- Page references followed by f indicate a figure; and page references followed by t indicate a table.
- A
- Accountability, 392–393
- Accounting
- basics, 13–19
- jargon, avoidance, 98
- reports, limitations,
- stereotype, overcoming, 110–112
- Accounts payable, 312
- Accounts receivable, 398–401
- example, 399f
- improvement, 405–410
- KPIs, 401–410
- past due analysis, 408t
- problem resolution, 378
- roll‐forward summary, 408–409, 409t
- Accounts receivable DSO, 51–52
- Accretive‐dilutive test. See Earnings per share
- Accrual accounting, 14–19, 575
- Accumulated depreciation, projection, 429t–430t
- Acquisitions, 523–524
- activities, progress, 563
- annualized cost synergies, 564
- challenge, 535–537
- cost reduction, 538
- dashboard, 566f
- examination, 563–564
- example, 541t
- performance
- problem, 553–554
- synergies/strategic objectives, 435
- potential value, 539
- price, reduction, 552
- process, 559
- purchase price allocation, 433t
- sales/synergies, 563
- valuation
- elements, 537–539
- methods/metrics, 539–554
- values (setting), multiples (usage), 522–523
- value, sources, 551f
- Activity‐based measures, 54, 56
- Actual development costs, target development costs (contrast), 374
- Actual product costs, target costs (contrast), 374–375
- Agile (versatile) associate, 209
- Agile employees, percentage, 212
- Agility, 575
- assessment/metrics, 212–214
- business, relationship, 210–211
- dashboards, 213f
- economic cycles, relationship, 210–211
- improvement, 207f
- measurement/factors, , 193 (See also Business agility)
- three‐part process, 205f
- Amazon, performance trends, 241f
- Amortization, 15, 542, 575
- Analysis
- credibility/objectivity, 93
- evaluation, 102–105
- examples, reading/collection, 91–92
- flow, 79
- inventory/assessment, 104t
- Analytical capability, building, , 89
- Analytical models
- accuracy/reasonableness, 79
- development, , 71
- robustness/flexibility, 78–79
- Analytical reports, usage, 416, 418
- Analytical skills, inadequacy, 90
- Analytical tools/concepts, , 43
- Analytical tools, repository/portfolio (maintenance), 97
- Analytical works
- incompleteness/ineffectiveness, 570
- portfolio maintenance, 92
- Analytics, , 575
- Annualized cost synergies, 564
- Annual operating plan, 250
- Annual plan process, evaluation, 276–277
- Annual reports, usage, 229–230
- Annual sales, 402
- Annuity in perpetuity
- present value, 447–448
- value, 447
- Apple, performance, 197f
- Artificial intelligence (AI), usage,
- Assets, 575
- business decisions, 428
- equation, 17t
- impairment history, 432–433
- inventory, 426–427
- levels, 255
- management, example, 390f, 422f
- turnover, 28, 196, 365, 396, 575
- utilization measure, 25–28, 368
- utilization review, 426–427, 427t
- write‐offs, 432–433, 563
- Assumptions/drivers, identification, 76
- Auction process, usage, 561–562
- Audiences
- knowledge, 113–115
- presentations, 115
- Average days to fill open positions, 380
- Average selling prices (ASPs), 339, 356
- B
- Backlog, 575
- Back‐office activities, quality, 378
- Balance sheet, 13, 16, 285, 575
- cash flow, relationship, 312, 315
- DBO supporting schedule, 298t–299t
- Bar chart, 127, 128f
- Base case, 112, 261, 489
- Base forecast, 335, 530
- Benchmarking, 54, 56, 59, 182, 575
- perspective, expansion, 234f
- summary, 243t, 532t
- target worksheet, 243t
- top‐level benchmarking, 238
- usage, 307
- Benchmarks
- comprehensive analysis, 236t–237t
- information, usage, 59
- types, 239, 242
- usage, 242
- Benefit‐cost ratio (BCR), 476
- Best delivery method, selection, 116–117
- Best possible DSO (BPDSO), 398, 405
- Best potential DSOs, 398, 403–404
- Best practices, , 74–81
- Beta, 454–459, 575
- Bias, reduction, 111
- Big picture/client perspective, 79
- Blockbuster (BBI), 196
- comparative performance, 198f
- Board of directors
- communication, 188
- presentations, 114–115
- Bond valuation, example, 446f
- Book value, 30–33, 423, 458, 575
- Bottom‐up process/top‐down process, balance, 253–254
- Breakeven, 576
- Budgeting, 250
- Budget process, example, 248f
- Budgets, 267
- cycle, 379
- documentation/review, 283
- process
- Business
- agility/economic cycles, relationship, 210–211
- case, usage, 467
- decisions (evaluation), P&L/EPS (usage), 263
- description, 229
- drivers, 571
- critical assumptions, identification/modeling, 308
- identification, 272, 284–285
- planning/analysis,
- information, presentation/communication, 91
- maturity, 93
- model, testing, 367–368
- orientation, absence, 90
- Business outlook, 72–73, 184–185, 250–251, 277, 576
- architecture map, 286f
- critical drivers, 285f
- horizon, 281f
- implementation, 282, 284
- summarization/presentation, 297
- perspective, development, 94
- planning/projections, 248–251
- problems, 343
- projections/plans, , 247
- unit accountability dashboard, 186f
- valuation, , 74, 507
- value, estimation, 508–517
- Business agility
- defining, 205–209
- increase, 214
- measurement/factor, 204–214
