Colorado Technical University Financial Performance Measurement Paper

User Generated

tsena352

Business Finance

Colorado Technical University

Description

Analyze and discuss operating EBITDA and its impact on the corporate strategy.

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  • What is Profitability Analysis and how does management use it in decision-making?
  • Examine and discuss the use of EBITDA in the decision-making process and corporate strategy.
  • Compare and contrast EBITDA and Gross Margin as it relates to corporate profitability.
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Assignment Objectives (must be included/500-800 words APA format/3-5 reference)

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  • Assess finance and accounting information to make important business decisions.
  • Compose financial metrics to measure performance toward organizational goals.
  • Interpret financial and accounting informatics and determine the information needed to make decisions that will help the organization meet its objectives.
  • Summarize financial and accounting information for internal and external stakeholders.

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Explanation & Answer

please find the attached files

1

Financial and Accounting Information
Student’s Name
Institution Affiliation

2
Although financial accounting is esoteric, it plays a vital role in the operations of the
business. It helps businesses to keep updated records of all transactions. Financial accounting
helps managers and investors to understand the company's health since it reports financial data
that goes in and out of the company. Managers can summarize financial and accounting
information to show business operation over a given period of time, yearly or monthly. Financial
information shows the balance sheet and income statements of a business. Lenders, analysts,
investors, managers, and other stakeholders use financial statements to make the right decisions.
An analysis of business cash flow, income, and profits guide investors as they use the
analysis to make decisions. From the financial analysis, investors can make decisions basing on
the comparison between different companies. Investors use financial statements' value and
creditworthiness of a company. Financial statements give investors an understanding of the
company's history, current and prediction of future business operations. Therefore, investors
make decisions depending on the financial accounting analysis (Eccles & Klimenko, 2019).
Financial information is also vital in making lending decisions. Financial statements
show all assets, long-term debts, and short-term debts, enabling lenders to better understand a
company's creditworthiness (Wild, 2019). Lenders are in great fear of the risks they enmesh
themselves in by giving debts to companies and industries. Therefore, to clear the doubts, lenders
analyze the financial statements to determine if the company or industry is worth getting the
debt. The financial statement also helps lenders make decisions on what amount to offer to the
company and the interest to charge on the debt.

3
Financial metrics
Financial accounting helps in the decision-making process to improve the success of the
business. Financial metrics help understand a company's health, and they influence managers to
make decisions that improve on the company's worth. Financial metrics are used to analyze and
measure the financial performance of a company. They include; gross profit margin, net profit,
and working capital. Understanding the financial metrics helps the company make changes that
contribute to achieving organizational goals and objectives (Wild, 2019).
Gross profit margin. It is a profitability ratio used to earnings after deduction of the cost
of goods sold. It is the company's earnings after subtracting the direct cost of p...


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