Many year ago I was meeting with a new client, Roy, the president of a large and profitable manufacturing company. Our audit had been completed and I was helping him plan for his annual shareholders meeting by explaining what I thought to be the more significant developments in his financial statements.

When we began the meeting he withdrew a single sheet of paper from his desk and held it in front of him. As we talked, he would occasionally glance at his paper and react by a nod, or an immediate question or comment.

After a while I asked him about the paper he was holding. "This is my business bible," he said and handed it to me. "Without this I don't know how I'd manage this business."

His paper was divided into two halves. The top half had horizontal lines for each month of the current year with periodic totals for each quarter and a total for the year. The bottom half was identical but was for the prior year. Columns across the top had headings for various items important to Roy, such as Sales $, Sales Units, Ave Sales $, Direct Labor $, Direct Labor Hrs, Ave Hr Earnings, Sales Backlog $ and Units, Bill to Book Ratio and various other columns. Included in all of the spaces were hand-written numbers corresponding to all the descriptions and dates for the columns and rows.

Ray said, "A long time ago I got tired of waiting for all my accounting reports and I didn't always understand all of them anyway." "So, I designed this worksheet to help me manage the business. Each month my secretary goes to different departments and gathers the data she needs for the worksheet. Production, Payroll, Accounting and the other departments usually have the numbers I need by two to three days after the end of each month. She records the data, computes and totals as needed, then hands me my worksheet."

Although a little hard to read because of the small entries, his worksheet was legible nonetheless. Most apparent was that about one third of his information was non-financial data; units, hours, orders, number of inspections, etc., none of which were in any of the formal financial statements we were reviewing.

What Roy was doing was taking the information that was important to him, both in financial and non-financial terms, and summarizing it in ways he needed to understand the business. He was also comparing the data to the prior year so that at any point he knew how he was doing. He was converting the data to ratios, percentages and averages so he could better understand their relationships. Lastly, he condensed his summary down to one page so that it would be manageable for understanding the truly relevant data.

Conclusion: My first meeting with Roy forever changed my perspective in understanding financial data. Do your reports give you the tools you need to understand your operations and can you obtain the data in days instead of weeks? If not, consider Roy's approach. No two persons have the same perspectives in analyzing data. Pick those items essential for what you manage and don't be afraid to change your worksheet along the way. Also, remember that your data is more relevant when compared to something such as a prior year or maybe your best year if using percentages and ratios. Be sure to include non-financial data to give you perspectives not available in your typical accounting reports. Above all, focus on the important issues and don't overdo it. We've seen managers with five-inch thick loose-leaf binders with data too detailed to provide an overall understanding of the business.

Roy has since passed away, but if he were here today, he would undoubtedly be placing a laptop computer on his desk at our next meeting but, with only a single page to show me.