- Business model, 59, 576
- benchmark, company reports/SEC filings basis, 63t
- building, 262–263
- concept, limitations, 68–69
- development, 210, 211
- example, 60t, 61t
- framework, 60–62
- homogeneity, 65t
- review, 62
- usage, 264f
- variability, relationship, 66–68
- variation, 62–64, 65t
- Business performance, 99
- quality, impact, 377–379
- visibility, increase,
- Business Performance Management (BPM), , 91
- accountability, 144
- assessment, 138
- content, measurement, 145–147
- defining, 138–144
- development/enhancement, 144–155
- execution, 141, 143
- execution planning, 139–141
- goal setting, 139
- implementation, 165
- management processes, integration, 183–189
- mistakes, avoidance, 189–191
- monitoring, 143–144
- objectives
- periodic review/revision, 188–189
- principle, 160–161
- C
- Canned dashboards, usage, 157–158
- Capital
- approval process, 424–425
- asset intensity at cost (fixed asset turnover at cost), 432
- assets, 316t, 389, 576
- intensity (fixed asset turnover), 28, 431
- management,
- cash flow, relationship, 389, 421
- importance, understanding, 392
- plan, ranking, 503t
- post implementation review, 425–426
- process, effectiveness, 422–423
- rationing, 500–502
- reinvestment rate, 432
- requirements, 312, 428
- review, 424–425
- Capital asset pricing model (CAPM), 486
- Capital, cost of, , 255, 441, 449–458, 528, 576
- dashboard, 460f, 461
- estimation, 452–453
- manager reduction, 456–458
- reduction, 457
- shareholder value driver, 148, 153
- value, sensitivity, 450f
- Capital expenditures
- integration, 428
- manufacturing project, 479t–480t
- pharmaceutical product development, 481t–482t
- Capital investment decisions (CIDs), , 91, 99, 251, 306–307, 485
- components, 470
- concepts, 465
- impact, 73–74
- presentation, 499–500
- process, effectiveness (evaluation), 502–505
- risk/uncertainty, impact, 485–499
- role, 571
- Capital investment proposal (CIP), 483
- Capital investments, 500f
- allocation, 502t
- economic merits, evaluation, 469–478
- examples, 471–472, 478–483
- implementation plan, 467–468
- process, 466–469, 466f
- projection, 428–431
- projects
- executive review, 468–469
- monitoring, 483
- Capital structure, 576
- financial policy, relationship, 457f
- measures, 29–31
- Capsule financials, 317t–318t
- Cash balances, excess, 436–437
- Cash effectiveness (CE%), 34
- Cash flow,
- balance sheet, relationship, 315
- capital management, relationship, 389, 421
- DBO supporting schedule, 298t–299t
- discounting, 514
- estimation, 469–472
- initial investment, 470
- multiples, 544–545
- projections, 73, 297
- statement, 18t, 576
- Cash generation/requirements, 33–35
- Cash management lag (CML), 401, 405
- Cause‐and‐effect relationships, 161
- Center of excellence, creation, 95
- Chief executive officers (CEOs), presentations, 113–114
- Churn rate, 345–346
- Circular reference, 524
- Client interviews, 99
- Client surveys, 99, 105–106
- Closing cycle, 96, 379–380
- Collection activities, 256
- Column graph, 127
- Common stock equivalent, 576
- Communication
- problems, 90
- skills, improvement, 92
- Company, sources of information
- disclosures, 229–230
- presentations, 230
- website, usage, 228–229
- Comparable/relative pricing methods, 544–545
- Comparables, 576
- Comparative histogram chart, 125f
- Comparative performance, 198f
- Comparative value, 554f
- Compensation plans, 74
- Competency, 100t, 101–102
- Competitive analysis, 227, 357
- Competitive forces, 146
- Competitive position, 330, 332–333
- Competitors
- Complex slides, usage, 120
- Compliance activities, percentage of time spent, 380
- Compound annual growth rate (CAGR), 21, 23, 151, 443, 576
- Compounding, 442
- Comprehensive benchmark analysis, 236t–237t
- Consensus, building, 572–573
- Conservative scenario, 261
- Context
- Continuous business outlook, 282
- Continuous improvement, 54
- Control premium, 576
- Control premium‐synergies macro test, 550f
- Control process, example, 248f, 268f
- Conversion process, 411f
- Cost and breakeven analysis, 66t
- Cost‐based analysis, 216
- Cost center reporting, 99
- Cost of capital, 255
- shareholder value driver, 148, 153
- Cost of Goods Sold (COGS), 26, 353–356, 577
- Cost of journal entries, 378
- Cost of quality (cost of quality failures), 377–378
- Cost of revenues, 353–356
- Cost per revenue transaction, 373
- Cost pie chart, 124f
- Costs, activity based, 58t
- Cost structure, revision, 68t
- Credit memos, issuance (cost), 378
- Credit terms, 256
- Creditworthiness, 256
- Critical assumptions, identification/modeling, 308
- Critical business drivers
- identification, 284–285
- improvements, identification, 571
- Critical information, delivery,
- Critical success factors (CSFs), 304, 391–393, 557–560
- Current ratio, 29
- Customer/competitor growth index, 344–345
- Customers
- analysis, 228–232
- competitor, quarterly update, 232
- loss, 345–346
- retention, 345–346
- returns, 377
- satisfaction, 332, 346–347
- service, 256, 332
