Unit 11: Using Managerial Accounting: Trends and Ratios
This unit examines the three-pronged approach managerial accountants and potential investors typically use to analyze a company's financial information. First, we use trend analysis and common-size analysis to examine trends in the company's financial sphere, such as sales and earnings from one year to the next. Then, we compare the company's financial measures with its main competitors in the industry. Finally, we compare the company's financial ratios with industry-wide averages or standards.
Completing this unit should take you approximately 7 hours.
11.2: Trends, Horizontal Analysis
11.3: Common-Size, Vertical Analysis
11.4: Ratio Analysis
11.5: Chicken Deluxe's Choice
Unit 11 Assessment
Unit 11 Conclusion
This unit and course ended with a practical and important topic. You learned how to use managerial accounting to produce information that is relevant to management decisions. Trends and ratios are critical for successful decisions, as are non-financial analyses.
Approximately 50 to 80 percent of mergers fail! Although the numbers you can produce and analyze are important, they cannot answer complex management questions on their own. Management accounting information serves a critical role, but decision-makers always need to look beyond the numbers and use a balanced approach.