Finance For HR

Approved Learning Partner
in Egypt and Middle East

Welcome to
Finance For Human Resources
Workshop
DAY 01
Finance For Human
Resources
3
Finance for HR Workshop
• Understand the different between finance and accounting

• Define the four key financial statements: balance sheet,
Objectives income statement, cash flow and changes in owner equity
• Read and analysis financial statements
• Understand the financial ratios
• Understand the cash position
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• Compare financial ratio with industry average.
Objectives • Correlation between Finance & HR

• Compensation and Benefits Essentials
• HR Function Efficiency Metrics
• Recruitment Metrics
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What is the difference between

Accounting and Finance?
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6
What is the difference between Accounting and Finance:
Finance Accounting
Uses accounting
Deals with the recording of Information to predict
VS
past transactions and future performance and
finance deals only with make decisions regarding
cash transactions in order long-term capital
to make decisions about investment and short-term
future activities. working capital.
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Accounting & Finance
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What is Accounting?
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Accounting is a system- an information system.

This system identifies and records events in a
way that allows the information to be
summarized, analyzed and reported.
This information can then be communicated to a
wide variety of audiences.
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What is accounting?
“the art of interpreting, measuring, and communicating the results of economic activities”.
• The main purpose of accounting is to provide decision makers with information useful
in making economic decisions.
• Accountants are the professional profit scorekeepers of the business world, meaning
that they are the ones who determine exactly how much profit was earned, or just
how much loss the business suffered, during the period.
• Accounting is an information system that helps in making decisions.
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Types of Information
• Liquidity; cash flow
• Profitability ; Net Income
• Financial position; Balance sheet
• Plans for the future; strategic planning and budget
• Cash Flow; Source of cash ( operation, Investing , Financing)
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What ‘events’ are recorded in the

accounting system?
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All economic transactions should be recorded

either this cash or noncash transactions
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Who uses accounting information?
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Internal and external audiences use

accounting information for various reasons.
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How do people use accounting

information?
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Accounting information is an essential

business management function in the areas of
planning and controlling.
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What are some planning or controlling

activities where accounting is used?
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Accounting information is an essential

decision-making tool.
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Accounting in Business Cycle
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Accounting in Practice
What do you mean by ?
• Generally Accepted Accounting Principles (GAAP) .
• Qualified & Unqualified Report
• Auditor.
• Going Concern Assumption:
An accounting guideline which assumes that the company will continue to operate long
enough in-order to use its assets and carry out its objectives and commitments.
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Cost Principle:
• An accounting principle that states that for use in financial statements the historical
cost of an item or the cost of it when it was first recorded in the system will be used
Specially on recording Fixed Asset
The Matching Principle:
• The principle that requires a company to match expenses with related revenues in
order to report a company's profitability during a specified time interval.
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Accrual Accounting:
An accounting method based on the matching principle, and it allows the current cash
inflows/outflows to be combined with future expected flows to give a more accurate
picture of a company's current financial condition.
Accounting Period Concept:
According to this concept, the lifespan of a business is divided into fixed periods of
time (months, quarters, or years) for which accounts are prepared.
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Accounting Terminology:
• Revenue ……. Expenses…….. Account receivable ………Account Payable
• Depreciation…….… Amortization…….… Impairment
• Share holder…….. Stockholder…….. Stakeholder………... Bondholder
• Fixed Asset (Long Term Asset) ………..Current Asset ( Short Term Asset).
• Asset ……... Liabilities ……... Owner Equity
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Financial Reporting Process
Supplying general-purpose financial information about a business to people

outside inside the organization is called Financial Reporting.
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Financial Reporting Process
Users of financial information: Investors
Governm
Public
ent
Business
Entity
Financial
Informati
on
Managem
Creditors
ent
Employee
s
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Accounting Equation
• The accounting recording system is based on the simple notion that all economic resources acquired by an entity must
be funded from somewhere, usually the owner.
• The relationship between resources and the funds provided to acquire these resources is expressed in accounting like
this:
Assets
= Liabilities
+ Owner’s
Equity
• We’ll use a simplified example to explain how the equation works:
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Accounting Equation
Asset:
• Assets are economic resources which are owned by a business and are expected to
benefit future activities.
• Assets can be classified as ‘current’ or ‘fixed’. Current assets such as cash are
expected to be used within one year. Non-current assets are expected to be used
beyond one year.
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Accounting Equation
Liabilities:
• They represents debts arising from the purchase of goods or services on credit
resulting in accounts payable.
• Money borrowed as supplementing the funds invested by the owner to buy

merchandise or additional machinery often results in notes payable.
• Claims raised by the Creditors are always settled before claims of owners, even if
such payment should exhaust the assets of the business, leaving nothing to the
owner.
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Accounting Equation
Owner’s Equity:
• It represents the resources invested in the business by the owner.
• The equity of owner is a residual claim, because the claims of creditors legally
come first.
• It is increased by owners investing more money or profits from business.
• It is decreased by withdrawals by owners or losses from business.
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Accounting Equation
Action 1:
An individual commences his business on 1 January with $20,000 cash.
The accounting equation of the business would record:
Assets (Cash) $20,000 = Owners’ equity $20,000
At the conclusion of this action, the individual’s stake in the business is worth $20,000,
represented by cash of $20,000.
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Accounting Equation
Action 2
Out of these cash resources he purchases plant and equipment for $12,000.
Only one side of the equation needs adjustment:
Cash $8000 + Plant $12,000 = Owners’ equity $20,000
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Accounting Equation
Action 3
Inventories of raw materials are purchased on credit for $6,000.
Cash $8,000 + Plant $12,000+ Raw material inventories $6,000
Owners’ equity $20,000 + Creditors $6,000
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Accounting Equation
Current Asset Items
• Cash
• Accounts receivable:
Used when a company delivers its goods or renders its service, on credit, and without
getting cheques or notes from clients.
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Accounting Equation
• Short-term notes receivable:
Used when a company delivers its goods or renders its service, on credit, and gets
cheques or notes from its clients.
• Inventory
(raw material, work in process, finished goods and others)
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Accounting Equation
Current Asset Items
use Investments with investments in trading, available for sale or held to maturity
securities.
Prepaid expenses:
used when a company pays for a service in advance.
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Accounting Equation
Example 1:
Paying the monthly rent of the flat at the beginning of the month. Thus, payment was
made before receiving the benefit of the rent.
Example 2:
Paying for a club subscription at the beginning of the year, then getting the benefits of
the sports and social activities in the club all year long.
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Accounting Equation
Current Liability Items
Current liabilities:
• Are typically settled using current assets, which are assets that are used up within
one year.
• Example:
Current liabilities include accounts payable, short-term debt, dividends, and notes
payable as well as income taxes owed.
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Accounting Equation
Current Liability Items
Accounts payable
are amounts due to vendors or suppliers for goods or services received that have not
yet been paid for. The sum of all outstanding amounts owed to vendors is shown as the
accounts payable balance on the company's balance sheet.
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Accounting Equation
Notes payable
is a liability account where a borrower records a written promise to repay the

lender.
"the maker" of the note creates liability by borrowing from another entity ,
promising to repay the payee with interest
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The Accounting Cycle
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Recording Process
• The Chart of Accounts is a list of all accounts that are available in the accounting
system.
• Each company can tailor their Chart of Accounts for their business needs. The chart
of accounts helps accountants identify, analyze and report financial information.
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Recording Process
Here is a simple Chart of Accounts
Asset Cash in Bank 110100 Asset