- Cycle time, 376, 416
- Cyclical industries, cost structure fixed component (reduction), 67
- Cyclical scenarios, development, 211
- D
- Daily dashboards, 170
- Dashboards, 131, 157, 577
- development, considerations, 166–167
- examples, 123f, 162f–163f
- measures, 161
- objectives, 157–160
- real‐time/predictive insights, 158–159
- samples, 175
- types, 170, 173
- usage, ,
- Data
- Days sales in inventory (DSI), 26–27, 238, 577
- Days sales of inventory (DSI), 413
- Days sales outstanding (DSO), 26, 27, 32, 51, 238, 577
- basis, 256
- count‐back method, 402–403, 403t
- drivers
- formula, 402
- measure, 401–402
- metric, 312
- reduction, 115
- usage,
- Debt, 577
- Debt, cost
- Debt to equity (D/E) ratio, 30
- Debt to total capital (D/TC) ratio, 30, 458
- Decision making process, understanding,
- Decision trees, 50–51, 494–495, 495f
- example, 496
- product replacement, 51f
- Defect rates, 378
- Dell, business model redefinition, 68–69
- Departmental budget, example, 269t
- Department dashboards, 170
- Depreciation, 14, 316t, 428–431, 577
- Depreciation and amortization (D&A), 520, 577
- Diagnostic tools, 52–54, 91
- Diplomacy, 112
- Discounted cash flow (DCF), 449f, 509f, 540, 577
- analysis, 129–130
- creation, 530
- importance, 546, 549–550
- model, usage, 449
- sensitivity analysis, 516t
- stand‐alone, 547t, 548t
- synergy, 548t
- usage, 489
- valuation method, 508
- valuation model, 510t
- Discounting, 445, 445f
- Discount rates (DRs), 472, 474
- Discounts, percentage, 356
- Distribution channels, 577
- Divestitures, 523–524
- Documentation, 76
- Doughnut (ring) chart, 125
- percentage completion, example, 126f
- Downside events, 205
- Downside scenarios, 49–50
- Downturns, recovery (preparation), 211
- Dual access graph, 129f
- Dual axis chart, 127–128
- Due diligence, inadequacy, 557
- Dupont formula, 51–52
- E
- Early‐stage enterprises, performance measures,
- Earnings before interest and after taxes (EBIAT), 15, 32, 365, 552, 577
- Earnings before interest and taxes (EBIT), 15, 32, 513, 519–520, 577
- Earnings before interest, taxes, depreciation, and amortization (EBITDA), 15–16, 33, 513
- Earnings conference calls, 230
- Earnings, multiples, 517–521, 544–545
- Earnings per share (EPS), 289, 396, 578
- Economic‐based measures, 545–553
- Economic case, usage, 467
- Economic cycles, 205, 210f
- agility/business, relationship, 210–211
- Economic profit, 16, 396, 578
- Economic profit/ROIC test, 540, 550, 551t
- Economic variables, 254
- Eisenhower, Dwight, 271
- Emotional intelligence, 112
- Emotional maturity, 93
- Employees
- average training hours, 222
- benefits, 220
- costs, 220
- engagement, 222–223
- hire rate percentage, success, 226
- recruitment/immersion, 223, 226
- retention, 222–223
- satisfaction, 222–223
- training/development programs, effectiveness, 222
- turnover, 223
- End of Life Cycle, 412
- Engineering change notices (ECNs), 201, 374, 375, 578
- Engineering change order (ECO), 578
- Enterprise goals, setting, 59, 242
- Enterprise value, 578
- Enterprise value/EBITDA ratio, 520, 544
- Enterprise value/EBIT ratio, 519–520
- Enterprise value/revenue ratio, 544
- Equipment, projection, 429t–430t
- Equity, 578
- market value, 519
- value, estimation, 515
- Equity, cost, 577
- Error rates, 378
- Event trees, 50–51, 494–495, 497f
- Event/trend problems, detection (provision),
- Exception‐based reporting (EBR), 173
- Excess and obsolete (E&O) inventory, 414f
- Excess cash (retention), economic cost (estimation), 437t
- Execution judgment (elimination/replacement), BPM (usage), 160
- Execution planning, 139–141
- Execution team, building, 572–573
- Executive intuition, 111
- Executive Summary, 118
- Exhibits, usage, 119–120
- Expected return, risk (relationship), 488f
- Expected value (EV), 49–50
- Expenses, histogram, 125f
- Experience, types, 101
- External activities, promotion, 209
- External factors/environment, insight, 159–160
- External information, usage, 59
- External reporting, 101
- Extrapolation, 252–253
- F
- Factory utilization, 369
- Finance
- fundamentals, , 13
- organization, 95f
- team, leadership/organization, 94–96
- Financial Accounting Standards Board (FASB), 110, 578
- Financial acumen, 98f
- Financial analysis
- Financial analysis, objectives, –5
- Financial closing cycle, 379–380
- Financial history, inclusion/review, 511
- Financial information, communication/presentation, , 109
- Financial leverage, 451, 458, 578
- Financial model, 59
- applications, 72–74
- architecture, 77f
- defining, 71
- documentation, 76
- example, 81–88
- portfolio, 82t–83t
- robustness/flexibility, 78–79
- Financial performance, 224f
- innovation/value, relationship, 199–201
- Financial picture, 263, 265
- Financial Planning & Analysis (FP&A), , 56, 89, 233, 569
- accomplishment, 95
- assessment, 99
- capabilities,
- client surveys, 105–106
- effectiveness, assessment, 570
- efforts, causes, 90
- importance, 94
- improvement plan, 106, 107t
- management processes, integration, 5f
