WHAT WE KNOW FOR SURE – Part 3 – Financial Pressure

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.