Furniture 110200 Asset
Computers 110300 Asset
Liabilities Banker (Loan) 220100 Liability

Capital You Inc. Capital 310100 Capital
Angel Inc Capital 310200 Capital
Commission Revenue 420200 Revenue
Misc. Revenue 430300 Revenue
Rent Expense 510100 Expense
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Case Study
Case Study 1: Roberts Real Estate Company

Roberts has started his business in the Real Estate sector in September 1 and established “Roberts Real Estate
Company”. The following activities took place in the month of September:
Sep.1 Began the business by depositing $180k in a company bank account.
2 Purchased land for $141k in cash.
5 Purchased a Machinery for $36k, paying $15k in cash and incurring a liability of $21k.
10 Sold part of the land at a price equal to cost of $11k, collectable within 3 months.
14 Purchased office equipment on credit $5.4k.
20 Received $1.5k cash as partial collection of the $11k account receivable.
30 Paid $15k on accounts payable.
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Case Study 1: Roberts Real Estate Company
Robert has employed you as his Head of Accounting Department and has asked you to
adopt the accounting equation technique for transactions in the month of September.
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Case Study 1: Roberts Real Estate Company - Answer
Assets = Liabilities + Owners’ Equity
Sept. 1: Cash $180 =O E. $180

Sept. 2: Cash $39 + Land $141 = O E $180
Sept. 5: Cash $24 + Land $141 + Machinery $ 36 = Liability $21 + OE $180
Sept. 10: Cash $24+ AR $11 + Land $130 + Machinery $36 = Liability $21 + OE $180
Sept. 14: Cash $24 + AR $11 + Land $130 + Machinery $36 + Office Eq. $5.4 = Liability $26.4 + OE $180
Sept. 20: Cash $25.5 + AR $9.5 + Land $130 + Machinery $36 + Office Eq. $5.4 = Liability $26.4+ OE $180
Sept. 30: Cash $10.5 + AR $9.5 + Land $130 + Machinery $36 + Office Eq. $5.4 = Liability $11.4 + OE $180
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Question 1
Accounting information is used by different groups of people for different primary purposes. They are:
i. shareholders concerned with the level of employee remuneration;
ii. managers concerned with the profitability of product lines;
iii. creditors concerned with the company’s ability to settle debts on time;
iv. analysts concerned with the company’s environmental record.
Which of the following is correct?

A. (i) and (ii) only.
B. (i) and (iv) only.
C. (ii) and (iii) only.
D. (ii) and (iv) only
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Answer
The correct answer is C.
Shareholders will be more concerned with the level of company profitability and dividends than the level of
employee remuneration. Hence, option (i) is incorrect. Analysts will be also more concerned with the company’s
profitability and financial performance than the company’s environmental record. Hence, option (iv) is rejected.
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Financial Statements
• The principal means of reporting general purpose financial information to persons

outside a business organization is a set of accounting reports called Financial
Statements.
• A set of financial statements consists of four related accounting reports that

summarizes in a few pages the financial resources, obligations, profitability, and
cash transactions of a business plus notes containing additional information.
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A complete set of financial statement include:
Income
statement
Balance Financial Balance

Sheet Statements Sheet
Changes
in
Owner’s
Equity
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• Balance Sheet:
Shows at a specific date the financial position of the company by indicating the
resources it owns, the debts that is owes, and the amount of owner’s equity (investment)
in the business.
• Income Statement:
Indicates the profitability of the business over the preceding year (period).
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• Statement of Owner’s Equity:
Explains certain changes in the amount of investment in the business.
• Statement of Cash Flows:
Summarizes the cash movements of the business over the same time period covered by
the income statement.
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Income Statement Statement of Owner’s Balance Sheet Cash Flow Statement

Equity
• Revenues &Expenses • Changes in owner’s • Reports on assets, • Movements of

are reported equity (capital and liabilities and cash during a
• The Profit (or Loss) is profit) are reported owner’s equity at a period are
calculated and feeds • The final balance point in time reported
into the Statement of feeds into the Balance • The final cash
Owner’s Equity Sheet balance for the
• Net Profit feeds the period feeds into the
Cash Flow Statement Cash Flow Statement
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Balance sheet
Balance Sheet
Fixed assets
• Are long lived assets acquired for use in the operation of the business and not
intended for resale to customers.
• The cost of plant and equipment includes all expenditures reasonable and
necessary in acquiring the asset and placing it in a position and condition for use
in the operations of the business.
• It is the intention of management as to the use of the asset, not its physical
characteristics, that determines whether or not it is classified as a fixed asset.
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Balance Sheet
Fixed assets
• For example, The plant and equipment is employed in transforming the raw
material into finished manufactured products; motor vehicles are used in the
shipping of finished goods to the point of sale. ( this equipment is considered as
FA)
• A car dealer, on the other hand, would account for motor vehicles as inventory, a
current asset.
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Balance Sheet
Fixed assets
• The distinction should be made, however, between the expense of maintaining

and operating the fixed assets and the depreciation which is charged.
• Maintenance expenditure is an expense that is charged against profits in the

period of outlay. Depreciation, on the other hand, is the allocation of a previously
incurred cost.
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Question 2
Companies acquire fixed assets for a variety of reasons, including:
i. to act as a hedge against inflation;
ii. to resell at a profit in the future;
iii. to avoid cash surpluses;
iv. to use in the course of the business.
Which of the following correctly reflects their primary reason(s)?

A. (i) only.
B. (i) and (ii) only.
C. (iii) and (iv) only.
D. (iv) only
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Answer
Answer: The correct answer is D.
Although options (i)–(iii) may be true in certain instances, option (iv) is the only option which is
correct at all times.
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Case Study
Case study 1: Fixed Assets – Minneapolis Factory
A factory in Minneapolis orders a machine from a San Francisco tool manufacturer at a

list price of $10,000, with terms of 2/10, n/30. Sales tax of $588 apply as well as
freight charges of $1,250. Transportation from the railroad station to the factory costs
$150 and installation labor $400. The Minneapolis factory has spent also $500 in
advertising campaign to promote for the products produced by the machine.
What is the cost value of the machine to be recorded in the balance sheet at time of
purchase, knowing that payment has been made within 8 days from the date of
purchase?
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Machine cost should include:

