Vontarius Falls 's Key Ideas from Financial Intelligence, Revised Edition
by Karen Berman, Joe Knight

Calculate asset-related, liquidity and leverage ratios to gauge the financial health of the business. Look for trends over time that indicate deterioration or improvement.  

Action: Identify at least 3 ratios to track on a monthly or quarterly basis. Compare the ratios to industry benchmarks and set internal targets for improvement.

Analyze cash flows in detail to ensure the business generates sufficient cash, uses cash efficiently and identifies opportunities to boost cash. Shortening the cash conversion cycle can significantly improve cash position.

Action: Create a cash flow projection for your area of responsibility. Revise processes and policies to improve collection cycles and reduce days in inventory.  

Establish financial targets and benchmarks to provide goals for your team to aim for. Compare performance to industry peers to identify where your company has opportunities to improve.  

Action: Create revenue, margin and efficiency targets for your team based on benchmarks. Revise targets annually based on new performance data.

Hold your team accountable for meeting budget goals. Thoroughly examine variances between actual performance, budgets and forecast to identify causes and actions. 

Action: Build actionable budgets for your department that tie to organizational goals. Review budget versus actual variances with your team monthly.   

Develop a checklist of key financial questions to ask regularly of your team. Look for explanations of variances, trends and anomalies that indicate potential issues or opportunities.

Action: Create your list of diagnostic questions. Ask for evidence to back up explanations from your team. Stay skeptical but promote a learning culture.