- performance management, relationship, 138
- slack, creation, 96
- structure, integration, 96f
- Financial projections, 272
- analysis/evaluation, 301, 488–496
- development, 273–274, 570–571
- evaluation, 256–258
- preparation, 254–255
- types, 249–251
- Financial projections, evolution, 248–249
- Financial ratios
- limitations/pitfalls, 35–36
- usage, 36
- Financial ratios/indicators, 19
- usefulness, 19
- variations, 21
- Financial report, example, 22t
- Financial results, best practices projection, 252–266
- Financial statements, 99
- basics, 13–19
- interrelationships, 20f
- Financial synergies, 538–539
- Financial terms/measures, 40t–41t
- Financial training
- programs, usage, 98–99
- topics, 99
- Financing accounts, 393
- Financing, impact, 255
- Finished goods inventory, 44t, 46t
- Firm value, estimation, 515, 517–521
- First‐time production yield, 376
- Fixed assets, 421
- Fixed cost, 66, 212, 368, 459, 578
- Fixed costs per week, 368
- Footnotes, usage, 229
- Forecasts, 72–73, 267, 412–413, 579
- accuracy, 373, 415
- documentation/review, 283
- effectiveness, measurement, 334, 341
- evaluation worksheet, 338t
- evolution, 277, 279, 282
- frequency/timing, 297, 301
- horizon, 280f, 304
- outlook, 184–185, 250–251
- philosophy, human behavior (relationship), 335
- progression analysis, 342f
- range, actual revenue (contrast), 258f
- scenarios, development, 336
- Form 8‐K, usage, 230
- Form 10‐K, usage, 229–230
- Formal programs, usage, 98
- Formulas, protection, 78
- Forward multiples, 522–523
- Free cash flow/free cash flow to the firm (FCF/FCFF), 579
- Full potential valuation, estimation, 533f
- Full‐time equivalent (FTE), 220
- Functional benchmarks, 232–233
- Function dashboards, 170
- Future cash flows
- discounting, 446, 508–517
- projection, 511–512
- Future cash value (reduction), uncertainty (impact), 442
- Future financial performance, projection/modeling,
- Future operating performance, elements (estimation), 511–513
- Future payment, discounting, 445–446
- Future performance, expectations/predictions/projections, 485–486
- Future value (FV), 442–443
- Future value of an annuity (FVA), 443–444, 444f
- G
- Game plan, development, 272, 273
- General Electric (GE) portfolios, 64
- Generally accepted accounting principles (GAAP), 14, 579
- Goal setting, 139
- Goodwill, 389, 542
- impairment charges, 435
- KPIs, 434–435
- total asset percentage, 434f
- turnover, 563
- Gross margins, , 329, 579
- analysis, 355t
- DBO supporting schedule, 292t
- key performance driver, 309
- percentage, 366
- percentage of sales, 23–24
- pricing strength dashboard, 357
- pricing strength, relationship, 358f
- reconciliation, 356f
- relative pricing strength, relationship, 351–356, 355f
- topside measure, 152
- usage,
- H
- Headcount analysis, 220, 221t, 370, 371t
- High‐impact opportunities, 99
- High‐leverage improvement opportunities, identification, 531–533
- Histogram
- Historical results
- Historical trends, plan trends (contrast), 257f
- Hockey sticks, 372
- Holistic approach, 501–502
- Human capital
- impact, 216f
- measurement/factors, , 193
- Human capital management (HCM), 187, 193, 214–226
- alignment/accountability, 219
- analysis/presentation, 230, 232
- assessment, 132f
- compensation/incentives, 219–220
- dashboard, 225f, 226
- development/training, 219
- engagement/evaluation, 219
- financial performance, 224f
- measures, 220–226, 378–379
- organization development, 217
- portfolio
- processes/activities, 217–220
- recruitment/immersion, 219
- retention, 219
- strategic planning, 217
- Human resources (HR)
- communication/retention/motivation, 560
- employee costs, 220, 380
- retention, 564
- Hurdle rate
- increase, 501
- setting, risk (basis), 489f
- I
- Impairment
- Improvement plan, 106
- Incentive plans, 74
- Income statement, 13, 14–16, 285, 579
- captions, usage, 289
- DBO income statement, 295t–296t
- Individuals
- analytical capability, 90–94
- manager dashboards, 173
- Industry
- capital asset requirements, 422
- reports, 228
- Information sources, 228
- Information technology (IT)
- costs, sales percentage, 380
- help desk, request levels/response times, 381
- network time, 381
- project, 189
- usage, 183
- In‐house workshops, usage, 98
- Innovation, 194, 332, 579
- dashboard, 203f, 354f
- efforts, impact, 195–196
- environment, assessment, 204
- financial performance/value, relationship, 199–201
- importance/factors, , 193
- measures, 201t
- power, 196, 199
- programs, types, 194–195
- Input areas, identification, 76
- Intangible assets, 389, 433–434, 579
- KPIs, 434–435
- total asset percentage, 434f
- Intangibles, 528
- shareholder value driver, 148, 153–154
- turnover, 563
- Integrated valuation, summary, 525–534
- Interest coverage, 30–31
- Internal growth rate (IGR), 34–35
- Internal rate of return (IRR), 474, 475, 478, 579
- analysis, 552–553
- IRR/NPV ratio, 540
- Inventory, 410–420
- dashboard, 416, 417f
- forecast analysis, 420t
- items, tracking, 418