List price $10,000
Less: discount (2%x10k) (200)
Net cash price $ 9,800
Add: Sales tax 588
Freight 1,250
Transportation 150
Installation labor 400
Machine total cost $ 12,188
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Advertising costs are to expense rather than included as part of the machine cost as it
is not considered to be the necessary cost to place the machine in position or condition
to allow its operation as intended.
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Balance Sheet
Long Shape
T-Shape
XYZ company
XYZ company
Balance Sheet
Balance Sheet
December 31, 2008
December 31, 2008
Fixed Asset
Assets Liabilities and Owner’s Property, Plant & Equipment, net
Equity $90,000
Cash 10,000 Liabilities:
Current Assets
A/Rec. 45,000 Notes payable 15,000
Inventory 25,000
Inventory 25,000 A/P 20,000
Accounts Receivable 45,000
PPE 90,000 LTL 0
Cash 10,000
Total Liabilities 35,000 Current Assets 80,000
Owners Equity: Current Liabilities

Capital ` Notes and accounts payable 35,000
135,000 Working capital 45,000
Total Liabilities & Net Assets $135,000

Total Assets $170,000 Owner’s Equity
$170,000 Represented by:
Owner’s Equity`+ LTL $135,000
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We should be able to understand:
• Income statement format;
By the end of this • The nature of net income, revenue, and expense;
session • The timing of recording revenue and expense and the

role of accounting conventions;
• What we mean by depreciation and its different types;

and
• The difference between the accrual and the cash basis.
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What is Profit?
• The profit and loss account will reveal that profit is the difference between the sales which the enterprise made
during the period under review and all the costs which had been incurred to bring the goods sold to the
marketplace ready for sale.
• An increase in owner’s equity resulting from the profitable operation of the business.
• An Income Statement shows the results of operation over a span of time. On the other hand, the Balance Sheet
shows the financial position of a company at a particular date.
• Accounting periods represents the period of time covered by an income statement. Generally, most companies use
12-month accounting period with the calendar year. However, some companies may elect to use a fiscal year which
ends on some other date, which is more convenient for its business.
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What is Profit?
• The profit and loss account will reveal that profit is the difference between the
sales which the enterprise made during the period under review and all the costs
which had been incurred to bring the goods sold to the marketplace ready for sale.
• An increase in owner’s equity resulting from the profitable operation of the

business.
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Revenues and Expenses
Revenues:
• Revenue is the price of goods sold and services rendered during a given accounting
period.
• Various terms are used to describe different types of revenue:
o In real estate business, revenue might be called Commissions Revenue,
o In professional practice like lawyers , dentists,..etc, rev. might be called Fees

Earned.
o In merchandise type business, revenue is called Sales.
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Revenues:
• When to record Revenue (The realization principle):
o The realization principle states that, a business should record revenue at the
time services are rendered to customers or goods sold are delivered to
customers, i.e when revenue is earned.
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Expenses:
• Expenses are the costs of the goods and services used up in the process of earning
revenue. Such as:
o Employee's salaries,
o Advertising,
o Rent and Utilities,
o and many more.
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Expenses:
• When to record Expenses (Matching Principle):
o A significant relationship exists between revenue and expenses.
o Expenses are incurred for the purpose of producing revenue.
o Therefore, in measuring net income for a period, revenue should be offset by

all the expenses incurred in producing that revenue. This is called the
Matching Principle.
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Depreciation Expense
• Depreciation means a systematic allocation of the cost of an asset to expense over

the accounting periods making up the assets useful life.
• Building and equipment are considered to be example of goods that are

purchased in advance but which are used up gradually over many accounting
periods.
• Causes for depreciation:
o Achieve the matching principle,
o Account for physical deterioration, and
o Account for obsolescence.
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• On the other hand, land is considered to be the only asset which is not depreciated.
• Types of calculating depreciation expense:
o Straight line method,
o Sum of year digits, and
o Accelerated Depreciation method.
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Straight Line Method
• Simple and most commonly used,
• Equal portion of the asset’s cost is recognized over its useful life.
• Calculated as:
(Cost – Residual Value)/years of useful life or ( depreciable amount)/years of useful

life
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Straight Line Method
Cost
$1,000
Year 1 Year 2 Year 3 Year 4 Year 5

$200 $200 $200 $200 $200
Asset Useful Life

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Case Study
Case Study 1: Straight Line Method
On April 1,08, Argo Industries purchased new equipment at a cost of $325,000. The
useful life of the equipment was estimated at 5 years, with a residual value of
$25,000.
Using the Straight Line Method, calculate the depreciation expense and the equipment
net book value at the end of 2008 and 2009.
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Case Study 1: Straight Line Method

Answer:
2008 2009
Depreciation expense:
(325,000 - 25,000)/5*9/12 45,000
(325,000 – 25,000)/5 60,000
Net book value:
325,000 – 45,000 280,000
280,000 – 60,000 220,000
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Income Statement and related to Balance Sheet

Income Statement and related to Balance Sheet
XYZ company
Balance Sheet
December 31, 2008
XYZ company
Income Statement * Long Term Assets
For the period ended in Dec. 31, 2008 Property, Plant & Equipment, net $90,000
Current Assets
Sales $ 100,000 Inventory 25,000
Accounts Receivable 45,000
Less: Cash 10,000
Cost of sales ($ 50,000) Current Assets 80,000
Gross Profit $ 50,000
Current Liabilities
Notes and accounts payable 35,000
Less:
Working capital 45,000
General and Administrative
Net Assets $135,000
$ 10,000
Selling and Marketing $ 15,000 Represented by:
Shareholders’ Equity
Net Profit before tax $ 25,000 Common shares $110,000
Profit / (loss) for the period 25,000
Total Shareholders’ Equity $ 135,000
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Accrual Vs Cash Basis of accounting
• The policy of recognizing revenue in the accounting records when it is earned and
recognizing expenses when the related goods or services are used is called accrual
basis of accounting.
• The purpose of accrual accounting is to measure the profitability of the economic

activities conducted during the accounting period.
• The most important concept involved in accrual accounting is the matching principle.
• Under Cash basis accounting, revenue is recognized when cash is collected from the
customers, rather than when the company sells goods or render service. Expenses
are recognized when payment is made, rather than when the related goods or
services are used in business operation.
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Case Study
Case Study: Income Statement and related to Balance Sheet

