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by Jack Alexander
Financial Planning & Analysis and Performance Management
COVER
PREFACE
WHY THIS BOOK?
USING THIS BOOK
ABOUT THE WEBSITE
WHAT'S ON THE WEBSITE
GLOSSARY
1 FINANCIAL PLANNING & ANALYSIS AND BUSINESS PERFORMANCE MANAGEMENT
THE PROBLEM WITH TRADITIONAL MEASUREMENT SYSTEMS
OBJECTIVES OF FINANCIAL ANALYSIS AND PERFORMANCE MANAGEMENT
PREVIEW OF THE BOOK
SUMMARY
Part One: Fundamentals and Key FP&A Capabilities
2 FUNDAMENTALS OF FINANCE
BASICS OF ACCOUNTING AND FINANCIAL STATEMENTS
FINANCIAL RATIOS AND INDICATORS
SUMMARY
NOTE
3 KEY ANALYTICAL TOOLS AND CONCEPTS
BASIC STATISTICAL TOOLS
THE BUSINESS MODEL
SUMMARY
4 DEVELOPING PREDICTIVE AND ANALYTICAL MODELS
WHAT IS A FINANCIAL MODEL?
SUMMARY
APPENDIX: ILLUSTRATIVE MODEL
5 BUILDING ANALYTICAL CAPABILITY
FOR THE INDIVIDUAL
FOR THE ORGANIZATION
SUMMARY
6 COMMUNICATING AND PRESENTING FINANCIAL INFORMATION
LAYING THE FOUNDATION FOR SUCCESS
DEVELOPING EFFECTIVE PRESENTATIONS AND REPORTS
DELIVERING THE PRESENTATION
DATA VISUALIZATION AND PRESENTATION: A PICTURE IS WORTH A THOUSAND WORDS
SUMMARY
NOTE
Part Two: Performance Management
7 BUSINESS PERFORMANCE MANAGEMENT
WHAT IS BUSINESS PERFORMANCE MANAGEMENT?
DEVELOPING OR ENHANCING BPM IN AN ORGANIZATION
SUMMARY
NOTES
8 DASHBOARDS AND KEY PERFORMANCE INDICATORS
OBJECTIVES OF DASHBOARDS AND KEY PERFORMANCE INDICATORS
SELECTING APPROPRIATE PERFORMANCE MEASURES AND KEY PERFORMANCE INDICATORS
CREATING PERFORMANCE DASHBOARDS
SAMPLE DASHBOARDS FOR SELECTED INDUSTRIES
SUMMARY
9 INSTITUTIONALIZING PERFORMANCE MANAGEMENT
GAINING TRACTION
INTEGRATING BUSINESS PERFORMANCE MANAGEMENT WITH OTHER MANAGEMENT PROCESSES
AVOIDING COMMON MISTAKES
SUMMARY
10 MEASURING AND DRIVING WHAT'S IMPORTANT
INNOVATION
MEASURING AND DRIVING BUSINESS AGILITY
HUMAN CAPITAL MANAGEMENT
HCM DASHBOARD
SUMMARY
11 THE EXTERNAL VIEW
ANALYSIS OF MARKETS, CUSTOMERS, AND COMPETITORS
BENCHMARKING TO EVALUATE PERFORMANCE
USING BENCHMARKS TO SET ENTERPRISE GOALS FOR PERFORMANCE AND VALUE CREATION
SUMMARY
Part Three: Business Projections and Plans
12 BUSINESS PROJECTIONS AND PLANS
OVERVIEW OF BUSINESS PLANNING AND PROJECTIONS
BEST PRACTICES IN PROJECTING FUTURE FINANCIAL RESULTS
SUMMARY
13 BUDGETS, OPERATING PLANS, AND FORECASTS
THE BUDGETING PROCESS
THE OPERATING PLAN
BUSINESS FORECASTS AND OUTLOOKS
SUMMARY
NOTE
14 LONG‐TERM PROJECTIONS
UNIQUE CHALLENGES IN ESTIMATING LONG‐TERM PERFORMANCE
APPLICATIONS OF LONG‐TERM PROJECTIONS
DEVELOPING LONG‐TERM PROJECTIONS
