MGT330 Discussion 1 Week 5 - Steps of Control

There are varying ratios used in accounts. Solvency, liquidity, efficiency, market prospect, profitability, investment coverage and leverage offer critical information that tells more about fiscal health of an organization. According to Baack, Reilly & Minnick, (2014), control function of the management involves analyzing control systems, employees’ challenges, financial well-being, and production expectancies. These ratios help the manager understand the state of these factors thus making critical financial decisions.

In making the financial decisions, the process of measuring actual performance of the organization remains primary. It fosters review of strategic goals. It also plays an important role in reviewing the perspectives and goals of the employees. As employees present their views, various challenges are identified.

Identification of problems help managers makes necessary adjustments. In this course, the ratios are useful in determining what changes need to be made. For example, liquidity is a key indicator on the solvency of an organization while activities of the organizations weigh on efficiency. Risk and debt are determined by leverage ratio while profitability ratios determine the profit of the organization. As such, undertaking an analysis of these ratios help the manager to understand the performance of the company in various aspects thus determining its success.

Reference

Baack, D., Reilly, M., & Minnick, C., & (2014). The five functions of effective management (2nd ed.). San Diego, CA: Bridgepoint Ed