Performance Management

This category covers all aspects of performance management such as budgeting, forecasting, performance measure and performance evaluation.

Days Inventory Outstanding – DIO: Definition, Formula, Calculation, and More

Businesses are run by sales. Days inventory outstanding is a measure that tells how quickly a business is turning its inventory into sales. Days inventory outstanding (DIO) is an important working capital ratio. It also shows the operating efficiency and short-term liquidity positions of a company. Let us discuss what is a DIO ratio, how …

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What is Days Sales Outstanding (DSO)? How to Calculate and Improve DSO?

Days sales outstanding is defined in several ways. However, the simplest way to understand DSO is the days a company takes to collect the payment after purchasing an order. The more limited the DSO, the quicker the organization gathers installment or pending payment from its clients – and the sooner it can utilize its money. …

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What is the Current Ratio? Advantages and disadvantages of Current Ratio – Explained

Definition The current ratio measures the ability of the business to pay off short-term obligations falling due in the next twelve months. Calculation and analysis of the current ratio help to assess the liquidity of the business and offers great help in understanding if the business is liquid and able to meet the commitments in …

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What is Operating Margin Ratio? How to Calculate It?

Financial statements contain four reports that provide valuable insights into a company’s operations. The first of these is the balance sheet, which includes various account balances. Similarly, the second is the income statement, detailing a company’s financial performance. They also consist of the cash flow statement, which contains cash transactions during the year. Lastly, they …

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What is Target Profit and How is it Calculated?

Target profit is the desired profit that a business wants to achieve in an accounting or manufacturing period. The conventional approach is to set budgets and compare results against standards. A comprehensive approach to follow is the cost-volume-profit analysis. The target profit calculation is an integral part of the CVP analysis. Let us discuss this …

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How to Calculate Throughput Accounting Ratio?

What is Throughput Accounting? Throughput accounting is a process used in management accounting that focuses on a company’s production efficiency. It looks at the rate at which a company converts its raw materials into finished goods and makes money from them. The purpose of throughput accounting is to identify any bottlenecks in a production process. …

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