Tools Trading Company was organized on Oct. 1, 2008. Assume that the accounts are
closed and financial statements are prepared each month. The company occupies
office space but owns office equipment to have a useful life of 10 years from date of
acquisition, Oct.1. The company showed the following balances, before recording
depreciation expense:
Cash 3,750 Goods Sold 9,220
A/R 1,210 Cost of sales 3,100
Office Eq. 4,800 Advertising expense 800
A/P 1,640 Salaries expense 3,600
Capital 7,170 Rent Expense 770
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Key Insurance has appointed you as Financial Controller Advisor and asked you to
provide a Balance Sheet and Income Statement at December 2008.
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Tools Trading Company Tools Trading Company
Income Statement Balance Sheet
For the 3 months ending Dec.31, 08 December 31, 08
Depreciation expense Calculation Long Term Assets
Sales $ 9,220 Office Equipment 4,800
using SLM: Cost of sales 3,100 Less: Acc. Dep. (120)
Total long term assets 4,680
Gross Profit 6,120
Cost 4,800 / 10 years x 3/12 = Current Assets
Cash 3,750
120 Less: A/R 1,210
Advertising exp. 800 Total Current Assets 4,960
Salaries exp. 3,600 Current Liabilities
A/P 1,640
Rent Expense 770
Working Capital 3,320
Depreciation exp. 120 Net Assets 8,000
Net Profit $ 830
Represented by:
Capital 7,170
Net Profit 830
Total owner’s equity 8,000
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Cash Flow Statement Presentation
We should be able to understand:
• the need for a cash flow statement in addition to a profit and loss account and
balance sheet;
• that profit is not the same as cash;
• the major sources and uses of cash and how these are compiled into a cash flow
statement;
• how to interpret a cash flow statement, in particular the critical importance of cash
flow from operations.
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Cash-Flow Statement:
• It is defined as a statement that is prepared periodically that summarizes the cash

inflow and outflow of a business.
• A cash flow statements records the inflow and outflow of cash over a period of
time.
• The statement is required under IFRS 1.
• It differs from a cash flow forecast in that it concerns what has happened rather
than what is expected to happen.
• It is different from a profit and loss account in that it concerns cash flow rather than
accounting profits.
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Benefit From cash flow Statement
Main objective of Cash flow:
• Provide Information about Cash receipt & Cash disbursement during a period of
time.
• Secondary objective
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Benefit From cash flow Statement
Main objective of Cash flow:
• Secondary objective:-
o Provide the ability to pay dividends.
o Generate positive Cash flow to meet the current obligation.
o Reconcile Net profit …. ( In-Direct Method ) from NI to Cash.
o provide Information about the non cash items ( provisions)
o provide information about Investing & Financing Activities.
o Meet General obligation ( current and potential obligation).
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Cash -Flow Statement Vs P&L
Description Cash Flow Statement P&L accounts

Sales Only Cash Sales Cash and Credit Sales
Cash purchases made during All purchases associated
Purchase of Stock
the year with the year’s sales
Capital increase Cash injections -
Expenses Cash expenses Cash and credit expenses
Depreciation - Included
Purchase of fixed
Included -
assets
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What is Cash?
“Cash is King. It is relatively easy to manufacture profits, but creating cash is
virtually impossible
Cash in a Cash Flow Statement would include:
• Cash balances on hand,
• Bank balances, and
• Cash equivalents:
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What is Cash?
Comprising temporary investments of cash not required at this moment by the business.
These investments are usually readily convertible into cash or, if left alone, would
mature within three months into cash.
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Where does cash come from?

Where does it go to?
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94
Where does cash come from? Where does it go to?
Operating
cash
come
Financing Investing
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Cash Flow Classification
Cash Flow from Operating activities:
Includes all cash received or paid during the operation process such as cash received
from customers and cash paid to suppliers. Also, it includes all other activities that are
not classified as Investing or Financing activities,
Cash Flow from Investing activities:
Investing activities include cash payments to acquire PPE and other long-term assets
[IAS7.16(a)]. Investing activities also include cash payments and cash receipts relating
to the acquisition and disposal of debt and equity interests in other entities [IAS7. Loans
or advances made to other parties are classified as investing activities16(c)].
[IAS7.16(f)].
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Cash Flow Classification
Cash Flow from Financing activities:
Financing cash flows include cash flows relating to obtaining, servicing, and redeeming
sources of finance. Those sources of finance can include loans & share capital
[IAS7.17(a)-(e)].
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Direct Method
XYZ Company
For the year ended Dec. 31, 08
Cash flow from operating activities:
Cash receipts from sales xx
Cash paid to suppliers and employees (xx)
Net Cash Flow from Operation xx

Cash from Investing activities:
Cash receipts from sale of FA xx
Cash paid for FA acquisition (xx)
Net cash flow from Investing act. xx
Cash flow from Financing Activities:
Cash receipts from capital raise xx
Dividends paid (xx)
Net Cash from Financing act. xx
Add: Cash at beginning of year xx
Cash balance at Dec. 31, 08 10000
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Question 3
Which of the following is not a source of cash?
A. Purchase of fixed assets.
B. Subscription for share capital.
C. Decrease in debtors.
D. Proceeds from the issue of loan stock.
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Answer
A. Purchase of fixed assets.
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Question 4
A company is considering various options to improve its cash inflows, including actions to:
i. reduce debtors;
ii. increase creditors;
iii. increase inventories;
iv. increase capital expenditure.
Which of the following will result in an increase in cash inflows?

B. (i) and (iii) only.
C. (i), (iii) and (iv) only.
D. (ii), (iii) and (iv) only.
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Answer
• i. reduce debtors;
• ii. increase creditors;
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Case Study
Case Study : Cash Flow Statement
Right Tools Corporation (RTC) has been experiencing some changes in the business
since the prior year. RTC management has supplied you with the following
information for the current year 2008 in an attempt to provide them with an
explanation about whether the business is doing good or not.
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• RTC had made sales of $3M during the year, of which 30% was on credit. Credit
terms were 5/10, and n/30.
• RTC purchased the inventory of $5M during the year, of which 60% was on credit
• RTC acquired a new piece of land in 2007 for $500k. During 2008, RTC bought
some machineries amounting to $200k, depreciation 20% SLM.
• RTC had an agreement in 2007 to acquire a loan of $1M to finance its new
expansion in 2009 to be paid in full on Dec. 2017. Interest is to be paid yearly as
15% starting from this year
• In an attempt to raise capital, RTC sold shares amounting to $1M during 2008.
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What is our Target:-
Give advice to the shareholder about the company going concerned
whether the business is doing good or not.
So you are more concerned with Cash rather than profit
To achieve this …….. Do you have to make it????
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Cash Flow Statement
Cash flow from Operations:

Cash received from customers $ 2,100,000
Cash paid to suppliers ($ 2,000,000)
Cash interest paid ($ 150,000)
Cash out flow from operation ($50,000)
Cash flow from Investing activities:

Machineries purchases ($200,000)
Cash outflow from Investing activities ($200,000)
Cash Flow From Financing activities

Capital issuance $1,000,000
Cash flow from Financing activities $1,000,000
Net Cash movement during 2008 $750,000

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Indirect Method
XYZ Company
For the year ended Dec. 31, 08
Net Profit xx
Adjustments:
Gain on sale of FA (xx)
Dep . XX
Changes in working capital xx
Net cash flow from operation xx
Cash from Investing activities:
Cash receipts from sale of FA xx
Cash paid for FA acquisition (xx)
Net cash flow from Investing act. xx
Cash flow from Financing Activities:
Cash receipts from capital raise xx
Dividends paid (xx)
Net Cash from Financing act. xx
Add: Cash at beginning of year xx
Cash balance at Dec. 31, 08 xx
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• The following information has been obtained from the accounting records of
Company A and Company B for the year ended on 30 June:
Company A Company B
$ $
• Profit (after depreciation) 12,500 15,500
• Fixed assets 50,000 45,000
• Depreciation policy 20% 10%
• What is the Cash flow from Operating activities in Company A and B?
• Note: depreciation method Is Straight line Method SLM.
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Case Study 1: Cash flow from Operating Answer
Using Indirect Method

A B
Net Profit 12,500 15,500
Adjustments:
Depreciation 10,000 4,500
Cash Flow from Operation 22,500 20,00
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Case Study
Case Study 1: Cash flow from Operating Answer
Guide to my answer
Net Profit (P&L) xx

Adjustments:
Gain on sale of FA or (xx)
Dep. xx
Changes in working capital xx
Net cash flow from operation xx
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Statement of changes in Shareholders’ Equity
This financial statement summarizes the increase and decreases during the accounting
period in the amount of stockholders’ Equity.
Increases result from net profits and from additional investment by stockholders.
Decreases result from net losses and dividends paid to stockholders
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Components of Stockholders’ Equity
Common Preferred Additional Retained

Stock Stock paid in Capital Earnings
Net income
Dividends / Loss
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Owner’s Equity Statements :

Common Share XX
Additional paid in Capital XX
Retained Earring's End XX
Retained earning , Beg. XX
+ Net profit or Loss - XX
- Div (XX)
Retained Earring's End XX
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Preferred Stock Common Stock Add. paid –in- Retained

Description Total
($100 par value) ($10 par value) capital Earnings
Opening balance,
$ 400,000 $ 200,000 $ 300,000 $ 600,000 $ 1,500,000
December 31, x0
Issuance of 5,000
50,000 200,000 250,000
common shares @ $50
Cash Dividends (300,000) (300,000)
Net Profit 500,000 500,000
Ending Balance,
$ 400,000 $ 250,000 $ 500,000 $ 800,000 $ 1,950,000
December 31, x0
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DAY 02
Finance For Non-Financials
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117
@ 2 0 2 1
Correlation between Finance & HR compensation and

Benefits Essentials
By the end of this • How do HR Departments calculate compensation
session and benefits?
• Compensation and benefits Models
• Compensation and benefits package example
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118
Compensation and Benefits Essentials
• HR Cost FTE Ratio
• HR Costs per Employee
By the end of this • HR Costs per FTE
session Recruitment Metrics
• Most frequently used (Recruiting Metrix)
• Strategic Tips for Measuring Recruitment

Effectiveness
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119
Compensation and Benefits
Essentials
Employee Benefits: Types, Examples and importance

Cover
Medical
and
insurance
Sponsor
Labor cost
Events for
Autonomy
Employees
Motivate Employee No Dress

your
Employees Benefits Code
Collect
Effective
Benefits
Communic
Involve through
ation
Employees Survey
in Policies
and
Decisions
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Employee Benefits: Definition
Employee benefits are defined as the non-wage compensation provided to

employees by an organization in addition to their normal salaries or wages.
These benefits may include:
• Group insurance (health, dental, life etc.)
• Retirement benefits
• Education loan,
 other loans (house loan, vehicle loan etc), sick leaves, vacation as well as flexible
alternative arrangements.
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• In an organization, the workforce is the most valuable asset, and is important for an
organization to understand their needs and help them to be engaged and satisfied.
Employee benefits when offered to the employees act as an attribute for better
performance and support for your employees.
• With rapid globalization and organizations looking at massive expansion not only in
the countries where they are set up but also across the globe, is a key indicator for
giving employees the flexibility to work at the hours most convenient to them.
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1. Cover the Medical Expenses and Insurance Cost
For example
consider an organization that is based out of the states and has branches in Germany,
Latin America, Asia, and Australia. The workforce engaged with this organization has
different working hours according to the continent they are in. If the organization is
providing flexible working hours, it will be suitable for the employees to effectively
communicate with each other at the hours most appropriate for them.
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8 Examples of Employee Benefits for a Greater Finance for HR Workshop
Employee Commitment:
• As goes an old saying, “health is wealth”. If you want your employees to be happy,
keep them healthy and fit! To build the level of commitment from your employees it
is essential that you provide them with benefits first. The first thing you need to do is
pen down a medical coverage plan that covers their medical expenses and
insurance. You can also provide them with:
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A. Offer them facilities to exercise
• Your workforce will be enthusiastic to have space to work out and stay fit. This will
not only save you time and money in the number of lost working days but will also
facilitate a healthy environment which will result in less number of sick days marked.
And it should be mentioned that turning a room in your office into a workout space is
way cheaper than you can imagine.
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A healthy work environment not only keeps a person fit but also relieves them of
stress and this is scientifically proven.
Ex. There are many organizations that incorporate this work culture into their routine,
there are other organizations that offer to pay the cost of membership for their
employees. Google is one such organization that promotes a healthy lifestyle.
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B. Start with a health and fitness course
• One of the best ways to promote individual health is by having your employees
participate in health awareness sessions and exercise-related competencies. To
reward their efforts, announce the winner if you are conducting competitions and
motivate others to participate in such get-togethers, to promote health and fitness
amongst your employees.
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2. Sponsor Events for your Employees:
• People often stress when they have a lot of work and deadlines to meet. To help
your employees lower their stress levels, you should organize social meetings and
promote the satisfaction of your employees in general. Many organizations have a
“Friday” culture where there are different kinds of recreational activities included
during the day. Going to team dinners, sponsoring karaoke nights, bowling, go-
karting, etc. are some examples of recreation you can often include during your
work week.
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3. No Dress Code!
• A study conducted by Question Pro revealed that organizations that do not follow
strict dress codes have happier employees.
• A whopping 94% of employees said they were a lot happier with no dress code
policy at work. There are many organizations that have adopted and practiced a
certain standard of casual dressing and if those standards are met by the
employees it is a good adaptation for them as well as the organization.
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4. Collect Examples of Benefits Through Employee Surveys
• How common is it to see organizations conduct employee surveys?
• Very common right? But, how common is it to see the organization take action
on the feedback that is provided by the employees? No very often right?
• Not taking action based on the result will not only decrease the response rates of
the deployed surveys, but it will also create a negative impression of your surveys.
You don’t need to bombard your employees with a 20-question survey. Ask them just
one powerful survey question, the employee Net Promoter Score Question
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4. Collect Examples of Benefits Through Employee Surveys
• “Considering your overall experience with our organization, on a scale from 0-10,
how likely are you to recommend this organization to your family and friends?”
• A quarterly or a half-yearly survey will also help you in finding out trends with
respect to the levels of commitment and satisfaction of your workforce. Collect and
act on their responses and you will be surprised with the changes in the levels of
engagement of your employees.
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5. Involve your Employees in Organizational Decisions and Policies
• Another good example of benefits for employees is to involve them in the policies
and decision-making within the organization.
• A weekly meeting is a good start to keeping your employees aligned with what is
going on in the organization, what are developments or changes the organization is
aiming to achieve, and what role employees are bound to play in it.
• Get feedback from your employees before implementing these changes and make
them a part of the process.
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6. Promote Effective Communication
• Create a work culture that promotes effective communication. As Dale Carnegie

says, “Communication is a dialogue, not a monologue.” Communicate with a
reason with your employees and the reason should be to keep them updated with
all that is happening in the organization.
• Promote the open door policy and give your workforce the voice they are looking
for.
• Transparent communication often opens the door for a better belief system.
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7. Motivate your Employees
• Organizations stagnate, sales dip all-time low, there is a sudden rise in employee
attrition and you experience financial losses. All these are signs of a disengaged
and highly unmotivated workforce.
• To avoid such a sudden downfall make sure to keep your employees motivated and
enthusiastic towards their work, don’t let employees lose interest in their work, make
sure you know their needs and implement immediately any changes that might
positively affect their performance.
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8. Labor Autonomy
• Share goals, strategies, and plans, and make your employees own their tasks.
• Give them the freedom to think out of the box and create an environment that
significantly reduces boredom in the workplace. Committed employees always work
harder and keep things moving. Appreciate their levels of commitment.
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HR Cost Per FTE – Definition
• HR Cost Per FTE is the total cost a company spends on human resources (HR) function
per full-time equivalent. This metric helps you to understand cost expenditure to
develop and manage human capital.
• Small companies have higher HR costs per employee than medium or large
industries. The reason is that when staff size increases, the cost gets distributed to
more employees. Thus, larger companies have lower HR Costs per employee.
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HR Cost Per FTE – Definition
• The HR department is the backbone of a company. HR workforce undertakes

duties that help to develop and manage company workforce strategies. They also
help in planning and defining policies.
• HR department source new talents for the company. They also perform duties like
deploying the workforce for an effective outcome, employee-company
relationships, employee training, and employee information management
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Formula to Calculate HR Cost Per FTE
• To calculate HR Cost per employee, divide the total HR costs per year by FTE count
at the end of the year.
HR cost per year

HR cost per FTE = × 100
Total FTEs count
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Where:
FTE Count = Number Total Full − Time Emplyee
HR Cost = Fixed Compensation salaries + Variable compensation + Benefits +

Indirect cost
o Fixed compensation includes salaries,

o Variable compensation includes commissions
o Benefits include health insurance and PF/gratuity.
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• FTE stands for Full-Time Equivalents. If your company has part-time employees, you
need to convert them into full-time equivalent employees.
• An FTE working hours per year are 2080. Hence, to convert the part-time
employees to FTEs use the following formula:
Part-time employees X Weekly Hours X 52 Weeks divided by 2080 hours
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Examples
Let us understand this ratio with some examples.
 Small/Medium Size Company
 Company Name: ABC
 HR Costs: $ 1,50,000
 FTE Count: 65
Applying the formula:
HR cost per year

Total FTEs count
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Examples
HR cost per year

Total FTEs count
• HR cost per FTE = $ 1,50,000 / 65
• HR cost per FTE = $ 2,308 HR Cost per FTE
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Example
• Large Size Company
• Company Name: XYZ
• HR Costs: $ 12,50, 000
• FTE Count: 1100
• Part-Time Count: 125
• Weekly Hours: 20 Hours
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In this example, we have part-time employees. So first, we need to convert the part-
time employees to FTEs using the above-given formula:
Part-time employees’ X Weekly Hours X 52 Weeks divided by 2080 hours
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Example:
Part-time employees’ X Weekly Hours X 52 Weeks divided by 2080 hours
1. part-time employees to FTEs = (125 part-time employee’s X Hr. /week X total 52

weeks) / 2080
2. part-time employees to FTEs = 62.5 FTEs
3. New FTE Count = 1100 + 62.5 = 1163 FTEs
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Example:
1. Applying the HR Cost Per FTE formula:
2. HR Cost Per FTE = $ 12,50,000 / 1163
3. HR Cost Per FTE = $ 1,074 HR Cost per FTE
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Benefit of Uses of HR Cost Per FTE
 HR cost per FTE shows the amount spend on human resource activities by a company
on each employee.
 It helps you to keep an eye on departmental costs.
 You can measure overspending or underspending of HR costs.
 Managers can predict future recruiting and other workforce-related costs.
 It helps you calculate Return On Investment.
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Recruitment Metrics
Recruitment Metrics
• Financial impact of late recruitment
• Vacancy Rate
• 1st Year Resignation Rate
• Time-to-Fill vacancies
• External Offer Acceptance Rate
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Recruiting Metrics
What are recruiting metrics?
Recruiting metrics are measurements used to track hiring success and optimize the
process of hiring candidates for an organization.
When used correctly, these metrics help evaluate the recruiting process and whether the
company is hiring the right people. Additionally, they provide you with data that will
allow you to make improvements to your recruitment process. They are an integral part
of a data-driven recruitment funnel
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Recruiting Metrics
Using this image, we can see that hiring someone who is more suited for the
job has the potential to create an enormous return on investment (ROI).
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Recruiting Metrics
This is why recruiting the right people is so important. Whether you’re starting off by measuring
recruitment data or fine-tuning your recruiting metrics, this list will give you a great overview.
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Recruiting Metrics
Most frequently used recruiting metrics
1. Time to fill 7. Candidates’ job satisfaction

2. Time to hire 8. Applicants per opening
3. Source of hire 9. Selection ratio
4. First-year attrition 10. Cost per hire
5. Quality of hire 11. Candidate experience
6. Hiring manager satisfaction
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Recruiting Metrics
Most frequently used recruiting metrics
12. Offer acceptance rate

17. Sourcing channel cost
13. Percentage of open position
18. Cost of getting to OPL
14. Application completion rate
19. Time of getting to OPL
15. Recruitment funnel
20. Advance impact
effectiveness
21. Recruiter performance
16. Sourcing channel
metrics
effectiveness
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Recruiting Metrics
1. Time to fill
• This refers to the number of calendar days it takes to find and hire a new candidate,
often measured by the number of days between approving a job requisition and the
candidate accepting your offer. Several factors can influence the time to fill, such as
supply and demand ratios for specific jobs as well as the speed at which the
recruitment department operates.
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Recruiting Metrics
2. Time to hire
• Time to hire represents the number of days between the moment a candidate applies
or is approached and the moment the candidate accepts the job. In other words, it
measures the time it takes for someone to move through the hiring process once they’ve
applied. Time to hire thus provides a solid indication of how the recruitment team is
performing. This metric is also called ‘Time to Accept’.
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Recruiting Metrics
2. Time to hire
• A shorter time to hire often enables you to hire better candidates, preventing the best
candidates from being snatched up by a company that does have a short time to hire.
It also impacts your candidate experience as nobody likes a recruiting process that
takes a long time. You’ll be able to see where the bottlenecks are in your hiring
process and you can work to remove them.
• For example, the data might show you that there is a long time between resume
screening and a phone interview. This can be an issue of scheduling, which recruiting
teams can solve by implementing automated scheduling programs.
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Recruiting Metrics
2. Time to hire
• This metric is heavily influenced by your recruitment funnel. If you are

hiring for jobs that have a relatively straight-forward recruitment
process of one interview, the time to hire will be shorter than when you
have a phone intake, assessment day, and three rounds of interviews.
For that reason, you should be a little bit careful when interpreting the
time-to-hire benchmark we included below.
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Recruiting Metrics
3. Source of hire
• Tracking the sources which attract new hires to your organization is one of the most
popular recruiting metrics. This metric also helps to keep track of the effectiveness
of different recruiting channels. A few examples are job boards, the company’s
career page, social media, and sourcing agencies.
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Recruiting Metrics
3. Source of hire
• Having a clear understanding of which channel works and which doesn’t, you’ll be
able to double down on the channels that are bringing you the most ROI and
decrease spending on those that aren’t. For example, if you see that most of your
successful hires are not coming from LinkedIn but your internal job board, then that’s
the channel that you want to be focusing on.
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Recruiting Metrics
4. First-year attrition
• First-year attrition or first-year/new hire turnover is a key recruiting metric and also
indicates hiring success. Candidates who leave in their first year of work fail to
become fully productive and usually cost a lot of money. First-year attrition can be
managed and unmanaged.
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Recruiting Metrics
4. First-year attrition
• Managed attrition means that the contract is terminated by the employer.

Unmanaged attrition means that they leave on their own accord (this is also referred
to as voluntary turnover). The former is often an indicator of the bad first-year
performance or a bad fit with the team.
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Recruiting Metrics
5. Quality of hire
• Quality of hire, often measured by someone’s performance rating, gives an indicator

of the first-year performance of a candidate. Candidates who receive high-
performance ratings are indicative of hiring success while the opposite holds true for
candidates with low-performance ratings.
• Low first-year performance ratings are indicative of bad hires. A single bad hire
can cost a company tens of thousands of dollars in both direct and indirect costs. To
read more about how to assess these costs, check out our article on HR costing.
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Recruiting Metrics
5. Quality of hire
• Quality of hire is the input for the Success Ratio
Nmber of hiered candidates considered satisfactory

Success Ratio=
Total number of candidates hired
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Recruiting Metrics
6. Hiring Manager satisfaction
• In line with the quality of hire, hiring manager satisfaction is another recruiting metric
that is indicative of a successful recruiting process. When the hiring manager is
satisfied with the new employees in their team, the candidate is likely to perform well
and fit well in the team. In other words, the candidate is more likely to be a successful
hire.
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Recruiting Metrics
7. Candidate job satisfaction
• Candidate job satisfaction is an excellent way to track whether the expectations set
during the recruiting procedure match reality. A low candidate job satisfaction
highlights mismanagement of expectations or incomplete job descriptions.
• A low score can be better managed by providing a realistic job preview. This helps
to present both the positive and negative aspects of the job to potential candidates,
thus creating a more realistic view.
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Recruiting Metrics
8. Applicants per opening
• Applicants per job opening or applicants per hire gauges the job’s popularity. A
large number of applicants could indicate a high demand for jobs in that particular
area or a job description that’s too broad.
• The number of applicants per opening is not necessarily an indicator of the number
of qualified candidates. By narrowing the job description and including a number of
‘hard’ criteria, the number of applicants can be reduced without reducing the
number of suitable candidates. You can also focus more on sourcing from channels
that have brought qualified candidates in the past.
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Recruiting Metrics
9. Selection ratio
• The selection ratio refers to the number of hired candidates compared to the total
number of candidates. This ratio is also called the Submittals to Hire Ratio.
• The selection ratio is very similar to the number of applicants per opening. When
there’s a high number of candidates, the ratio approaches 0. The selection ratio
provides information such as the value of different assessment and recruitment
tools and can be used to estimate the utility of a given selection and recruitment
system.
Number of hired candidates

Selection ratio=
Total number of candidates
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Recruiting Metrics
10. Cost per hire
• The cost-per-hire recruitment metric is the total cost invested in hiring divided by the
number of hires.
Total recruiment cost 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐+𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐

Cost per hire= =
Total number of hires 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛 𝑜𝑜𝑜𝑜 ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖
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Recruiting Metrics
10. Cost per hire
• Cost per hire consists of multiple cost structures which can be divided by internal and
external cost.
• Internal costs include compliance cost, administrative costs, training & development,
and hiring manager costs.
• External costs would be background checks, sourcing expenses, travel expenses, or
marketing costs.
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Recruiting Metrics
10. Cost per hire
• By quantifying all of them you can calculate the total recruitment cost.
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Recruiting Metrics
11. Candidate experience
• When we talk about recruiting metrics, candidate experience shouldn’t be

overlooked. Candidate experience is the way that job seekers perceive an
employer’s recruitment and onboarding process, and is often measured using a
candidate experience survey. This survey uses Net Promoter Score and helps to
identify key components of the experience that can be improved.
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Recruiting Metrics
11. Candidate experience
• Keep in mind that you can measure candidate experience in different stages of the
recruitment process. And don’t rule out unsuccessful candidates. You should measure
them along with the ones you’ve ended up hiring to get a more accurate picture of
the state of your candidate experience.
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Recruiting Metrics
12. Offer acceptance rate
• The offer acceptance rate compares the number of candidates who successfully
accepted a job offer with the number of candidates who received an offer. A low
rate is indicative of potential compensation problems. When these problems occur
often for certain functions, the pay can be discussed earlier in the recruiting process
in an effort to minimize the impact of a refused job offer.
Number of offers accepted

Offer acceptance ratio=
Total number of offers made
B e a c o n F i n T r a i n @ 2 0 2 2 174
Recruiting Metrics
13. % of open positions
• The % of open positions compared to the total number of positions can be applied
to specific departments or to the entire organization even.
• A high percentage of open positions in a specific department can mean those
positions are in high demand (for example, due to fast growth). It can also mean
that there’s currently a low supply of workers in the market for those positions. This
metric can offer you insights into the current trends and changes happening in the
labor market, which can be valuable when you’re building your talent acquisition
strategy.
Total number of open positions
%of open positions=
Total number of positions in the organization
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Recruiting Metrics
• This is a talent acquisition metric that shows how many candidates who started a job
application finished it. You can also measure the other way around as “Applicant
drop-off rate”, ie. the share of candidates who did not finish the application.
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Recruiting Metrics
• Application completion rate is especially interesting for organizations with elaborate

online recruiting systems. Many large corporate firms require candidates to manually
input their entire CV in their systems before they can apply for a job. The drop-off in
this process is indicative of problems, e.g. web browser incompatibility with the
application system, or a non-user-friendly interface.
• A simple way to check for any issues that might happen during your application
process is to test it out yourself. This will help you understand where your applicants
might struggle with and how you can improve it.
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Recruiting Metrics
15. Recruitment funnel effectiveness
• Recruitment process can be seen as a funnel which begins with sourcing and ends
with a signed contract. By measuring the effectiveness of all the different steps in
the funnel, you can specify a yield ratio per step.
Number of applications who successfully competed the sage

