ABSTRACT
This chapter explains how funding decisions impact external organizational evaluation and how external creditors and investors will evaluate the company. The first step to evaluating organizational performance is to identify the measures that properly align with the company's strategic plan. Many companies use a balanced scorecard as a tool to compare company performance to its goals. Other profitability measures and analysis can be conducted during the operating cycle as a means of estimating and determining continuous profit levels and then controlling factors that impact profitability. It focuses on manufacturing companies and the sale of inventory rather than service companies. Just as with other ratio formulas and analysis discussed in this chapter, the average debt ratio for the industry should be considered in the creditor's evaluation. Use the ratios covered in this chapter to see the impact. Both that opportunity's costs and profits would impact the organization's overall performance in the long run.