PRESENTATION OF LONG‐TERM PROJECTIONS
SUMMARY
Part Four: Planning and Analysis for Critical Business and Value Drivers
15 REVENUE AND GROSS MARGINS
REVENUE GROWTH: KEY DRIVERS
KEY PERFORMANCE MEASURES: REVENUE GROWTH
REVENUE DASHBOARD
GROSS MARGINS AND RELATIVE PRICING STRENGTH
MEASURES OF RELATIVE PRICING STRENGTH
SUMMARY
16 OPERATING EXPENSES AND EFFECTIVENESS
DRIVERS OF OPERATING EFFECTIVENESS
KEY PERFORMANCE INDICATORS: OPERATING EFFECTIVENESS
TOOLS FOR ASSESSING AND IMPROVING OPERATING EFFECTIVENSS
SUMMARY
17 CAPITAL MANAGEMENT AND CASH FLOW
CRITICAL SUCCESS FACTORS
OPERATING CAPITAL MANAGEMENT
UNDERSTANDING THE DYNAMICS OF OPERATING CAPITAL
UNLEASHING THE VALUE TRAPPED IN OPERATING CAPITAL
ACCOUNTS RECEIVABLE
KEY PERFORMANCE INDICATORS FOR THE REVENUE PROCESS AND ACCOUNTS RECEIVABLE
INVENTORIES
SUMMARY
18 CAPITAL MANAGEMENT AND CASH FLOW
CAPITAL INTENSITY
TOOLS FOR IMPROVING THE MANAGEMENT OF LONG‐TERM CAPITAL
PROJECTING CAPITAL INVESTMENTS AND DEPRECIATION
KEY PERFORMANCE INDICATORS FOR CAPITAL INTENSITY
INTANGIBLE ASSETS
KEY PERFORMANCE INDICATORS: GOODWILL AND INTANGIBLE ASSETS
EXCESS CASH BALANCES
LONG‐TERM CAPITAL DASHBOARD
SUMMARY
19 RISK, UNCERTAINTY, AND THE COST OF CAPITAL
THE TIME VALUE OF MONEY
THE COST OF CAPITAL
PERFORMANCE MEASURES
SUMMARY
Part Five: Valuation and Capital Investment Decisions
20 CAPITAL INVESTMENT DECISIONS
THE CAPITAL INVESTMENT PROCESS
EVALUATING THE ECONOMIC MERITS OF CAPITAL INVESTMENTS
ILLUSTRATIONS
SUMMARY
21 CAPITAL INVESTMENT DECISIONS
DEALING WITH RISK AND UNCERTAINTY IN CAPITAL INVESTMENT DECISIONS
PRESENTING CAPITAL INVESTMENT DECISIONS
CAPITAL BUDGETING AND RATIONING
EVALUATING THE EFFECTIVENESS OF THE CAPITAL INVESTMENT DECISION PROCESS
SUMMARY
22 BUSINESS VALUATION AND VALUE DRIVERS
ESTIMATING THE VALUE OF A BUSINESS BY DISCOUNTING FUTURE CASH FLOWS
ESTIMATING THE VALUE OF FIRMS BY USING THE VALUATION OF SIMILAR FIRMS: MULTIPLES OF REVENUES, EARNINGS, AND RELATED MEASURES
BUILDING SHAREHOLDER VALUE IN A MULTIPLES FRAMEWORK
INTEGRATED VALUATION SUMMARY FOR ROBERTS MANUFACTURING COMPANY
VALUE DRIVERS
SUMMARY
NOTE
23 ANALYSIS OF MERGERS AND ACQUISITIONS
THE ACQUISITION CHALLENGE
KEY ELEMENTS IN VALUING AN ACQUISITION
METHODS AND METRICS FOR VALUING AN ACQUISITION
COMMON MISTAKES IN M&A
BEST PRACTICES AND CRITICAL SUCCESS FACTORS
UNDERSTANDING SELLER BEST PRACTICES
KEY PERFORMANCE INDICATORS FOR M&A
DASHBOARDS FOR M&A
SUMMARY
Part Six: Summary
24 SUMMARY AND WHERE TO FROM HERE?
KEY TAKEAWAYS
WHERE TO FROM HERE?
