The Visual MBA

Leadership is more than management. It’s about inspiring change and improving results through who you are and how you motivate others.

Pro forma is just a fancy way of saying “what the future could look like.” It is forecasting based on an increase in sales. Look at your financial statement and everything on it that is dependent on sales. In this case, let’s say COST OF GOODS SOLD (COGS) and ADMINISTRATIVE expenses both increase with sales.

If sales increased by 20%, what would our net profit be? Look at the previous page and see that COGS was 22% of sales, and your administrative expense was 3%. When increasing $90 by 20% ($108), you then figure out what 22% and 3% (COGS and administrative, respectively) of $108 are.

COMMON SIZED financial statements are a great way to figure out how you are doing over time, or to compare one company in a similar industry with another. All you do is divide everything by sales to see where any differences are

Sure. You sold $90 but the cups, sugar, and lemons cost $20. Your gross profit is $70. You also had to pay for some administrative overhead. That left you with $67 operating income or EBIT (Earnings Before Interest & Taxes). You then need to take out interest and taxes, which leaves you with a net profit of $64

A balance sheet is a snapshot in time and is a good indicator of your net worth as a business. Now let’s jump into your income statement.

ou are the new CEO of a lemonade stand. You need a loan of $50 (liability) to buy some assets. You purchase a stand for $20 and have $30 left over

OK. So at any given point in time you have Assets, Liabilities, and Equity. The secret is, Assets = Liabilities + Equity. That’s called the “Accounting Equation.” Your loan was $50 (Liability), you used it to buy a stand for $20 (Asset), and have $30 cash (Asset). You have $50 debt (Liability) and $50 of assets. A = L + E.

Accounting is the language of business. Unless you are keeping track of how your company is doing, you won’t know how to improve it. Everything in this course revolves around these three financial statements

CHANGE includes the team’s ability to adapt to rapidly changing circumstances while working towards the goal

COMPETENCIES includes having the right people whose combined skill can solve the problem. It’s about setting the right goal and leveraging the team’s skill to achieve it.