Financial Planning & Analysis and Performance Management

JACK ALEXANDER is an experienced CFO and operating executive turned consultant, author, and educator. As the founder of Jack Alexander & Associates, LLC, he provides advice to businesses across a wide range of financial and operating areas, with a focus and passion on Financial Planning & Analysis (FP&A) and Performance Management (PM). The firm also offers customized training and workshops on FP&A. He is a frequent speaker on FP&A and PM. He is the author of Performance Dashboards and Analysis for Value Creation and Financial Planning and Analysis and Performance Management, both from Wiley.

Preface xv About the Website xix 1 Financial Planning & Analysis and Business Performance Management 1 The Problem with Traditional Measurement Systems 1 Objectives of Financial Analysis and Performance Management 3 Preview of the Book 6 Summary 9 Part One Fundamentals and Key FP&A Capabilities 2 Fundamentals of Finance 13 Basics of Accounting and Financial Statements 13 Financial Ratios and Indicators 19 Summary 42 3 Key Analytical Tools and Concepts 43 Basic Statistical Tools 43 The Business Model 59 Summary 69 4 Developing Predictive and Analytical Models 71 What Is a Financial Model? 71 Summary 81 Appendix: Illustrative Model 81 5 Building Analytical Capability 89 For the Individual 90 For the Organization 94 Summary 108 6 Communicating and Presenting Financial Information 109 Laying the Foundation for Success 110 Developing Effective Presentations and Reports 117 Delivering the Presentation 120 Data Visualization and Presentation: A Picture Is Worth a Thousand Words 121 Summary 134 Part Two Performance Management 7 Business Performance Management 137 What Is Business Performance Management? 138 Developing or Enhancing BPM in an Organization 144 Summary 155 8 Dashboards and Key Performance Indicators 157 Objectives of Dashboards and Key Performance Indicators 157 Selecting Appropriate Performance Measures and Key Performance Indicators 160 Creating Performance Dashboards 166 Sample Dashboards for Selected Industries 175 Summary 175 9 Institutionalizing Performance Management 179 Gaining Traction 179 Integrating Business Performance Management with Other Management Processes 183 Avoiding Common Mistakes 189 Summary 191 10 Measuring and DrivingWhats Important:Innovation, Agility, and Human Capital 193 Innovation 194 Measuring and Driving Business Agility 204 Human Capital Management 214 HCM Dashboard 226 Summary 226 11 The External View: Benchmarking Performance and Competitive Analysis 227 Analysis of Markets, Customers, and Competitors 228 Benchmarking to Evaluate Performance 232 Using Benchmarks to Set Enterprise Goals for Performance and Value Creation 242 Summary 243 Part Three Business Projections and Plans 12 Business Projections and Plans: Introduction and Best Practices 247 Overview of Business Planning and Projections 248 Best Practices in Projecting Future Financial Results 252 Summary 266 13 Budgets, Operating Plans, and Forecasts 267 The Budgeting Process 267 The Operating Plan 272 Business Forecasts and Outlooks 277 Summary 301 14 Long-Term Projections 303 Unique Challenges in Estimating Long-Term Performance 304 Applications of Long-Term Projections 305 Developing Long-Term Projections 307 Presentation of Long-Term Projections 319 Summary 325 Part Four Planning and Analysis for Critical Business and Value Drivers 15 Revenue and Gross Margins 329 Revenue Growth: Key Drivers 330 Key Performance Measures: Revenue Growth 343 Revenue Dashboard 351 Gross Margins and Relative Pricing Strength 351 Measures of Relative Pricing Strength 356 Summary 359 16 Operating Expenses and Effectiveness 361 Drivers of Operating Effectiveness 362 Key Performance Indicators: Operating Effectiveness 365 Tools for Assessing and Improving Operating Effectivenss 382 Summary 387 17 Capital Management and Cash Flow:Working Capital 389 Critical Success Factors 391 Operating Capital Management 393 Understanding the Dynamics of Operating Capital 394 Unleashing the Value Trapped in Operating Capital 396 Accounts Receivable 398 Key Performance Indicators for the Revenue Process and Accounts Receivable 401 Inventories 410 Summary 420 18 Capital Management and Cash Flow:Long-Term Assets 421 Capital Intensity 421 Tools for Improving the Management of Long-Term Capital 424 Projecting Capital Investments and Depreciation 428 Key Perform