All of this discussion about ratios can seem daunting, but don ‚ t get discouraged. As a WLP professional and former mathematics teacher pointed out to me, all her math students became discouraged about midway through the school year. They also felt better about what they were learning as time went on and they became more comfortable and confident. The important thing is not to give up. Familiarity,
How can you use this information about balance sheets and ratios to communicate your value? To see how assets break into cascading measures through an organization and how those measures can be translated into value chains, take a look at figure 5-6. To help draw a visual link from the financial value chain to WLP interventions, the financial value chains have possible WLP interventions depicted.
Figure 5-6: Asset measure and sample financial value chain.
In the top half of figure 5-6, starting on the left-hand side, are examples of asset measures for each type of audience, ending on the right with examples of WLP interventions that may improve those measures. The closer you get to the Individual level of your audience, the longer and more varied the list of possible measures and interventions becomes. The list of measures and possible interventions in this example are not restricted to what ABC MediCompany might use and are by no means exhaustive in covering every type of organization in every industry.
In figure 5-6, examples of current and long-
The same intervention can sometimes positively affect profit, position, and cash all at the same time. You can keep your value communication fresh and more powerful by understanding how to point out the impact of your interventions in terms of more than one financial statement.
The sample asset-based value chain in figure 5-6 selects current assets as the Senior-level measure and AR as the Mid-level measure. To help with monthly and weekly collections,
A similar set of measures and a sample financial value chain are shown on figure 5-7.
Figure 5-7: Liability measures and sample financial value chain.
In this case, administrative assistants are required to
Because ratios compare such items as assets, liabilities, equity, revenue, costs, and profit, you can also point out how any of the financial value chains improve the ratios that the Senior executive measures are a part of.