The usefulness of the Company Board is that it presents financial information in a visual manner. For people who do not enjoy looking at long columns of small numbers, this may make the information more accessible. It can also clarify ratios and relationships for people who do not have strong numeric skills or financial understanding.
The Company Board is especially useful for assessing ‘relationships’ rather than the actual values.
The values can be evaluated using the scale in the bottom left corner; in this case the scale is 1 stack = 2.5 Billion so the total sales is 11.5 stacks or approximately 28 or 29 billion. If you want the actual number you will have to refer to the actual financial statement.
But the ratios are visually apparent:
Leverage or Debt-to Equity is shown by the relationship of Liabilities to Equity; looking at the bottom right corner of the Balance Sheet, Debt-to-Equity is the ratio of red stacks to black stacks.
Liquidity issues are shown by the ratio of Liabilities (red stacks on the Balance Sheet) to Cash & Equivalents (silver stacks in Cash, R
eceivables, Other Current Assets). Specifically you are concerned with the short-term liabilities, those coming due with in the next 12 months.
Return on Sales or Profitability is the relationship of Profit (Net Income, the black stacks at the bottom of the Income Statement) to Total Revenue (gold stacks at the top of the Income Statement)
Return on Assets is the relationship of Profit (Net Income, the black stacks at the bottom of the Income Statement) to Total Assets (silver, multi– and copper stacks spread across the Balance Sheet).
We use this same business visualization methodology to accelerate the learning of financial planning and analysis tools in our business acumen workshops.
In an earlier post How to Read Financial Statements using the Company Board, I said using the Company Board helps you more easily understand the financial statements, even if you have not participated in an Income/Outcome business simulation. This statement is equally true with regard to extracting useful information.