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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.

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: November 15, 2019

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 (SOX) 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. Conducting An Audit In Accordance With GAAS - Part 1
  13. Conducting An Audit In Accordance With GAAS - Part 2
  14. Conducting An Audit In Accordance with GAAS - Part 3
  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

8 Reviews (15 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
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.
3
Member's Profile
Use a split screen rather than flipping back and forth between pages.
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.
4
Member's Profile
Good Course. i recommend all users to go through this course.

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 .
Course Syllabus
INTRODUCTION AND OVERVIEW
  4:03Introduction to Analyzing Financial Efficiency and Performance Ratios
  2:51Financial Ratios
  8:49AR Turnover
  3:54Asset Turnover
  10:36Inventory Turnover
  7:36Performance Ratios
  7:40Cash Conversion
  4:19CCC Analysis
  9:02Comprehensive Example
  3:01AR Turn
  4:06Inventory and Summary
CONTINUOUS PLAY
  1:05:57Analyzing Financial Efficiency and Performance Ratios
SUPPORTING MATERIALS
  PDFSlides: Analyzing Financial Efficiency and Performance Ratios
  PDFAnalyzing Financial Efficiency and Performance Ratios Glossary/Index
REVIEW AND TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM