Page 119 - Finance for Non-Financial Managers

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Finance for Non-Financial Managers
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nesses of your company that don’t appear in bold type in your
statements or the accompanying footnotes. And if they go
there, you want to be there first, to see that information before
they do.
If you’re employed by the company, it’s because you may
want to know how healthy it is beyond the rumors in the halls
and the muffled comments in the washroom. If the company is
in dire straits and needs to cut costs tomorrow, you might want
to know that, if possible. If the foundation is like the Rock of
Gibraltar, but it doesn’t yet show up in the income statement,
that just might influence how much you put into your 401K or
the company pension fund.
If you’ve invested in the company or are considering invest-
ing in it, it’s because you can readily see how knowing things
that other people don’t know, good or bad, can make you a
hero or keep you from being the last one out the door. Hidden
information is what many insiders make their buy and sell deci-
sions on—and what people in general probably couldn’t under-
stand if they had it. But with these tools you can.
OK, so the answer isn’t “It all depends.” The real answer is
that you always want to have this information, because it gives
you insights, options, and alternatives that you aren’t going to
get anywhere else. It gives you information that gets to the root
causes of problems only hinted at in the basic financial state-
ments, information that can give you not only the sources of
problems, but also important clues as to the solutions.

What Are CPFs? Do They Mix with Water?
CPFs are the performance metrics that enable us to look at the
relationships in a company’s financial numbers in a new way.
They are best accompanied by a benchmark, a standard
against which the metric is compared to see if the company is
doing better or worse than was expected or hoped for. The
result is an insight that we didn’t have previously about an area
that’s important to us.