We posted COVID, STRATEGY, AND WHAT WE KNOW FOR SURE about a week ago. Here are some further comments and observations about the second “known.”
Gee, about a year ago, things were simple. Put together a good strategy and ride it into the future. Sweet!
BAM! COVID-19! >>>>> FINANCIAL PRESSURE WILL INCREASE!
OK, it’s obvious that financial pressures have and will increase. The question you might want to dig into is “So, how much should I, a non-expert but an up-and-coming leader, need to know?”
See if the following list list makes you nervous. If so, start learning just a wee bit more about the magic stuff (money) that keeps your business running.
Profit and Loss Statement
- Net Sales
- Cost of Goods Sold
- Merchandise/Product Margins
- Net Profit
- Cash vs. Non-Cash Items
- Accrual Reporting vs. Cash Reporting
- Variance Analysis
- Are you really making money? How much profit does the company make on $1 of revenue?
Balance Sheet
- Types of Assets
- Types of Debt
- Owners Equity
Cash Flows
- Operating
- Investing
- Financing
Meaning of Basic Financial Ratios
- DuPont ROE Model
- Return on Investment
- Return on Sales
- Return on Assets
- Impact of Leverage/Borrowing
Budgets
- How to Budget
- Variance Analysis
Don’t get snowed as the world changes around you. Financial literacy is needed at ALL levels of leadership.