GLOSSARY
ACKNOWLEDGMENTS
ABOUT THE AUTHOR
JACK ALEXANDER
INDEX
END USER LICENSE AGREEMENT
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PRAISE FOR FINANCIAL PLANNING & ANALYSIS AND PERFORMANCE MANAGEMENT
Table of Contents
COVER
PREFACE
WHY THIS BOOK?
USING THIS BOOK
ABOUT THE WEBSITE
WHAT'S ON THE WEBSITE
GLOSSARY
1 FINANCIAL PLANNING & ANALYSIS AND BUSINESS PERFORMANCE MANAGEMENT
THE PROBLEM WITH TRADITIONAL MEASUREMENT SYSTEMS
OBJECTIVES OF FINANCIAL ANALYSIS AND PERFORMANCE MANAGEMENT
PREVIEW OF THE BOOK
SUMMARY
Part One: Fundamentals and Key FP&A Capabilities
2 FUNDAMENTALS OF FINANCE
BASICS OF ACCOUNTING AND FINANCIAL STATEMENTS
FINANCIAL RATIOS AND INDICATORS
SUMMARY
NOTE
3 KEY ANALYTICAL TOOLS AND CONCEPTS
BASIC STATISTICAL TOOLS
THE BUSINESS MODEL
SUMMARY
4 DEVELOPING PREDICTIVE AND ANALYTICAL MODELS
WHAT IS A FINANCIAL MODEL?
SUMMARY
APPENDIX: ILLUSTRATIVE MODEL
5 BUILDING ANALYTICAL CAPABILITY
FOR THE INDIVIDUAL
FOR THE ORGANIZATION
SUMMARY
6 COMMUNICATING AND PRESENTING FINANCIAL INFORMATION
LAYING THE FOUNDATION FOR SUCCESS
DEVELOPING EFFECTIVE PRESENTATIONS AND REPORTS
DELIVERING THE PRESENTATION
DATA VISUALIZATION AND PRESENTATION: A PICTURE IS WORTH A THOUSAND WORDS
SUMMARY
NOTE
Part Two: Performance Management
7 BUSINESS PERFORMANCE MANAGEMENT
WHAT IS BUSINESS PERFORMANCE MANAGEMENT?
DEVELOPING OR ENHANCING BPM IN AN ORGANIZATION
SUMMARY
NOTES
8 DASHBOARDS AND KEY PERFORMANCE INDICATORS
OBJECTIVES OF DASHBOARDS AND KEY PERFORMANCE INDICATORS
SELECTING APPROPRIATE PERFORMANCE MEASURES AND KEY PERFORMANCE INDICATORS
CREATING PERFORMANCE DASHBOARDS
SAMPLE DASHBOARDS FOR SELECTED INDUSTRIES
SUMMARY
9 INSTITUTIONALIZING PERFORMANCE MANAGEMENT
GAINING TRACTION
INTEGRATING BUSINESS PERFORMANCE MANAGEMENT WITH OTHER MANAGEMENT PROCESSES
AVOIDING COMMON MISTAKES
SUMMARY
10 MEASURING AND DRIVING WHAT'S IMPORTANT
INNOVATION
MEASURING AND DRIVING BUSINESS AGILITY
HUMAN CAPITAL MANAGEMENT
HCM DASHBOARD
SUMMARY
11 THE EXTERNAL VIEW
ANALYSIS OF MARKETS, CUSTOMERS, AND COMPETITORS
BENCHMARKING TO EVALUATE PERFORMANCE
USING BENCHMARKS TO SET ENTERPRISE GOALS FOR PERFORMANCE AND VALUE CREATION
SUMMARY
Part Three: Business Projections and Plans
12 BUSINESS PROJECTIONS AND PLANS
OVERVIEW OF BUSINESS PLANNING AND PROJECTIONS
BEST PRACTICES IN PROJECTING FUTURE FINANCIAL RESULTS
SUMMARY
13 BUDGETS, OPERATING PLANS, AND FORECASTS
THE BUDGETING PROCESS
THE OPERATING PLAN
BUSINESS FORECASTS AND OUTLOOKS
SUMMARY
NOTE
14 LONG‐TERM PROJECTIONS
UNIQUE CHALLENGES IN ESTIMATING LONG‐TERM PERFORMANCE
