Income/Outcome Business Contextuary
eliza
Published Date
It is a visual glossary, so why do I call it a ‘contextuary of corporate finance’? Because the Company Board (i.e. the visual graphic) creates context for any of the illustrated entries.Here is a sample entry:
Return on Equity (ROE)
Ratio: Net Income as a percentage of the Shareholders’ Equity.
ROE measures how effectively the Shareholders’ investment has been put to work to create profit. Also known as Return on Investment or ROI.
So while you are looking at the ratio, you have 1) a visual sense of the ‘return’ as it relates to the total equity. But you are also looking at 2) the small return as a percentage of the sales that generated it; AND 3) you are looking at the equity in relationship to both debt and the assets of the balance sheet.
All three views of these relationships allow you to see Return on Equity in the context of the whole business.This business visualization (and contextualization) of company financial statements is the foundation of the Income/Outcome business simulations.
See the complete contextuary here.
