Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

What is the most important financial ratio for a financial Manager? or another word how we can judge the performance of financial manager?

You should answer this question with valid reasoning?

user-image
Question added by Muhammad Imran , Corporate Finance and Management accounting tutor , London's Learning
Date Posted: 2013/07/12
Asif Umer
by Asif Umer , Accounting Manager , Garden College Ltd

The basic role of a finance manager is to manage funds rationally, to plan ahead and safe the company from liquidity problem.
With very reference to finance manager, keeping apart other things, Liquidity Ratio is the most important tool to assess the performance of a finance manager.
In the same context it must be kept in mind that Finance Manager is not sacrificing the operations of the business to keep this ratio healthy.
asif

Mohammed Salim Allana
by Mohammed Salim Allana , Compliance and Assurance Manager , United Arab Bank

One could not judge the performance of Finance manager alone. Due to decision making power lies with the senior management including the CFOs. The performance of the company decide the performance of Finance manager/HOF or CFO. 

Muhammad Imran
by Muhammad Imran , Corporate Finance and Management accounting tutor , London's Learning

Liquidity ratios like current ratio and quick ratio are good for showing a company's short-term future, but they do not tell much about the big picture of a company.
Since neither ratio accounts for long-term debts, you might miss out on the fact that a company will be loaded with lots of long-term debt if you use only current and quick ratio in your analysis.
Liquidity ratios very important in financial statement analysis, but the most important and the most worrying for financial manager is to look at a company's debt-to-equity ratio to see how a company's debt is leveraged.

Nazim Malik
by Nazim Malik , Account Manager , New Horizon CLC

Liquidity ratio determines the Financial standing of an organization.
The finance manager performance can be judged based on his strategies implemented to keep the liquid ratio good for the organization.

Nagoorammal Abdul Rahman
by Nagoorammal Abdul Rahman , Finance Manager , Vox Spectrum Limited

I am a Finance Manager and according to me all Ratio's are important.
But based on the ratio's alone we cannot determine the whole performance of the Finance Manager.
Because on top of the Finance Manager/Controller the management also plays an important role in playing with funds.
It's my opinion.
now let us come to the actual question: finance person generally look into Liquidity ratios to know the credit worthiness, repayable capacity which normally looked by our vendor & Banks.
but there is no standard for this ratios.
Some companies have2:1 or1:1 or even less.
It might be ideal for them, for which we need to have the actual scenario.
No one can comment simply on ratios without knowing fact and actual situation.

More Questions Like This