APPLICATIONS OF LONG‐TERM PROJECTIONS
DEVELOPING LONG‐TERM PROJECTIONS
PRESENTATION OF LONG‐TERM PROJECTIONS
SUMMARY
Part Four: Planning and Analysis for Critical Business and Value Drivers
15 REVENUE AND GROSS MARGINS
REVENUE GROWTH: KEY DRIVERS
KEY PERFORMANCE MEASURES: REVENUE GROWTH
REVENUE DASHBOARD
GROSS MARGINS AND RELATIVE PRICING STRENGTH
MEASURES OF RELATIVE PRICING STRENGTH
SUMMARY
16 OPERATING EXPENSES AND EFFECTIVENESS
DRIVERS OF OPERATING EFFECTIVENESS
KEY PERFORMANCE INDICATORS: OPERATING EFFECTIVENESS
TOOLS FOR ASSESSING AND IMPROVING OPERATING EFFECTIVENSS
SUMMARY
17 CAPITAL MANAGEMENT AND CASH FLOW
CRITICAL SUCCESS FACTORS
OPERATING CAPITAL MANAGEMENT
UNDERSTANDING THE DYNAMICS OF OPERATING CAPITAL
UNLEASHING THE VALUE TRAPPED IN OPERATING CAPITAL
ACCOUNTS RECEIVABLE
KEY PERFORMANCE INDICATORS FOR THE REVENUE PROCESS AND ACCOUNTS RECEIVABLE
INVENTORIES
SUMMARY
18 CAPITAL MANAGEMENT AND CASH FLOW
CAPITAL INTENSITY
TOOLS FOR IMPROVING THE MANAGEMENT OF LONG‐TERM CAPITAL
PROJECTING CAPITAL INVESTMENTS AND DEPRECIATION
KEY PERFORMANCE INDICATORS FOR CAPITAL INTENSITY
INTANGIBLE ASSETS
KEY PERFORMANCE INDICATORS: GOODWILL AND INTANGIBLE ASSETS
EXCESS CASH BALANCES
LONG‐TERM CAPITAL DASHBOARD
SUMMARY
19 RISK, UNCERTAINTY, AND THE COST OF CAPITAL
THE TIME VALUE OF MONEY
THE COST OF CAPITAL
PERFORMANCE MEASURES
SUMMARY
Part Five: Valuation and Capital Investment Decisions
20 CAPITAL INVESTMENT DECISIONS
THE CAPITAL INVESTMENT PROCESS
EVALUATING THE ECONOMIC MERITS OF CAPITAL INVESTMENTS
ILLUSTRATIONS
SUMMARY
21 CAPITAL INVESTMENT DECISIONS
DEALING WITH RISK AND UNCERTAINTY IN CAPITAL INVESTMENT DECISIONS
PRESENTING CAPITAL INVESTMENT DECISIONS
CAPITAL BUDGETING AND RATIONING
EVALUATING THE EFFECTIVENESS OF THE CAPITAL INVESTMENT DECISION PROCESS
SUMMARY
22 BUSINESS VALUATION AND VALUE DRIVERS
ESTIMATING THE VALUE OF A BUSINESS BY DISCOUNTING FUTURE CASH FLOWS
ESTIMATING THE VALUE OF FIRMS BY USING THE VALUATION OF SIMILAR FIRMS: MULTIPLES OF REVENUES, EARNINGS, AND RELATED MEASURES
BUILDING SHAREHOLDER VALUE IN A MULTIPLES FRAMEWORK
INTEGRATED VALUATION SUMMARY FOR ROBERTS MANUFACTURING COMPANY
VALUE DRIVERS
SUMMARY
NOTE
23 ANALYSIS OF MERGERS AND ACQUISITIONS
THE ACQUISITION CHALLENGE
KEY ELEMENTS IN VALUING AN ACQUISITION
METHODS AND METRICS FOR VALUING AN ACQUISITION
COMMON MISTAKES IN M&A
BEST PRACTICES AND CRITICAL SUCCESS FACTORS
UNDERSTANDING SELLER BEST PRACTICES
KEY PERFORMANCE INDICATORS FOR M&A
DASHBOARDS FOR M&A
SUMMARY
Part Six: Summary
24 SUMMARY AND WHERE TO FROM HERE?
KEY TAKEAWAYS
WHERE TO FROM HERE?
