Self-Study
16
Overview
Finance
There are no prerequisites.

Course Description

A typical business churns out an enormous amount of financial and operational information, which can be difficult to sort through to see how a company is performing. Ratios and other measurements can play a valuable role in analyzing this information. In addition, a system of measurements can be used to monitor and control the operations of an organization. This course describes more than 200 ratios and other measurements that can be used to analyze the results, liquidity, and cash flows of a business. General analysis topics include measurements for such areas as performance, liquidity, cash flow, return on investment, and share performance. More specific functional analysis topics include measurements for such areas as cash management, credit and collections, fixed assets, inventory, and product design.



Instructor

Steven M. Bragg, CPA

Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books. He provides Western CPE with self-study courses in the areas of accounting and finance, with an emphasis on the practical application of accounting standards and management techniques. A sampling of his courses include the The New Controller Guidebook, The GAAP Guidebook, Accountants’ Guidebook, and Closing the Books: An Accountant’s Guide. He also manages the Accounting Best Practices podcast.

Steven has been the CFO or controller of both public and private companies and has been a consulting manager with Ernst & Young and an auditor with Deloitte & Touche. He holds an MBA from Babson College, a Master of Finance from Bentley College, and a BA from the University of Maine (summa cum laude).



Course Specifics

Finance
Jan 22, 2018
There are no prerequisites.
SS3188011
333
None


Compliance Information

103220
Qualifies for CA Fraud: No


Learning Objectives

Upon successful completion of this course, participants will be able to:

Chapter 1

  • Recognize the circumstances under which certain measurements should be used.

Chapter 2

  • Note the contents of the various performance measurements and the factors they are intended to compare.

Chapter 3

  • Recognize the components of the cash conversion cycle and the ratios derived from it.

Chapter 4

  • Identify the contents of the free cash flow concept and the measurements related to cash flow.

Chapter 5

  • Cite the situations in which return on investment measurements can be used and the factors they are intended to compare.
  • Recognize the measurements that can be used to reduce the number of unused fixed assets.

Chapter 6

  • Identify the parties using share performance measurements and the future conditions that these measurements can indicate.

Chapter 7

  • Identify the adjustment factor used for deflated growth measures and the situations in which these measurements are used.

Chapter 8

  • Note the key factors to be monitored in a system of constraint management.

Chapter 9

  • Recognize the contents of the cash management measurements and when their results should trigger an investigation.

Chapter 10

  • Identify the behaviors on which credit and collection measurements are intended to focus attention.

Chapter 11

  • Recognize the conditions that can be uncovered through use of customer service measurements.

Chapter 12

  • Identify the situations in which certain facility-related measurements should be used.

Chapter 13

  • Cite the measurements used to examine the ability to pay and the situations in which these measurements can be used.

Chapter 14

  • Identify the situations in which fixed asset measurements can be most gainfully employed and when they are of reduced value.

Chapter 15

  • Identify the types of behaviors that certain human resources measurements can be used to track.

Chapter 16

  • Recognize the effects of using certain inventory measurements.

Chapter 17

  • Note the effects that can skew the outcomes of payroll-related measurements.

Chapter 18

  • Cite the effects of price elasticity on profitability and how elasticity can be altered.

Chapter 19

  • Recognize the measurements that can track the performance level of a production process and the usage of inventory.

Chapter 20

  • Note the measurements that should be used to focus attention on the development of products.

Chapter 21

  • Identify the purchasing measurements most useful for monitoring progress toward supplier certification and reduction as well as the use of procurement cards.

Chapter 22

  • Cite the situations in which certain payables measurements can yield incorrect or skewed results.

Chapter 23

  • Recognize the measurements used to monitor different types of sales and marketing behaviors.