Yield ratio=
Total number of applicants who entered this sage
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Recruiting Metrics
16. Sourcing channel effectiveness
• Sourcing channel effectiveness helps measure the number of potential candidates

each of your recruitment channels are bringing in, and the conversion rate. By
comparing the percentage of applications with the percentage of impressions of the
job postings, you can quickly judge the effectiveness of different channels.
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Recruiting Metrics
17. Sourcing channel cost
• You can also calculate the cost efficiency of your different sourcing
channels by including ad spend, the amount of money spent on
advertisement, on those platforms. By dividing the ad spend by the number
of visitors who successfully applied through the job opening you measure
the sourcing channel cost per hire.
Ad spend per platform

Sourcing channel ratio=
Number of successful applicants per platform
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Recruiting Metrics
18. Cost of getting to Optimum Productivity Level (OPL)
• The cost of getting to Optimum Productivity Level (OPL) is the total cost involved in
getting someone up to speed. This includes things like onboarding cost, training cost,
the cost of supervisors and co-workers involved in on-the-job training, and more.
Usually, a percentage of the employee’s salary is also included in this calculation,
until they hit 100% OPL.
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18. Cost of getting to Optimum Productivity Level (OPL)
• On top of this metric, there is also the “logistical” cost of replacing an employee.
These are also called the cost per hire. Research by Oxford Economics (2014) lists
OPL cost in retail at £ 16,240 (approx. $ 20,200), in media £ 21,633 ($ 27,000),
and in legal £ 35,307 ($ 44,000).
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Recruiting Metrics
19. Time to productivity
• Time to productivity, or time to Optimum Productivity Level,

measures how long it takes to get people up to speed and
productive. It is the time between the first day of hiring and
the point where the employee fully contributes to the
organization.
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19. Time to productivity
• According to the same research by Oxford Economics, the

average time a new employee takes to reach their OPL is 28
weeks. Employees from within the same industry usually take
less, while employees from outside the industry take significant
longer (32 weeks). University graduates (40 weeks), school
leavers (53 weeks) and unemployed (52 weeks) take the
longest time.
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Recruiting Metrics
20. Adverse impact
• Adverse impact is the negative effect biased and unfair employment practices have
on members of protected groups. These practices can include hiring, learning and
development, promotion, transfer, and performance appraisals.
• Tracking this metric is the key to ensure that your HR practices and activities can
contribute to building a more diverse and inclusive workforce, that you have a fair
hiring process, and that you comply with (local) legislation.
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20. Adverse impact
• The four-fifths rule is a useful tool to determine whether or not there is adverse
impact in your selection process and other employment practices. According to this
metric, the selection rate of protected groups — which include race, sex, age (40
and over), religion, disability status, and veteran status — should be 80% or more
of the selection rate of non-protected groups to avoid adverse impact against the
former.
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Recruiting Metrics
20. Adverse impact
• Example
if 7% of female job candidates and 19% of male candidates are moved to the
interview stage, you can divide 7 by 19 to get the impact ratio of 37%. This is less
than 80%, which means that female candidates are adversely impacted in this case
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Recruiting Metrics
21. Recruiter performance metrics
• Just like how it’s important to track the performance of your recruitment channels or
process, you also need to measure how well your recruiters are doing. You can do this
through various metrics, most of them focusing on the channel that your recruiters use to
communicate with candidates, which is email.
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Recruiting Metrics
• Example
you can look at the email open rate, which is the percentage of sent emails that
candidates opened.
Number of opened emails

Open rate= %
Number of emails delivered
• The response rate is also a good metric to look at, which measures the percentage of
emails that candidates reply to.
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Recruiting Metrics
Number of replies
Response rate= %
Number of emails delivered
• Another metric is the conversion rate, which is the percentage of emails that lead to
interviews
Number of candidates interviewed

Interview conversion rate= %
Number of cold emails delivered
B e a c o n F i n T r a i n @ 2 0 2 1 190
10 Strategic Tips for Measuring Recruitment Effectiveness

Gathering and reporting recruitment metrics is just the beginning. You need a strategic approach to align results with
business goals. Use these tips to gather recruitment effectiveness metrics and improve your recruiting efforts
1. Assess the Availability of External

1. Assess Current Need
Candidates
2. Forecast Future Need
2. Measure and Assess Promotion Rates
3. Take Current Talent Inventory
3. Measure and Analyze Turnover Rate
4. Determine Talent Mix Required to Fill
4. Focus on Increasing Candidate
Talent Gaps
Engagement
5. Define Pool of Internal Candidates
5. Continually Refine Sourcing Strategies
and Tactics
B e a c o n F i n T r a i n @ 2 0 2 2 191
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you Approved Learning Partner in Egypt and Middle East

Finance For HR

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in Egypt and Middle East

• Understand the different between finance and accounting

• Compare financial ratio with industry average.

Objectives • Correlation between Finance & HR

What is the difference between

What is the difference between Accounting and Finance:

Accounting & Finance

Accounting is a system- an information system.

• Accounting is an information system that helps in making decisions.

• Liquidity; cash flow

• Profitability ; Net Income

• Financial position; Balance sheet

• Plans for the future; strategic planning and budget

• Cash Flow; Source of cash ( operation, Investing , Financing)

What ‘events’ are recorded in the

All economic transactions should be recorded

Who uses accounting information?

Internal and external audiences use

How do people use accounting

Accounting information is an essential

What are some planning or controlling

Accounting information is an essential

Accounting in Business Cycle

What do you mean by ?

• Generally Accepted Accounting Principles (GAAP) .

• Qualified & Unqualified Report

• Going Concern Assumption:

The Matching Principle:

Accounting Period Concept:

• Revenue ……. Expenses…….. Account receivable ………Account Payable

• Depreciation…….… Amortization…….… Impairment

• Share holder…….. Stockholder…….. Stakeholder………... Bondholder

• Asset ……... Liabilities ……... Owner Equity

Financial Reporting Process

Supplying general-purpose financial information about a business to people

Financial Reporting Process

Users of financial information: Investors

• We’ll use a simplified example to explain how the equation works:

• Money borrowed as supplementing the funds invested by the owner to buy

• It represents the resources invested in the business by the owner.

• It is increased by owners investing more money or profits from business.

• It is decreased by withdrawals by owners or losses from business.

An individual commences his business on 1 January with $20,000 cash.

The accounting equation of the business would record:

Assets (Cash) $20,000 = Owners’ equity $20,000

Only one side of the equation needs adjustment:

Cash $8000 + Plant $12,000 = Owners’ equity $20,000

Inventories of raw materials are purchased on credit for $6,000.

Cash $8,000 + Plant $12,000+ Raw material inventories $6,000

Owners’ equity $20,000 + Creditors $6,000

Current Asset Items

• Short-term notes receivable:

(raw material, work in process, finished goods and others)

Current Asset Items

used when a company pays for a service in advance.

Current Liability Items

Current Liability Items

is a liability account where a borrower records a written promise to repay the

The Accounting Cycle

Here is a simple Chart of Accounts

Asset Cash in Bank 110100 Asset