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The following two categories need to be comprehended in order to understand your business:
(1) Operations and (2) Financial.
Companies do a much better job of understanding the operations side of their businesses than they do its financial side. This is partly due to financial fundamentals not being logically defined. Since the financial fundamentals are not clearly defined, they cannot be effectively articulated to business decision-makers.
(1) Operations “umbrella”
Operations include sales, customers, production, competition, markets, personnel, etc.
All of these fit under the “operations umbrella”.
Generally, businesses do a very good job of comprehending their operations. This is understandable because the operations are the business. They are the reasons founders and successors created and grow their companies. It is what excites and drives them.
Additionally, the P&L and operating reports are usually logical and intuitive. On the other hand, non-P&L financial concepts are poorly defined and therefore, not logical and intuitive.
It needs to be realized that operations and the P&L are not the entire “business story”. In addition to operations, the financial story needs to be grasped to round out or complete the full “business story”.
(2) Financial “umbrella”
To understand the financial side of your business, you need to know the financial fundamentals.
The financial fundamentals fit under the “financial umbrella”.
It is unfortunate that financial fundamentals have historically been poorly defined, articulated, conveyed, etc.
Financial fundamentals are easily accessible.
The PattonTenders® convey the 5 Elements® of financial fundamentals to business decision-makers. They were developed to solve the problem of confusion and lack of clarity of business’ financial fundamentals.
The Trenders are easily updated each month with existing internally generated balance sheets and P&Ls. In other words, companies do not have to do anything new or different.
The 5 Elements of financial fundamentals provided by the Trenders are as follows:
- Operating earnings
- Cash flow
- Financial health (re, liquidity)
- Shareholder values
- Borrowing capacity
The Trenders provide financial fundamentals in a succinct manner. They simplify and de-mystify business’ financial fundamentals.
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Please contact PattonTrender for more information.
Call Us: 210–822–9977
Email Us: info@pattontrender.com