Table of Contents

Chapter 1 – Overview of Measurements

Learning Objectives

Introduction

What to Measure

Mandatory Measurements

Breaking with Tradition

Measurement Usage Levels

Measurement Timing

Measurement Consistency

Measurements and the Soft Close

Measurement Clutter

Limitations of Ratio Analysis

Summary

Chapter 1 Review Questions

Chapter 2 – Performance Measurements

Learning Objectives

Introduction

Overview of Performance Measurements

Sales Returns and Allowances to Sales

Contribution Margin Ratio

Gross Profit Ratio

Operating Income Ratio

Net Profit Ratio

Deflated Profit Growth

Effective Tax Rate

Core Earnings Ratio

Quality of Earnings Ratio

Operating Ratio

Operating Leverage

Breakeven Point

Margin of Safety

Discretionary Cost Ratio

Summary

Chapter 2 Review Questions

Chapter 3 – Liquidity Measurements

Learning Objectives

Introduction

Overview of Liquidity Measurements

Cash Conversion Cycle

Days Sales in Accounts Receivable

Days Sales in Inventory

Days Payables Outstanding

Liquidity Index

Current Ratio

Inventory to Current Assets Ratio

Quick Ratio

Cash Ratio

Defensive Interval Ratio

Net Working Capital Ratio

Working Capital Productivity

Working Capital Roll Forward

Illiquid Asset Conversion Ratio

Solvency Ratio

Summary

Chapter 3 Review Questions

Chapter 4 – Cash Flow Measurements

Learning Objectives

Introduction

Overview of Cash Flow Measurements

Free Cash Flow

Cash Flow Returns

Cash Flow per Share

Cash Flow Return on Sales

Cash Flow Return on Assets

Cash Flow from Operations Ratio

Cash Reinvestment Measurements

Cash Reinvestment Ratio

Funds-Flow Adequacy Ratio

Summary

Chapter 4 Review Questions

Chapter 5 – Return on Investment

Learning Objectives

Introduction

Return on Equity

Economic Value Added

Book Value Analysis

Net Book Value

Tangible Book Value

Book Value per Share

Return on Assets

Return on Assets

Return on Operating Assets

Earnings per Share

Dividend Performance

Dividend Payout Ratio

Dividend Yield Ratio

Summary

Chapter 5 Review Questions

Chapter 6 – Share Performance Measurements

Learning Objectives

Introduction

Overview of Share Performance Measurements

Price / Earnings Ratio

Capitalization Rate

Total Shareholder Return

Market Value Added

Market to Book Ratio

Insider Buy/Sell Ratio

Options and Warrants to Common Stock Ratio

Short Interest Ratio

Institutional Holdings Ratio

Summary

Chapter 6 Review Questions

Chapter 7 – Growth Measurements

Learning Objectives

Introduction

Overview of Growth Measurements

Sales Growth

Deflated Sales Growth

Sales Growth Consistency

Core Sales Growth

Customer Growth

Expense Growth

Profit Growth

Profit Growth

Profit Growth Consistency

Affordable Growth Rate

Summary

Chapter 7 Review Questions

Chapter 8 – Constraint and Throughput Measurements

Learning Objectives

Introduction

Overview of Constraint Measurements

Bottleneck Utilization

Bottleneck Effectiveness

Bottleneck Schedule Fulfillment

Buffer Penetration

Bottleneck Maintenance to Operating Ratio

Bottleneck Rework Processing

Post-Bottleneck Scrap

Manufacturing Effectiveness

Manufacturing Productivity

Manufacturing Effectiveness

Manufacturing Throughput Time

Delayed Throughput

Summary

Chapter 8 Review Questions

Chapter 9 – Cash Management Measurements

Learning Objectives

Introduction

Overview of Cash Management Measurements

Auto Cash Application Rate

Suspense to Receivables Ratio

Actual Cash Position versus Forecast

Average End of Day Available Balance

Earnings on Invested Funds

Unhedged Gains and Losses

Summary

Chapter 9 Review Questions

Chapter 10 – Credit and Collection Measurements

Learning Objectives

Introduction

Overview of Credit and Collection Measurements

Days Sales Outstanding

Best Possible DSO

Collection Effectiveness Index

Measurements Based on Time Buckets

Days Delinquent Sales Outstanding

Average Days to Pay per Collector

Collection Dispute Cycle Time

Deduction Turnover

Average Time to First Contact

Bad Debt Percentage

Collection Performance Report

Average Time to Establish Credit

General Management Measurements

Summary

Chapter 10 Review Questions

Chapter 11 – Customer Service Measurements

Learning Objectives

Introduction

Overview of Customer Service Measurements

On-Time Delivery Percentage

Order Cycle Time

Order Fill Rate

Orders Damaged in Transit

Customer Turnover

First Contact Resolution

Escalation Rate

Caller Abandonment Rate

Incident Volume

Inbound Caller Retention

Customer Opinions

Customer Satisfaction Ratio

Net Promoter Score

Summary

Chapter 11 Review Questions

Chapter 12 – Facility Measurements

Learning Objectives

Introduction

Overview of Facility Measurements

Cost per Square Foot

Occupancy Cost Ratio

Square Feet per Person

Percent of Storage in High-Cost Locations

Floor Space Utilization

Cubic Volume Utilization

Percentage of Storage Bins Utilized

Honeycombing Percentage

Summary

Chapter 12 Review Questions

Chapter 13 – Financing Measurements

Learning Objectives

Introduction

Overview of Financing Measurements

Debt to Equity Ratio

