The goal of financial management of maximizing shareholder wealth can be assessed through a variety of measurements. What this variety of measurements may not assess is potential problems in relationships between businesses and stakeholders. One way to assess potential problems with these relationships is to look for fractures. This article describes how to identify fractures through FP&A within three elements on the balance sheet.
Karl Kern
Karl Kern has a BBA degree in Accounting from Temple University, and an MBA degree with a concentration in Finance from Babson College. After graduating from Temple University Karl started a career where he has established a reputation as a problem solver. Karl’s reputation as a problem solver is based on his ability to create as well as implement initiatives that have helped organizations increase revenues, decrease expenses, and improve cash flows.
Karl’s ability to create as well as implement initiatives is due to being a well-read individual with exceptional organizational skills and passion. It is Karl’s passion that guides him to improve the lives of not only himself but also those around him.
Author's Articles
Machines thinking on their own present a number of anxieties in the workplace. Perhaps the most significant anxiety is the loss of work. Loss of work within factories is more than an anxiety, it is a reality.
One of the more important qualities of FP&A practitioners is curiosity. Curiosity, a strong desire to know or learn something, is affected by the types of questions asked. It is the types of questions that determine how much FP&A practitioners want to know or learn. One type of question is “what.” The purpose of asking “what” is to acquire information. Acquiring information can be in the form of financial numbers like revenues, expenses, and cash flows. Acquiring information can be in the form of non-financial numbers like the amount of time companies receive or make payments. Acquiring information can be in the form of qualitative data like comments from customers, names of products, or types of services provided. Asking “what” helps FP&A practitioners know about the environments where they work but knowing is not enough. FP&A practitioners need to ask questions that help them learn about the environments where they work.
FP&A practitioners rely on raw materials, i.e. data, to conduct their work. In order to conduct their work a variety of data types should be utilized. There are three types of data that FP&A practitioners should utilize. The first type of data is financial numbers. Financial numbers must be utilized due to the goal of FP&A. The goal of FP&A is to assess whether wealth is or will be created based on decisions within businesses. These decisions can be assessed through elements within financial statements. Income, stockholders’ equity, and cash are the elements most commonly used to assess wealth. These elements are expressed through financial numbers so it seems foolish to describe their importance but it is necessary to do so. This is due to the role of other data types.