An executive that has little to no previous accounting experience will become easily frustrated when handling finance reports. Whether it is personal tax preparation or understanding financial statements, using a reputable professional is important. They find it very difficult to understand how the financial information flows and the particular function of certain types of reports. The executive only want to make the best decisions for their company but this task can be made very difficult by lack of accounting experience. Is it possible for accountants to help their colleagues understand the information packed into most financial statements?
An efficiency ratio is great for determining how effectively a company is using their assets and liable debt. This ratio will also be effective in determining how quickly payments are received and if purchase of inventory has been financially beneficial. Generally an increase in these ratios will indicate a rise in your company’s profitability.
Another ratio that non accountants should become familiar with is the liquidity ratio. This ratio is often used to indicate if an business is able to meet short term debt obligations. The presence of excess liquidity will result in stale and idle funds in your company.
Learning these ratios is very important because it will give you enough understanding to make informed decisions about the finances of your company.
Most non accounting executives have areas where they typically have the biggest concerns such as:
– The efficiency of their organizations;
– Controlling internal spending;
– The ability to pay the company’s debt in a timely fashion;
– Having additional capital to promote growth;
The particular needs change depending on the industry but the list is generally accurate no matter what type of business is involved.
How to Teach
If individuals in the accounting profession want to teach others, they need to focus their attention on the areas that are important to the students. The teaching of an executive should usually involve a lot of mock financial reports for you to explain in detail to the students. Be sure to focus on the main four types of financial statements and the particular details of each report.
Once the student begins to become familiar with the different reports, they will be able to begin focusing on different key elements which affect the other reports. If the mock reports become a valuable tool to the student, then they will become more focused on certain types of accounting techniques.
Your approach is secondary to taking the fear out of financial documents for the students. By taking the fear away you will give the student the confidence to tackle the documents head on and interpret them to the best of their ability.