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Tom Noon

Getting the Most from Financial Statement Review – Blog 4

This is a six blog series on Why Review Financial Statements? Catalyst Cohorts has re-invented Peer 2 Peer CEO groups with the novel concept that to get the best results from the time we spend helping each other with issues and opportunities we need to know each other’s business or organization better. Because we review Financial Information and Key Performance Indicators each month we get to know each other’s businesses more intimately and in return we know our own business better too! Here is Why, What and How we do this


Besides financial statements, I Catalyst Cohort meetings we also look at metrics, Key Performance Indicators (KPIs) that are both leading and lagging indicators or how we are doing in reaching our Heroic Hopes. These should be presented over time to see the rate and rhythm of change.

KPIs need to be presented in Clear and Compelling ways to make the data mining and lessons learned more visible and meaningful. This means using charts, graphs, color and putting these in front of users of the data on a regular, recurring basis.

Each business is a bit unique and may have specialty KPIs (business 2 business vs business 2 consumer vs government contracting vs manufacturing vs building service contractors to name a few), but some of the major KPIs to consider for review are:

Balance Sheet
  • Liquidity– Cash, accounts receivable, prepaid expenses & short term investments less current
    liabilities. (note- we do not include inventory since this is more of a capital requirement of
    running the business)
  • Return on Assets- Net income plus divided by Average Total Assets (for the time period
    related to the income)
  • Return on Equity- Net Income divided by Average Total Equity (for the time period related to
    the income)
Income Statement

Leading Indicators

  • ROI on marketing- cost per lead and cost per sale
  • Proposals given – number and %
  • Sales close rate – by salesman
  • For Contractors this may include estimates outstanding; rates of contracting with new jobs;
    average job size, etc.

Lagging indicators

  • Sales – a daily, weekly and monthly rhythm; including results per salesperson
  • Cost of Sales – dollars and percentage
  • Sales, marketing, and overhead – dollars and percentage; including details per marketing
  • Actual job performance versus estimates

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