Page 36 - Finance for Non-Financial Managers

Siciliano02.qxd 2/8/2003 6:31 AM Page 17
The Structure and Interrelationship of Financial Statements
8-yard line. In a well-executed play, your team’s running back
takes the ball and charges through the pack, only to be tackled
at the goal line. Did he get over or not? The referee says no. 17
Once again, you stop the tape, rewind, and review. This time
you’re sure the ref is smoking something, because you have
made your own analysis of the data and are convinced the
score should now be 6-0 in favor of your team.
As you visualize this picture, keep in mind that the game
was played earlier, before you got a chance to watch it, and it
went on continuously for three hours (counting pileups, com-
mercials, and halftime), despite your ability to stop the tape
whenever you chose. The game didn’t stop in reality, but your
analysis tools enabled you to look back and analyze the action
in as much depth as you wanted, because you had recorded
with your VCR all the details of the game. In picture form that
might look like Figure 2-3.

Flow of Events Flow of Events
Freeze Freeze Freeze
Figure 2-3. Flow of the action

As you can see, the action flows throughout the tape, but
periodically your “freeze frame” commands to your remote
resulted in an artificial stop in the action. When you press Play
again, the action continues exactly where it left off, as if it had
never stopped. Each vertical bar represents the freeze frame
actions you took in an otherwise continuous flow of activity.
Now consider the financial transactions that occur every day