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 xvAbout the Website xix1 Financial Planning & Analysis and Business Performance Management 1The Problem with Traditional Measurement Systems 1Objectives of Financial Analysis and PerformanceManagement 3Preview of the Book 6Summary 9Part One Fundamentals and Key FP&A Capabilities2 Fundamentals of Finance 13Basics of Accounting and Financial Statements 13Financial Ratios and Indicators 19Summary 423 Key Analytical Tools and Concepts 43Basic Statistical Tools 43The Business Model 59Summary 694 Developing Predictive and Analytical Models 71What Is a Financial Model? 71Summary 81Appendix: Illustrative Model 815 Building Analytical Capability 89For the Individual 90For the Organization 94Summary 1086 Communicating and Presenting Financial Information 109Laying the Foundation for Success 110Developing Effective Presentations and Reports 117Delivering the Presentation 120Data Visualization and Presentation: A Picture Is Worth a Thousand Words 121Summary 134Part Two Performance Management7 Business Performance Management 137What Is Business Performance Management? 138Developing or Enhancing BPM in an Organization 144Summary 1558 Dashboards and Key Performance Indicators 157Objectives of Dashboards and Key Performance Indicators 157Selecting Appropriate Performance Measures and KeyPerformance Indicators 160Creating Performance Dashboards 166Sample Dashboards for Selected Industries 175Summary 1759 Institutionalizing Performance Management 179Gaining Traction 179Integrating Business Performance Management with OtherManagement Processes 183Avoiding Common Mistakes 189Summary 19110 Measuring and DrivingWhat’s Important:Innovation, Agility, and Human Capital 193Innovation 194Measuring and Driving Business Agility 204Human Capital Management 214HCM Dashboard 226Summary 22611 The External View: Benchmarking Performance and Competitive Analysis 227Analysis of Markets, Customers, and Competitors 228Benchmarking to Evaluate Performance 232Using Benchmarks to Set Enterprise Goals for Performance and Value Creation 242Summary 243Part Three Business Projections and Plans12 Business Projections and Plans: Introduction and Best Practices 247Overview of Business Planning and Projections 248Best Practices in Projecting Future Financial Results 252Summary 26613 Budgets, Operating Plans, and Forecasts 267The Budgeting Process 267The Operating Plan 272Business Forecasts and Outlooks 277Summary 30114 Long-Term Projections 303Unique Challenges in Estimating Long-Term Performance 304Applications of Long-Term Projections 305Developing Long-Term Projections 307Presentation of Long-Term Projections 319Summary 325Part Four Planning and Analysis for Critical Business and Value Drivers15 Revenue and Gross Margins 329Revenue Growth: Key Drivers 330Key Performance Measures: Revenue Growth 343Revenue Dashboard 351Gross Margins and Relative Pricing Strength 351Measures of Relative Pricing Strength 356Summary 35916 Operating Expenses and Effectiveness 361Drivers of Operating Effectiveness 362Key Performance Indicators: Operating Effectiveness 365Tools for Assessing and Improving Operating Effectivenss 382Summary 38717 Capital Management and Cash Flow:Working Capital 389Critical Success Factors 391Operating Capital Management 393Understanding the Dynamics of Operating Capital 394Unleashing the Value Trapped in Operating Capital 396Accounts Receivable 398Key Performance Indicators for the Revenue Process andAccounts Receivable 401Inventories 410Summary 42018 Capital Management and Cash Flow:Long-Term Assets 421Capital Intensity 421Tools for Improving the Management of Long-Term Capital 424Projecting Capital Investments and Depreciation 428Key Performance Indicators for Capital Intensity 431Intangible Assets 433Key Performance Indicators: Goodwill and Intangible Assets 434Excess Cash Balances 436Long-Term Capital Dashboard 437Summary 43919 Risk, Uncertainty, and the Cost of Capital 441The Time Value of Money 441The Cost of Capital 449Performance Measures 458Summary 461Part Five Valuation and Capital Investment Decisions20 Capital Investment Decisions: Introduction and Key Concepts 465The Capital Investment Process 466Evaluating the Economic Merits of Capital Investments 469Illustrations 478Summary 48421 Capital Investment Decisions: Advanced Topics 485Dealing with Risk and Uncertainty in Capital InvestmentDecisions 485Presenting Capital Investment Decisions 499Capital Budgeting and Rationing 500Evaluating the Effectiveness of the Capital InvestmentDecision Process 502Summary 50522 Business Valuation and Value Drivers 507Estimating the Value of a Business by Discounting FutureCash Flows 508Estimating the Value of Firms by Using the Valuationof Similar Firms: Multiples of Revenues, Earnings,and Related Measures 517Building Shareholder Value in a Multiples Framework 521Integrated Valuation Summary for Roberts ManufacturingCompany 525Value Drivers 528Summary 53323 Analysis of Mergers and Acquisitions 535The Acquisition Challenge 535Key Elements in Valuing an Acquisition 537Methods and Metrics for Valuing an Acquisition 539Common Mistakes in M&A 554Best Practices and Critical Success Factors 557Understanding Seller Best Practices 560Key Performance Indicators for M&A 562Dashboards for M&A 564Summary 564Part Six Summary24 Summary and Where to from Here? 569Key Takeaways 569Where to from Here? 572Glossary 575Acknowledgments 585About the Author 587Index 589