- KPIs, 413–415
- levels, 63
- levels, drivers, 410–413
- roll‐forward summary, 420t
- slow‐moving/obsolete inventory levels, 414–415
- trend schedule, 418, 419t
- turns, 413
- understanding/assessment, tools, 416
- unique inventoried parts, number, 415
- visibility, improvement, 416, 418
- write‐offs, 377
- Inventory turns, 26
- Invested capital, 60–61, 64, 579
- Investment levels, 255
- Investor communication, 188
- Investors
- communication, improvement, 458
- company presentations, 230
- Invoice error rate, 373
- Irrational exuberance, reduction, 211
- J
- Journal entries, cost, 378
- Judgment/intuition, replacement, 190
- K
- Kahneman, Daniel, 111
- Key innovation measures, 201t
- Key performance drivers, projection, 309–318
- Key performance indicators (KPIs), , 137, 157, 579
- development, manager education, 181
- goodwill, 434–435
- intangible assets, 434–435
- measures, 161
- monitoring, 276
- objectives, 157–160
- operating effectiveness, 365–382
- posting, practice, 166
- real‐time/predictive insights, 158–159
- selection, 160–166, 188
- usage, , 144, 256, 570
- Key performance measure (KPM), 579
- L
- Lagging financial measures, 35
- Lagging performance measure, 579
- Leadership structure, 90
- Lean management, 182
- Lean manufacturing, 54
- Lewis, Michael, 111
- Liability, 579
- Life cycles, 210f
- Line graph, 126, 126f
- Liquidity
- measures, 29–31
- projections, 73
- Long‐range forecasts, 73
- Long‐range projections, requirement, 251
- Long‐term assets, , 421
- Long‐term capital
- dashboard, 437, 438f
- improvement, management tools, 424–428
- Long‐term performance, estimation (challenges), 304–305
- Long‐term projections (LTPs), , 303
- applications, 305–307
- capital assets/depreciation, 316t
- capital requirements, 312
- capsule financials, 317t–318t
- costs/expenses, 312
- critical assumptions, identification/modeling, 308
- development, 307–318
- key performance drivers, projection, 309–318
- operating expense projections, 313t–314t
- presentations, 319f, 319–324
- revenue/margin projections, 310t–311t
- situation assessment, 307
- strategic issues, identification, 308
- Lost orders, 357
- M
- Management
- assumptions, 112
- attention, 391–392
- bias, 112
- practices, integration,
- reporting, 187
- Management Discussion and Analysis (MD&A), 229
- Management processes
- BPM, integration, 183–189
- creation, 195
- integration, 5f
- PM, integration, 184f
- Managers, information (provision),
- Manufacturability, design, 412
- Manufacturing
- cycles, 212
- process, automation (case study), 471–472
- project, capital expenditure, 479t–480t
- Marathon training program, example, 141t
- Margin
- documentation, 84t
- model, documentation, 83–88
- projections, 310t–311t
- Market
- capitalization (value), 580
- forces, 146
- interest rates, 451
- share, 3357
- size, 340–341, 340t
- value, growth, 196
- Marketing, DBO supporting schedule, 293t–294t
- Markets analysis, 59, 228–232
- Mean, 47
- Measurement
- definitions, 165
- importance, 193
- systems, problem, –3
- Median, 47
- Medical center, dashboard, 178f
- Mergers and acquisitions (M&As), 74, 170, 306, 383
- actual ROIC, planned ROIC (contrast), 463
- actual sales/profits, planned sales/profits (contrast), 562
- analysis, , 535
- auction process, sale, 561–562
- best practices, 557–560
- company success, 434
- critical success factors, 557–560
- dashboards, 564, 565f
- KPIs, 562–564
- mistakes, 554–557
- overpayment, reasons, 555–556
- parent/partner, sale, 561–562
- plan, meeting, 561
- planning/communication/integration/execution, problems, 555–557
- process, effectiveness, 562–563
- soft issues, anticipation/addressing (failure), 557
- strategic justification, 558
- strategic rationale/fit, problem, 555
- strong market sale, 562
- synergies
- identification, 559
- problems, 556–557
- valuation, discipline, 558–559
- Messaging strategy, creation, 115–116
- Mission‐oriented frameworks, 154
- performance framework, 155f
- Models
- development, best practices, 74
- example, 87f–88f
- portfolio, establishment, 81
- Monthly business reviews, 185, 187
- Most admired benchmarks, 239, 242
- Multiples, 580
- base, adjustment/normalization, 523–524
- factors, 521–522
- pricing method, 546
- usage, 522–523
- Multiples, framework, 521–525
- Multiyear compounding, 443
- N
- Natural expense code analysis, 382–383, 383t
- Netflix (NFLX), 196
- comparative performance, 198f
- Net income, 15, 580
- Net operating assets/invested capital, example, 18t
- Net operating profit after taxes (NOPAT), 15
- Net present value (NPV), 448, 472–473, 473t, 478, 580
- New business creation, 306
- New customers, revenue, 346
- New hires, investment, 215t
- New product development (NPD), 170, 214, 306, 362
- New products
- ECNs, 375
- information, 411–412
- production yields, 375
- revenue percentage, 345
- sales projections, 342
- Nonfinance managers, education, 116
- Nonfinancial managers, financial literacy, 97–99
- Nonoperating accounts, 393
- O