GLOSSARY
ACKNOWLEDGMENTS
ABOUT THE AUTHOR
JACK ALEXANDER
INDEX
END USER LICENSE AGREEMENT
List of Tables
Chapter 2
TABLE 2.1 Comparison of Common P&L Measures
TABLE 2.2 Assets = Liabilities + Shareholders' Equity
TABLE 2.3 Net Operating Assets/Invested Capital Illustration
TABLE 2.4 Cash Flow Statement
TABLE 2.5 Roberts Manufacturing Company Historical and Estimated 2018 Financials
TABLE 2.6 Cash Effectiveness for Roberts Manufacturing Company
TABLE 2.7 Roberts Manufacturing Company Performance Assessment Summary
TABLE 2.8 Key Financial Terms and Measures: Quick Reference Guide
Chapter 3
TABLE 3.1 Finished Goods Inventory – Vance Corp
TABLE 3.2 Finished Goods Inventory – Vance Corp: Descending Order
TABLE 3.3 Analysis of Finished Goods Inventory
TABLE 3.4 Stock Price Sensitivity Analysis
TABLE 3.5 Expected Value of Sales Plan
TABLE 3.6 Return on Equity Analysis
TABLE 3.7 Order Processing Costs Allocated by Sales Dollars
TABLE 3.8 Costs Assigned Based on Activity
TABLE 3.9 Business Model Illustration: Traditional View
TABLE 3.10 Business Model Illustration: Comprehensive View
TABLE 3.11 Business Model Benchmark Summary Based on Company Reports and SEC Filings
TABLE 3.12 Varying Business Models under the Same Roof
TABLE 3.13 Business Models in a Homogeneous Company
TABLE 3.14 Cost and Breakeven Analysis
TABLE 3.15 Operating Leverage Illustration: Current Situation
TABLE 3.16 Operating Leverage Illustration: Revised Cost Structure
Chapter 4
TABLE 4.1 Portfolio of Financial Models
TABLE 4.2 Product Revenue and Margin Documentation
TABLE 4.3 Revenue Plan Model – Existing Products
TABLE 4.4 Revenue Plan Model – New Products
Chapter 5
TABLE 5.1 Experience, Skill, and Competency Inventory
TABLE 5.2 Best Practices Checklist Excerpt
TABLE 5.3 Report and Analysis Inventory and Assessment
TABLE 5.4 FP&A Improvement Plan
Chapter 6
TABLE 6.1 Sensitivity Chart
Chapter 7
TABLE 7.1 Marathon Training Program
TABLE 7.2 Project Timeline
Chapter 10
TABLE 10.1 Key Innovation Measures
TABLE 10.2 Investment in New Hire
TABLE 10.3 Headcount Analysis
Chapter 11
TABLE 11.1 Comprehensive Benchmark Analysis
TABLE 11.2 Benchmarking Summary and Target Worksheet
Chapter 12
TABLE 12.1 Upside and Downside Event Summary
TABLE 12.2 Revenue Probability Analysis
Chapter 13
TABLE 13.1 Traditional Departmental Budget
TABLE 13.2 Rolling Forecast Method
TABLE 13.3 DBO Supporting Schedule: Product Margins
TABLE 13.4 DBO Supporting Schedule: Gross Margins
TABLE 13.5 DBO Supporting Schedule: Marketing
TABLE 13.6 DBO Income Statement
TABLE 13.7 DBO Supporting Schedule: Balance Sheet and Cash Flow
Chapter 14
TABLE 14.1 LTP: Revenue and Margin Projections
TABLE 14.2 LTP: Operating Expense Projections
TABLE 14.3 LTP: Capital Assets and Depreciation
TABLE 14.4 LTP: Capsule Financial Summary
TABLE 14.5 Traditional Retail Model
TABLE 14.6 New Reality for Established Retailers
Chapter 15
TABLE 15.1 Revenue Planning Worksheet: Product Detail
TABLE 15.2 Forecast Evaluation Worksheet
TABLE 15.3 Market Size and Share Analysis
