Monday, 26 May, 2008

What the CEO wants you to know

I recently read this book, "What the CEO wants you to know", which is authored by Prof Ramcharan. The sub-title of this book is "Using Business Acumen to understand how your company really works". IMHO, the sub-title is what correctly describes the content of the book though the title is the one which is more catchy!

In less than 150 pages, the author has provided time-tested advice to each one operating in the business. What I liked the most about this book is a list of eight questions that one should ask about a company to understand its total business. These eight questions are as follows:
  1. What were your company's sales during the last year?
  2. Is the company growing? Or is growth flat or declining? Is this growth picture good enough?
  3. What is your company's profit margin? Is it growing, declining or flat?
  4. How does your margin compare with your competitors? How does it compare wit those of other industries?
  5. Do you know your company's inventory velocity? its asset velocity?
  6. What is your company's return on assets? (ROA = After-tax margin * Asset Velocity)
  7. Is your company's cash generation increasing or decreasing? Why is it going one or the other?
  8. Is your company gaining or losing against the competition?

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