- Objectivity (performance measure guideline), 164
- Obsolete inventory levels, 414–415
- On‐demand business outlooks (DBOs), 250, 273, 282
- design process/model architecture, 285–286
- development, objectives, 283
- income statement, 295t–296t
- presentation, summary, 300f
- process/model, construction, 285
- supporting schedule
- balance sheet/cash flows, 298t–299t
- gross margins, 292t
- marketing, 293t–294t
- product margins, 290t–291t
- On‐time delivery (OTD), 347, 530
- Operating capital, 389, 580
- cash/debt, subtraction, 394t
- dynamics, understanding, 394–396
- forecast, example, 395t
- management, 393
- percentage sales, 27–28
- turnover, 27–28
- value, unleashing, 396–398
- Operating cash cycle, 27
- Operating effectiveness
- assessment/improvement tools, 382–387
- dashboard, 385f, 387
- drivers, 362–365
- example, 363f
- key performance indicators, 365–382
- measures, 365–367
- process view, 363f
- shareholder value driver, 148, 152–153
- Operating expenses
- effectiveness, , 361
- projections, 313t–314t
- Operating income, 67
- Operating income percentage sales, 25
- Operating income/profit, 580
- Operating income, sales percentage, 365
- Operating leverage, 66–68, 451–452, 459, 580
- Operating margins, 196
- Operating measures, 21–25
- Operating plans, 267, 272–277
- assumptions/actions, identification, 274
- documentation/review, 283
- evaluation, dashboard, 278f
- Operating plans/budgets, 72
- Operating profit after tax (OPAT), 15, 580
- Operational effectiveness
- impact, 364
- topside measure, 152
- Operational planning, 99, 184, 383
- Operational reviews, 185, 187
- Opportunity cost, 442
- Option
- Order backlog levels, 349–350
- Organizational structure, 90
- Organizations
- agile associates, acquisition/development, 209
- analytical capability, 94
- audible, 205–209
- BPM development/enhancement, 144–155
- development, 217
- goals/objectives, achievement,
- mission, 146
- objectives, 283
- performance, 196, 199
- recognition/response, 208–209
- strategy, 146
- structuring, 95–96
- value creation, 196, 199
- vision, 206, 208
- Outsourcing, 412
- P
- Pareto analysis, 47
- Past due analysis, 408t
- Past‐due collections, 404
- Past due collections, root cause analysis, 408
- Past‐due customer orders, 415
- Past‐due orders, 347
- Past due, root cause, 409f
- Payback, 474–477, 474t, 475t, 580
- People management, 378–379
- People‐related costs, 220
- People utilization, 368
- Perceived risk, operating managers (impact), 458
- Performance
- actual performance, projected performance (contrast), 459, 461
- assumptions, monitoring (process development), 276
- benchmarking, 147, 227
- perspective, expansion, 234f
- dashboards, creation, 166–174
- drivers, 304
- objectives/identification, 285–286
- enterprise goals, setting, 242
- evaluation, 233–242
- evaluation, benchmarking, 232–242
- example, 197f
- extrapolation, 261
- framework, 148, 155f
- goals, establishment, 272, 273
- implicit assumptions, 524–525
- improvement dashboards, 173
- leading indicators, emphasis, 164–165
- measures, 343–351, 458–461
- monitoring,
- perspective, comprehensiveness, 305
- progress, tracking, 276
- targets
- Performance assessment, 147
- Performance improvement, 52–54
- Performance management (PM), , , 89, 569, 570
- communication/training, 180–181
- context, creation, 145–147, 146f
- corporate development, 188
- delivery mechanism, 182–183
- executive support, 180
- forecasting/business outlook, 184–185
- FP&A, relationship, 138
- framework, establishment, 180f
- institutionalization, , 179
- link, 255–256
- management processes, integration, 5f, 184f
- objectives, –5
- oversight, 183
- process, 139f
- strategic/operational planning, 184
- Performance management analysis (PMA), 138
- Performance management framework (PMF), , 580
- Performance measures, 31–33
- development, 161, 164–166
- guidelines, 164–166
- selection, 160–166
- worksheet, 167f
- Periodic payments (PMTs), 444
- Perpetuity, 447–448, 514, 580
- Personal health/fitness dashboard, example, 162f–163f
- Pharmaceutical product development, capital expenditure, 481t–482t
- Pie chart, usage, 124
- Planning cycle, 212
- Plans
- development, 265–266
- objectives/targets, communication, 275–276
- trends, historical trends (contrast), 257f
- Portfolio
- Post‐planning horizon value, estimation, 513–514
- Predictive models, 52
- accuracy/reasonableness, 79
- development, , 71
- Predictive (leading) performance measure, 581
- Presentations, 80
- brevity, 120
- content, 118
- delivery, 120–121
- development, 117–120
- exhibits, usage, 119–120
- eye contact, importance, 121
- flexibility, 120
- graphics, usage, 121–133
- objectivity, 121
- outline, 120
- questions, anticipation, 121
- skills, improvement, 92
- takeaways/actions, identification, 119
- technical terms/explanations, avoidance, 121
- Presentation skills, problems, 90
- Present value (PV), 442–443, 447–448, 581
- Present value factor (PVF), 448
- Press releases, usage, 230