TABLE 15.4 Revenue Forecast Accuracy
TABLE 15.5 Quarterly Sales Trend
TABLE 15.6 Comprehensive Revenue Measures
TABLE 15.7 Gross Margin Analysis
Chapter 16
TABLE 16.1 Sales and Value Added per Employee
TABLE 16.2 Headcount Analysis
TABLE 16.3 Critical New Product Development Status
TABLE 16.4 Natural Expense Code Analysis
Chapter 17
TABLE 17.1 Operating Capital (Working Capital Less Cash and Debt)
TABLE 17.2 Operating Capital Forecast – Thomas Industries
TABLE 17.3 Working Capital Improvement Illustration
TABLE 17.4 DSO Count‐Back Illustration
TABLE 17.5 Best Possible DSO Estimate
TABLE 17.6 Accounts Receivable Aging Schedule for Morehouse Company
TABLE 17.7 Accounts Receivable Past Due Analysis
TABLE 17.8 Accounts Receivable Roll‐Forward Summary
TABLE 17.9 Inventory Trend Schedule by Category
TABLE 17.10 Inventory Roll‐Forward Summary
TABLE 17.11 Inventory Forecast Analysis
Chapter 18
TABLE 18.1 Asset Utilization Review
TABLE 18.2 Projecting Property and Equipment and Accumulated Depreciation
TABLE 18.3 Acquisition Purchase Price Allocation
TABLE 18.4 Estimating the Economic Cost (Penalty) of Retaining Excess Cash
Chapter 19
TABLE 19.1 Uneven Cash Flows Illustration
TABLE 19.2 WACC Illustration Inputs
TABLE 19.3 WACC Computation
Chapter 20
TABLE 20.1 NPV Illustration
TABLE 20.2 IRR Illustration
TABLE 20.3 Payback Illustration
TABLE 20.4 Combined Illustration
TABLE 20.5 Capital Expenditure: Manufacturing Project
TABLE 20.6 Capital Expenditure: Pharmaceutical Product Development
Chapter 21
TABLE 21.1 Project Investment Analysis: Procrastination Pharmaceutical
TABLE 21.2 Sensitivity Analysis
TABLE 21.3 Sensitivity and Breakeven Analysis
TABLE 21.4 Capital Investment Allocation
TABLE 21.5 Capital Plan Ranking
TABLE 21.6 Review of Capital Investments
Chapter 22
TABLE 22.1 DCF Valuation Model
TABLE 22.2 DCF Sensitivity Analysis
TABLE 22.3 Roberts Manufacturing Company Valuation Summary Table
TABLE 22.4 Benchmarking Summary
TABLE 22.5 Summary of Full Potential Value
Chapter 23
TABLE 23.1 Sheridan Acquisition Company Acquires Roberts Manufacturing Company
TABLE 23.2 Accretive‐Dilutive Test Illustration
TABLE 23.3 Control Premium Analysis
TABLE 23.4 DCF Stand‐Alone
TABLE 23.5 DCF Synergy and Stand‐Alone
TABLE 23.6 Synergy Valuation and Control Premium Test
TABLE 23.7 Economic Profit/ROIC Test
List of Illustrations
Chapter 1
FIGURE 1.1 Space Shuttle Cockpit Instrument Panel
FIGURE 1.2 FP&A and PM Must Be Integrated with Other Management Processes
Chapter 2
FIGURE 2.1 Financial Statement Interrelationships
FIGURE 2.2 Key Performance Trends for Roberts Manufacturing Company
Chapter 3
FIGURE 3.1 Decision Tree: Replace Existing Product
FIGURE 3.2 Revenue Process and Accounts Receivable Analysis
Chapter 4
FIGURE 4.1 Financial Model Architecture
FIGURE 4.2 Model Summary
Chapter 5
FIGURE 5.1 Traditional Finance Organization
FIGURE 5.2 Integrated FP&A Structure
FIGURE 5.3 Financial Acumen Scores
Chapter 6
FIGURE 6.1 Revenue Process–Accounts Receivable Dashboard
