5 takeaways from the book Financial Intelligence
march 25, 2025
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Financial Intelligence by Karen Berman, Joe Knight and John Case is a book that simplifies the balance sheet and explains how a company’s decisions revolve around it.
Introduction
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Let’s look at five key takeaways from Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean!
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Companies make decisions based on numbers on the balance sheet. Therefore, understanding the estimates that go into the financial statements is important.
Numbers and decisions
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The book likens operating expenses to cholesterol. While a good expense makes a business strong, a bad expense drags it down.
Good cholesterol, bad cholesterol
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Profit is equal to revenue minus expense. Revenue is recognised when a product/service is delivered, not when the bill is paid, making revenue and profit a promise.
Profit is a promise
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Profitability is like a grade one receives for a subject, while equity is the grade point average (GPA) reflecting cumulative performance at a point in time.
Report card
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Cash is a reality check and an indirect means to look into a company’s bank account. Cash flow statements can help spot early warning signs of trouble.
Cash is king
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Thanks for reading!
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