- Price‐earnings growth (PEG) ratio, 520–521
- Price‐earnings (P/E) multiple, 188, 199
- Price‐earnings (P/E) ratio, 518–519, 581
- Price‐to‐sales ratio, 518
- Pricing methods, 544–545
- Pricing strength, 581
- Probability, 49–50
- Problem resolution, 256
- Process
- assessment/improvement, 182
- benchmarks, 232–233
- dashboards, 170
- efficiency, 392
- evaluation, 383, 387
- improvement tools, 181–182
- innovation, 194–195
- perspective, 363f
- Procurement cycles, 212
- Procurement process, 411f
- Product
- competitive analysis, 357
- development, 185
- lifecycle issues, 411–412
- line, breadth, 412
- margins, 290t–291t
- pipeline, revenue projection, 348
- quality, 256, 412
- replacement, 51f
- return, 404
- revenue, 84t
- Profitability, 365
- Profitability index (PI), 477, 501
- Profit after tax (PAT), 15, 19
- Profit and loss (P&L), 469–470
- measures, 16t
- model, 59
- statement, 14–15
- usage, 263
- Profit growth, 195
- Projections
- assumptions/risks/upsides, identification, 259
- development, business model (usage), 264f
- long‐term projections, 303
- usage, 252
- Projects
- acceptance/rejection, 477–478
- cash flows, estimation (association), 469–472
- dashboards, 173
- examples, 94
- expected performance, measurement, 472–477
- investment analysis, 490t–491t
- life, cash flows, 471
- management, 185
- post audit review, 426
- review, 185, 187
- timeline, 142t
- Property, plant, and equipment (PP&E), 312, 389, 421
- Property, projection, 429t–430t
- Proxy statement, 230, 581
- Public company, costs, 381–382
- Publicly traded companies, disclosures, 229–230
- Purchasing power (reduction), inflation (impact), 442
- Q
- Quality, 399
- control, 378
- failures, total cost, 378
- Quarterly business reviews, 185, 187
- Quarterly corporate dashboard, 169f
- Quarterly performance, 231f
- Quarterly sales trend, 344t
- Quartile analysis, 45
- Questions, anticipation, 121
- Quick ratio, 29–30
- Quote levels, 349
- R
- Raw data, transformation, 45
- Real options, 498–499
- Recession scenario, 261
- Reconciliation (waterfall) graph, 128–129, 129f
- Reference materials, 91
- Regulation FD, 230
- Rehearsing, importance, 120
- Relative pricing strength, 528
- gross margins, relationship, 351–356, 355f
- measures, 356–358
- shareholder value driver, 148, 151–152
- Relevancy (performance measure guideline), 164
- Reporting cycle, 96
- Reports
- development, 117–120
- elimination, 96
- evaluation, 99, 102–105
- examples, 94
- inventory/assessment, 104t
- outline, 120
- types, 228
- Research analyst reports, 228
- Research and development (R&D)
- budget, establishment, 59, 263
- percentage of sales, 366
- percentage sales, 24
- Residual value, 471
- Resource allocation, 101
- Rest of year (ROY)
- forecast, 257
- project performance, 337–338
- Restructuring, 523–524
- Retail
- Retailers, perspective, 322t–323t
- Return
- levels, 375–376
- risk, relationship, 450f, 487f
- slack, 475
- value creation, relationship, 315
- Return on assets (ROA), 31, 581
- Return on equity (ROE), 31, 52, 396, 581
- analysis, 53t
- consideration, 362
- tree, 32
- Return on invested capital (ROIC), 32–35, 60, 64, 196, 581
- Return on invested capital market (ROICM), 33
- Return on sales (profitability), 25
- Revenue, 195, 329
- change analysis, 338–339, 339f
- cost, 353–356
- dashboard, 351
- detail, views (preparation), 334, 337–343
- documentation, 83–88
- forecasting process, improvement, 334–337
- forecasts, accuracy, 341t
- key performance driver, 309
- levels, projection/testing, 334
- linearity, 165, 184, 276, 370, 581
- margins,
- measures, 352t–353t
- multiples, 517–521, 544–545
- new customer revenue, 346
- patterns, 370, 372, 372f, 405
- percentage, 345
- plan model, examples, 85t–86t
- planning worksheet, product detail, 337t
- prediction, 511
- probability analysis, 263t
- process/receivables improvement dashboard, 174f
- product development pipeline, 348f
- projections, 73, 310t–311t
- product pipeline usage, 348
- tools, 342
- rate, year to date (YTD), 257–258
- revenue per customer, 349
- revenue per transaction, 348–349
- timing/pattern, 256
- variance, 339f
- Revenue/customer fulfillment, 383
- Revenue growth, 196
- assumptions, identification/documentation/assumptions, 336–337
- competitive position, 330, 332–333
- competitor attributes/actions, 333
- cost/pricing advantages, 332–333
- customer satisfaction/service, 332
- dashboard, 354f
- drivers, 330–343
- innovation, 332
- input, 350–351
- issues, 342–343
- lost orders, 346
- market, 330
- new market entry, 333
- order backlog levels, 349–350
- past‐due orders, 347
- performance measures, 343–351
- quote levels, 349
- share analysis, 340t
- sources, 200f
- year‐over‐year revenue growth, 21, 345f
- Revenue process, 55f, 123f, 170, 373, 581
- accounts receivable dashboard, 405, 406f
- assessment, 405–410
- effectiveness, 400–401
- Revenue/sales growth (shareholder value driver), 148, 150–151
- Rework, 377
- Ring chart, 125
- Risk, , 441
- basis, 489f
- expected return, relationship, 488f