FIGURE 6.2 Cost Pie Chart
FIGURE 6.3 Histogram of Expenses
FIGURE 6.4 Comparative Histogram Chart
FIGURE 6.5 Doughnut Graph – Percentage Completion
FIGURE 6.6 Line Graph
FIGURE 6.7 Stacked Column Graph
FIGURE 6.8 Stacked Columns with Float
FIGURE 6.9 Bar Chart
FIGURE 6.10 Dual Access Graph
FIGURE 6.11 Reconciliation (Waterfall) Graph
FIGURE 6.12 Speedometer Chart
FIGURE 6.13 Human Capital Management Assessment
FIGURE 6.14 Valuation Summary
Chapter 7
FIGURE 7.1 Overview of Performance Management Process
FIGURE 7.2 Implementing Performance Management Framework
FIGURE 7.3 Creating Context for Performance Management
FIGURE 7.4 The Value Performance Framework
FIGURE 7.5 Performance Framework for Mission‐Oriented Organization
Chapter 8
FIGURE 8.1 Space Shuttle Cockpit Instrument Panel
FIGURE 8.2 Personal Health and Fitness Dashboard
FIGURE 8.3 Performance Measure Worksheet
FIGURE 8.4 Quarterly Corporate Dashboard
FIGURE 8.5 Example of Weekly Dashboard
FIGURE 8.6 New Product Development Dashboard
FIGURE 8.7 Revenue Process/Receivables Improvement Dashboard
FIGURE 8.8 Dashboard for Specialty Retail: Lawn and Garden
FIGURE 8.9 Dashboard for Ski Resort
FIGURE 8.10 Dashboard for Medical Center
Chapter 9
FIGURE 9.1 Establishing a Performance Management Framework
FIGURE 9.2 Integrating PM with Other Management Processes
FIGURE 9.3 Business Unit Accountability Dashboard
Chapter 10
FIGURE 10.1 Historical Performance Recap: Apple
FIGURE 10.2 Comparative Performance: Netflix and Blockbuster
FIGURE 10.3 Drilling Down into Sources of Revenue Growth
FIGURE 10.4 New Product Development Dashboard
FIGURE 10.5 Innovation Dashboard
FIGURE 10.6 Agility as a Three‐Part Process
FIGURE 10.7 Improving Agility
FIGURE 10.8 Economic and Life Cycles
FIGURE 10.9 Agility Dashboard
FIGURE 10.10 Human Capital Impacts All Value Drivers
FIGURE 10.11 HCM Portfolio Analysis
FIGURE 10.12 Human Capital Management and Financial Performance
FIGURE 10.13 HCM Dashboard
Chapter 11
FIGURE 11.1 Quarterly Performance Recap: Under Armour
FIGURE 11.2 Expanded Benchmarking View
FIGURE 11.3 Apple Performance Trends
FIGURE 11.4 Amazon Performance Trends
Chapter 12
FIGURE 12.1 Historical Budget and Control Process
FIGURE 12.2 Historical versus Plan Trends
FIGURE 12.3 Sales Run‐Rate Analysis
FIGURE 12.4 Actual Revenue versus Forecast Range
FIGURE 12.5 Sensitivity Analysis: Key Assumption
FIGURE 12.6 Scenario Recap
FIGURE 12.7 Using Business Model to Develop Projections
Chapter 13
FIGURE 13.1 Traditional Budget and Control Process
FIGURE 13.2 Budget Roll‐Up Illustration
FIGURE 13.3 Dashboard: Evaluation of Operating Plan
FIGURE 13.4 Traditional Forecast Horizon
FIGURE 13.5 Rolling Forecast: Business Outlook Horizon
FIGURE 13.6 Reflect Critical Drivers in Business Outlook
FIGURE 13.7 Business Outlook Architecture Map
FIGURE 13.8 DBO Presentation Summary
Chapter 14
FIGURE 14.1 SLOT Analysis
FIGURE 14.2 LTP: Presentation Summary
FIGURE 14.3 Comparison of Traditional versus New Reality Retail
Chapter 15
FIGURE 15.1 Drill‐Down Illustration: Revenue Growth Drivers
