Ratios you think are most valuable to managers in your company
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1. What is ratio analysis. What ratios do you think are most valuable to managers in your company or an organization you know about?
2. Some theorists believe that people are basically trustworthy and that controls are unnecessary and counterproductive. Others believe that people are untrustworthy and we need to look over their shoulder. These are Douglas MacGregor's Theory X and Theory Y. What is your opinion on this complex issue?
3. What are the positive and negative issues of automation impacting our society today? Support your response with practical examples and situations.
4. What different kinds of organizational controls are functioning within an organization with which you are familiar?
5. Describe the six steps involved with information system performance. Use a practical example to illustrate the significance of these steps.
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Solution Summary
Ratio analysis is defined. The positive and negative issues of automation impacting out society today is determined.
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Organizational
Answer 1
Ratio analysis can be defined as the control tool that is used to develop a summary of the financial performance of the organization (Brigham & Houston, 2008). This tool measures profitability and financial soundness of the organization. It represents the financial statements in systematic and simple format. Financial statements are analyzed in ratio analysis. This tool is useful in forecasting and budgeting process. Apart from this, it also assists in measuring the short and long term financial position of the business. In this process, ratio is calculated on the basis of various financial measures. There are mainly four categories of ratio that are most valuable to the managers. These are as follow:
Liquidity Ratio: This ratio measures the ability of the firm to fulfill its short term obligation. It covers current ratio and quick ratio to measure the liquidity of the firm.
Profitability Ratio: This ratio measures the profitability of the organization by measuring common size income statements, net profit margin, operating profit margin, gross profit margin, earning per share, return on common equity and return on total assets (Brigham & Houston, 2008).
Activity Ratio: This ratio analyzes the speed of converting accounts into cash or sales. It considers various measures like inventory turnover, average collection period, average payment period and total assets turnover.
Debt Ratio: In this ratio, debt position of the company is measured by ratio analysis. It considers various measures like debt, times interest earned and fixed payment coverage to measure debt in the organization.
Answer 2
According to some theorists, people need to be controlled, as they are untrustworthy. This assumption is known as theory X. At the same time, some theorists do not favor this, as they believe that people are trustworthy and there is no need to exercise controls over them. This assumption is known as Theory Y given by Douglas McGregor. Both these assumptions have different meanings and perception regarding the tendency and behavior of people. Theory X can be attributed to autocratic management style and Theory Y can be linked to democratic management ...
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