- factors, 230
- identification/monitoring,
- impact, 485–499
- mitigation, , 205
- perception, 452
- return, relationship, 450f, 487f
- sources, 486
- Rolling forecasts, 279, 581
- business outlook horizon, 281f
- implementation, 282, 284
- method, 287t–288t
- Root cause analysis, 54, 408
- Rotational assignments, 209
- S
- Sales
- percentage, 380
- plan, expected value, 50t
- quarterly sales trend, 344t
- run‐rate analysis, 258f
- sales per employee, 367, 368t
- transactions, discount/margin, 173
- Scales, usage, 130–131
- Scenario analysis, 48–49, 79–80, 259–262, 515–516, 582
- applications, 49
- assumptions/drivers, variation, 76
- usage, 492–494
- Scenarios
- Scorecards, usage,
- Securities and Exchange Commission (SEC), 582
- Self‐financing, 34–35
- Selling, general, and administrative (SG&A), 32, 63, 152, 364, 582
- percentage of sales, 366–367
- percentage sales, 24–25
- Senior executives, presentations, 113–114
- Sensitivity analysis, 48, 79–80, 259–262, 515, 582
- Sensitivity chart, 129–130, 130t
- Shareholder value, 571
- building, multiples framework, 521–525
- drivers, 148
- Simple compounding, example, 442–444
- Simulations, 495–496
- Situational analysis, 147
- Six Sigma, 54, 182
- Skills inventory, 99, 100t, 101–102
- Skip‐level meetings, 223
- Ski resort, dashboard, 177f
- Slow‐moving inventory levels, 414–415
- Space shuttle cockpit, instrument panel, 4f, 158f
- Space utilization, 369–370
- Special purpose projections, 251
- Specialty retail, dashboard (example), 176f
- Speedometer chart, 130, 130f
- Stacked column graph, 127f
- Stacked columns, float (usage), 128f
- Stand‐alone value, 121, 537, 540f
- Standard deviation, 47–48
- Statement of Cash Flows (SCF), 13, 17–19, 285
- Statistical tools, 43
- Stock price
- increase, 536–537
- sensitivity analysis, 48t
- Stock volatility/beta, 458–459
- Strategic alternatives/scenarios
- evaluation, 308–309
- modeling capability, 304–305
- Strategic initiatives, 146
- Strategic investment, defining, 477–478
- Strategic issues, identification, 308
- Strategic model, 321
- Strategic objectives, 254
- Strategic planning, 184, 217, 305, 383
- Strategic plans, 73
- Strengths limitations opportunities threats (SLOT), 147
- Strengths weaknesses opportunities threats (SWOT), 147
- Stretch scenario, 261
- Summary charts, 131
- Supplemental disclosures, usage, 230
- Supplier performance, 415
- Supply chain dashboard, 417f
- Supply chain management, 170, 376–377, 582
- Synergies, 537–539, 582
- T
- Talent acquisition/evaluation/development, 187
- Target costs, actual product costs (contrast), 374–375
- Target development costs, actual development costs (contrast), 374
- Terminal value (TV), 471, 512–514, 582
- Textron portfolios, 64
- Times interest earned (interest coverage), 30–31, 582
- Time value of money (TVOM), 441–448, 472
- Top‐level benchmarking, 238
- Total fixed costs, 67
- Total Quality Management, 54, 182
- Total return to shareholders (TRS), 195, 582
- Trailing multiples, 522–523
- Training programs, effectiveness, 222
- Transaction processing, 96
- percentage of time spent, 380
- Trend analysis, 252–253
- Trigger events, establishment, 211
- Tversky, Amos, 111
- U
- Uncertainty, , 441
- Undoing Project, The, (Lewis), 111
- Uneven cash flows
- Unique parts, number, 376–377
- United Technologies portfolio, 64
- Upside/downside events, 260t
- Upside scenario, 261
- Utilization rate, 369
- V
- Valuation, 91, 571, 582
- comprehensive summary, 526, 528
- decisions,
- discipline, 558–559
- dynamics, exploration, 515–517
- methods, 553
- summary, 133f, 525–534, 526f, 526t, 527f
- usage, 517–521
- Value
- attainment, 150
- creation, 148–154, 196, 199
- enterprise goals, setting, 242
- returns, relationship, 315
- decomposition, 516–517, 517f
- estimation, 531–533
- innovation/financial performance, relationship, 199–201
- sensitivity, 450f
- Value‐added activities, 96
- Value added per employee, 367, 368t
- Value‐added product, usage, 35–36
- Value drivers, 91, 507, 520–531, 528, 582
- human capital, impact, 216f
- improvements, identification, 571
- planning/analysis,
- Value performance framework (VPF), 148, 149f, 151, 528, 529f, 582
- Variability, volatility (contrast), 452
- Variable contribution margins, 67
- Variable cost, 24, 66–68, 212, 452, 583
- Vendors
- number, impact, 376
- performance assessment, 377
- Vertical integration, 412, 423
- Visibility, improvement, 416–418
- Visuals
- Volatility
- reduction, 457
- variability, contrast, 452
- W
- Warranty
- Waterfall graph, 128, 129f
- Weekly dashboards, 170
- Weighted average cost of capital (WACC), 487, 514, 583
- Working capital, , 312, 389, 583
- drivers, 99
- improvement, example, 397t
- requirements, 238
- Write‐offs, 432–433
- Y
- Year‐over‐year growth, 21, 345f
- Year to date (YTD)
- comparison, 257–258
- projected performance, 337–338
- Year to date to last year (YTD‐LY), 257
- Yield to maturity, 454, 583
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