INDEX

    • 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, 2
      • 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, 7, 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, 6, 89
    • Analytical models
      • accuracy/reasonableness, 79
      • development, 6, 71
        • best practices, 74–81
      • robustness/flexibility, 78–79
    • Analytical reports, usage, 416, 418
    • Analytical skills, inadequacy, 90
    • Analytical tools/concepts, 6, 43
    • Analytical tools, repository/portfolio (maintenance), 97
    • Analytical works
      • incompleteness/ineffectiveness, 570
      • portfolio maintenance, 92
    • Analytics, 3, 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, 3
    • Assets, 575
    • 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, 7, 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
      • roll‐up, example, 270f
    • 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, 8
      • 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, 7, 247
      • unit accountability dashboard, 186f
      • valuation, 8, 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, 4
    • Business Performance Management (BPM), 7, 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
      • budgeting, 500–502
      • depreciation, 428–431
      • drivers, cost, 450–452, 451f
      • effectiveness, 528, 576
      • efficiency, example, 390f
      • intensity, 421–423, 576
        • KPIs, 431–433
      • management, 8
        • 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, 8, 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), 8, 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, 8
      • 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
      • selection, 525
    • 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
      • analysis, 228–232
      • attributes/actions, 333
    • 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
      • effectiveness, 411
    • 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, 4
    • 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, 3, 7
    • 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
      • formula, 402
      • measure, 401–402
      • metric, 312
      • reduction, 115
      • usage, 2
    • Debt, 577
    • Debt, cost
    • Debt to equity (D/E) ratio, 30
    • Debt to total capital (D/TC) ratio, 30, 458
    • Decision making process, understanding, 5
    • 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
    • Discounting, 445, 445f
    • Discount rates (DRs), 472, 474
      • increase, 501
      • usage, 486–488
    • 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, 3
    • Earnings before interest and after taxes (EBIAT), 15, 32, 365, 552, 577
    • Earnings before interest and taxes (EBIT), 15, 32, 513, 519–520, 577
      • percentage sales, 25
    • 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
    • 80/20 rule, 382
    • 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
      • estimation, 453–454
      • weight, 453, 454–456
    • Error rates, 378
    • Event trees, 50–51, 494–495, 497f
    • Event/trend problems, detection (provision), 4
    • Exception‐based reporting (EBR), 173
    • Excess and obsolete (E&O) inventory, 414f
      • management, 414–415
    • 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, 6, 13
      • organization, 95f
      • team, leadership/organization, 94–96
    • Financial Accounting Standards Board (FASB), 110, 578
    • Financial acumen, 98f
    • Financial analysis
      • learning, 90–94
    • Financial analysis, objectives, 3–5
    • Financial closing cycle, 379–380
    • Financial history, inclusion/review, 511
    • Financial information, communication/presentation, 6, 109
    • Financial leverage, 451, 458, 578
    • Financial model, 59
      • applications, 72–74
      • architecture, 77f
        • development, 75–76
      • 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), 1, 56, 89, 233, 569
      • accomplishment, 95
      • assessment, 99
      • capabilities, 6
      • 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
      • turnover, 28
    • Fixed cost, 66, 212, 368, 459, 578
    • Fixed costs per week, 368
    • Footnotes, usage, 229
    • Forecasts, 72–73, 267, 412–413, 579
      • 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, 3
    • 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
      • deficiencies, 523
    • Goal setting, 139
    • Goodwill, 389, 542
      • impairment charges, 435
      • KPIs, 434–435
      • total asset percentage, 434f
      • turnover, 563
    • Gross margins, 8, 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, 2
    • 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, 7, 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
      • charges, 563
      • history, 432–433
    • 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, 7, 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), 7, 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, 2, 144, 256, 570
        • manager education, 181
    • Key performance measure (KPM), 579
    • L
    • Lagging financial measures, 35
      • focus, 2
    • 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, 8, 421
    • Long‐term capital
      • dashboard, 437, 438f
      • improvement, management tools, 424–428
    • Long‐term performance, estimation (challenges), 304–305
    • Long‐term projections (LTPs), 7, 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, 4
      • 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), 5
    • 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, 1–3
    • 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, 8, 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
      • architecture, 285–286
        • development, 75–76
      • 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
        • problems, 524–525
    • 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
      • analysis, 552–553
    • 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, 8, 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, 3
      • 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, 4
      • perspective, comprehensiveness, 305
      • progress, tracking, 276
      • targets
      • visibility, 392
    • Performance assessment, 147
      • example, 37t–38t
    • Performance improvement, 52–54
      • tools/disciplines, 54
    • Performance management (PM), 1, 7, 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, 7, 179
      • link, 255–256
      • management processes, integration, 5f, 184f
      • objectives, 3–5
      • oversight, 183
      • process, 139f
      • strategic/operational planning, 184
    • Performance management analysis (PMA), 138
    • Performance management framework (PMF), 4, 580
      • implementation, 145f
    • 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, 6, 71
    • Predictive (leading) performance measure, 581
    • Presentations, 80
      • brevity, 120
      • content, 118
      • delivery, 120–121
      • development, 117–120
        • best practices, 74–81
      • 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
      • dashboard, 357
    • 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
      • effectiveness, 411
    • Product
      • competitive analysis, 357
      • development, 185
        • pipeline, revenue, 348f
      • 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, 8
      • 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
        • drill‐down example, 331f
      • 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
        • assessment, 410
      • improvement, 405–410
      • KPIs, 401–410
      • quality, 256
      • timeline, 400f
    • Revenue/sales growth (shareholder value driver), 148, 150–151
    • Rework, 377
    • Ring chart, 125
    • Risk, 8, 441
      • basis, 489f
      • expected return, relationship, 488f
      • factors, 230
      • identification/monitoring, 5
      • impact, 485–499
      • mitigation, 5, 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, 2
    • Securities and Exchange Commission (SEC), 582
      • Regulation FD, 230
    • 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
      • assumptions, 261f
      • assumptions/drivers, variation, 76
      • examples, 492t, 493t
      • usage, 492
    • 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
      • review, 272–273
    • 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
      • assessment, 383
      • dashboard, 416
      • KPIs, 413–415
    • 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
      • estimation, 513–514
    • Textron portfolios, 64
    • Times interest earned (interest coverage), 30–31, 582
    • Time value of money (TVOM), 441–448, 472
      • application, 448
    • 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, 8, 441
    • Undoing Project, The, (Lewis), 111
    • Uneven cash flows
    • Unique parts, number, 376–377
    • United Technologies portfolio, 64
    • Upside/downside events, 260t
      • identification, 274–275
    • Upside scenario, 261
    • Utilization rate, 369
    • V
    • Valuation, 91, 571, 582
    • 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, 8
    • 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
      • computation, 453–456, 454t
      • estimation, 488
      • inputs, example, 453t
      • usage, 452–453
      • visual summary, 455f
    • Working capital, 8, 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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