation on key financial ratios and how to use them.
5
Anonymous Author
Good course, increased my knowledge of subject. Well presented.
5
Anonymous Author
This course was interesting and informative. I recommend it .
4
Member's Profile
Good Course. i recommend all users to go through this course.
show all reviews
Prerequisites
Course Complexity: Intermediate

No Advanced Preparation or Prerequisites are needed for this course. However, it is recommended to take the other courses in the series prior to completing this one.

Education Provider Information
Company: Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact: For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Instructor for this course
  Course Overview CPE
Course Syllabus
INTRODUCTION AND OVERVIEW
  Introduction to Analyzing Financial Efficiency and Performance Ratios4:03
  Financial Ratios2:51
  AR Turnover8:50
  Asset Turnover3:54
  Inventory Turnover10:36
  Performance Ratios7:37
  Cash Conversion7:40
  CCC Analysis4:19
  Comprehensive Example9:03
  AR Turn3:01
  Inventory and Summary4:06
CONTINUOUS PLAY
  Analyzing Financial Efficiency and Performance Ratios1:06:00
SUPPORTING MATERIALS
  Slides: Analyzing Financial Efficiency and Performance RatiosPDF
  Analyzing Financial Efficiency and Performance Ratios Glossary/IndexPDF
REVIEW AND TEST
  REVIEW QUESTIONSquiz
 FINAL EXAMexam