FIGURE 15.2 Revenue Variance
FIGURE 15.3 Revenue Change Analysis
FIGURE 15.4 Forecast Progression Analysis
FIGURE 15.5 Year‐over‐Year Growth
FIGURE 15.6 Revenue in Product Development Pipeline
FIGURE 15.7 Backlog Analysis
FIGURE 15.8 Revenue Growth and Innovation Dashboard
FIGURE 15.9 Gross Margins and Relative Pricing Strength
FIGURE 15.10 Gross Margin Reconciliation
FIGURE 15.11 Dashboard: Gross Margin and Pricing Strength
Chapter 16
FIGURE 16.1 Operating Effectiveness Diagram
FIGURE 16.2 Process View
FIGURE 16.3 Revenue Patterns
FIGURE 16.4 Natural Expense Code Analysis Histogram
FIGURE 16.5 Operating Effectiveness Dashboard
FIGURE 16.6 New Product Development Process Dashboard
Chapter 17
FIGURE 17.1 Drill‐Down Illustration: Capital Efficiency and Asset Management
FIGURE 17.2 Drill‐Down Illustration: Accounts Receivable
FIGURE 17.3 Revenue Process Timeline from Order to Collection
FIGURE 17.4 Revenue Process–Accounts Receivable Dashboard
FIGURE 17.5 DSO Drivers
FIGURE 17.6 Past Due by Root Cause
FIGURE 17.7 Procurement and Conversion Processes
FIGURE 17.8 Excess and Obsolete Inventory Summary
FIGURE 17.9 Supply Chain and Inventory Dashboard
Chapter 18
FIGURE 18.1 Drill‐Down Illustration: Capital Effectiveness and Asset Management
FIGURE 18.2 Capital Investment Process Overview
FIGURE 18.3 Goodwill and Intangible Assets as a Percentage of Total Assets
FIGURE 18.4 Long‐Term Capital Dashboard
Chapter 19
FIGURE 19.1 Compounding Illustration
FIGURE 19.2 Future Value of Annuity Illustration
FIGURE 19.3 Discounting Illustration
FIGURE 19.4 Bond Valuation Illustration
FIGURE 19.5 Discounted Cash Flow (DCF)
FIGURE 19.6 Sensitivity of Value to Cost of Capital
FIGURE 19.7 Risk and Return
FIGURE 19.8 Cost of Capital Drivers
FIGURE 19.9 WACC Visual Summary
FIGURE 19.10 Optimal Cost of Capital and Capital Structure
FIGURE 19.11 Capital Structure and Financial Policy
FIGURE 19.12 Cost of Capital Dashboard
Chapter 20
FIGURE 20.1 Capital Investment Process Overview
Chapter 21
FIGURE 21.1 Risk and Return
FIGURE 21.2 Risk and Expected Return
FIGURE 21.3 Setting Hurdle Rates Based on Risk
FIGURE 21.4 Scenario Recap
FIGURE 21.5 Decision Tree
FIGURE 21.6 Event/Option Tree
FIGURE 21.7 Option Event Summary for Procrastination Pharmaceutical
FIGURE 21.8 Option Value Illustration
FIGURE 21.9 Capital Investment Summary
Chapter 22
FIGURE 22.1 Discounted Cash Flow (DCF)
FIGURE 22.2 Value Decomposition
FIGURE 22.3 Roberts Manufacturing Company Valuation Summary Graph
FIGURE 22.4 Valuation Summary
FIGURE 22.5 The Value Performance Framework
FIGURE 22.6 Estimating Full Potential Valuation
Chapter 23
FIGURE 23.1 Stand‐Alone and Synergies Value
FIGURE 23.2 Control Premium–Synergies Macro Test
FIGURE 23.3 Sources of Acquisition Value
FIGURE 23.4 Comparative Value Summary: Acquisition of Roberts Manufacturing Company
FIGURE 23.5 M&A Dashboard
FIGURE 23.6 Dashboard for a Specific Acquisition
Guide
Cover
Table of Contents
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