Ability to Pay Measurements

Interest Coverage Ratio

Debt Service Coverage Ratio

Fixed Charge Coverage Ratio

Cash Coverage Ratio

Average Cost of Debt

Borrowing Base Usage

Summary

Chapter 13 Review Questions

Chapter 14 – Fixed Asset Measurements

Learning Objectives

Introduction

Overview of Fixed Asset Measurements

Sales to Fixed Assets Ratio

Accumulated Depreciation to Fixed Assets Ratio

Cash Flow to Fixed Asset Requirements Ratio

Repairs and Maintenance Expense to Fixed Assets Ratio

Summary

Chapter 14 Review Questions

Chapter 15 – Human Resources Measurements

Learning Objectives

Introduction

Overview of Human Resources Measurements

Position Fulfillment Speed

Unfilled Requisitions Ratio

Recruiter Effectiveness Ratio

Intern Conversion Ratio

Cost per Hire

Employee Replacement Cost

Accession Rate

Employee Turnover

Annualized Compensation per Employee

Net Benefits Cost per Employee

Sales per Person

Profit per Person

Administrative Staff Ratio

Ergonomic Injury Rate

Outsourcing Cost Effectiveness

General Management Measurements

Summary

Chapter 15 Review Questions

Chapter 16 – Inventory Measurements

Learning Objectives

Introduction

Overview of Inventory Measurements

Average Inventory Calculation

Inventory Turnover Measurements

Inventory Turnover Ratio

Raw Materials Turnover

Work-in-Process Turnover

Finished Goods Turnover

Inventory Accuracy Percentage

Excess Inventory Measurements

Obsolete Inventory Percentage

Percent of Inventory Greater than XX Days

Returnable Inventory Valuation

Opportunity Cost of Excess Inventory

Summary

Chapter 16 Review Questions

Chapter 17 – Payroll Measurements

Learning Objectives

Introduction

Overview of Payroll Measurements

Payroll Transaction Error Rate

Form W-2c to Form W-2 Ratio

Proportion of Manual Checks

Payroll Entries to Headcount Ratio

Outsourced Payroll Cost per Employee

Summary

Chapter 17 Review Questions

Chapter 18 – Pricing Measurements

Learning Objectives

Introduction

Overview of Pricing Measurements

Price Elasticity of Demand

Cross Price Elasticity of Demand

Throughput per Minute

Proportion of Discounted Prices

Selling Price Variance

Sales Volume Variance

Summary

Chapter 18 Review Questions

Chapter 19 – Production Measurements

Learning Objectives

Introduction

Overview of Production Measurements

Department-Level Performance

Order Cycle Time

Manufacturing Efficiency

Productivity Cause and Effect Ratio

Degree of Unbalance

Operational Takt Time

Equipment Measurements

Equipment Effectiveness

Setup Time

Unscheduled Downtime Percentage

Maintenance and Repair Ratio

Average Run Time

Yield Measurements

First-Pass Yield

Material Yield Variance

Expense Proportions

Indirect Labor to Direct Labor Ratio

Overhead to Direct Cost of Goods Ratio

General Management Measurements

Summary

Chapter 19 Review Questions

Chapter 20 – Product Design Measurements

Learning Objectives

Introduction

Overview of Product Design Measurements

Product Development

Number of Design Platforms

Reused Components Percentage

Design Cycle Time

Bill of Material Accuracy

Financial Outcomes

Percentage of Target Cost Attained

Percentage of New-Product Sales

Return on Research and Development

Warranty Claims Percentage

Summary

Chapter 20 Review Questions

Chapter 21 – Purchasing Measurements

Learning Objectives

Introduction

Overview of Purchasing Measurements

Proportion of Purchase Orders above Threshold

Procurement Card Usage Percentage

Proportion of Spend Managed

Proportion of Spend with Preferred Suppliers

Proportion of Certified Suppliers

Supplier Performance Measurements

Supplier Fulfillment Rate

Supplier Defect Rate

Supplier Billed Price Variance

Economic Order Quantity

Proportion of Targeted Inventory Dispositioned

General Management Measurements

Summary

Chapter 21 Review Questions

Chapter 22 – Payable Measurements

Learning Objectives

Introduction

Overview of Payables Measurements

Transaction Error Rate

Full-Time Equivalent Measurements

FTEs per $1 Million of Revenue

Staff Cost per FTE

Line Items per FTE

Paperless Measurements

Percent of Paperless Invoices

Percent of Paperless Payments

Additional Payables Measurements

Summary

Chapter 22 – Review Questions

Chapter 23 – Sales and Marketing Measurements

Learning Objectives

Introduction

Overview of Sales and Marketing Measurements

Sales Productivity

Incremental Salesperson Effectiveness

Sales Effectiveness

Sales and Marketing as Percentage of Sales

Existing Customer Solicitation Ratio

Order Placement Rate

Sales per Customer

Quote to Close Ratio

Sales Backlog Ratio

Throughput Measurements

Throughput Quoted

Ratio of Throughput Awarded to Quoted

Ratio of Throughput Booked to Billed

Marketing Measurements

Advertising Value Equivalency

Sales to Unique Visitors Ratio

Direct Mail Effectiveness

Market Share

General Management Measurements

Summary

Chapter 23 Review Questions

Review Question Answers and Rationales

Glossary

Index

Qualified Assessment

Answer Sheet

Course Evaluation



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