I gave the lecture “How to Read and Use Statement of Financial Statements” at “Small Business Enterprise University Kansai School.”


Hello. It is Yasuda Consulting Yasuda. Today, I will introduce the story that I was a trainee lecturer of “How to read and utilize the settlement of accounts” at the small business enterprise school Kansai school for three days.

I am keeping giving this lecture every year since 2011. It is very important to accumulate the contents of the lecture every year to improve the satisfaction of the students by brushing up.

Well, about the content of the lecture, it is a long-term from 9:30 to 17:30 (1 hour break) for each 3 days. We will start by explaining the real basic matters of the income statement and the balance sheet while taking care of “viewpoint of management accounting”. Since most students don’t have bookkeeping knowledge, I do not use bookkeeping words at all. Even if it is important for bookkeeping or tax, I didn’t explain in the case where it was not needed in management company.

First of all from the income statement.

I didn’t explain the meaning of sales but the idea to increase sales.

Cost of sales … Unfortunately this item can be made bigger or smaller by valuation of inventory.  If the company doesn’t correctly take an inventory, cost of sales is not correct. Of course I will not tell you to revise it because it is not important. But you need to understand that it is bad to calculate the cost rate by incorrect value. You should grasp the actual situation.”

Next is the balance sheet.

Accounts receivables, inventory assets, fixed assets are  three brothers which are easy to get extra flesh. To shape up them is effective both in terms of efficiency and cash flow.

“Well then, it’s inventory reduction!”

But you need it to match your company’s business strategy. If your company’s strategy is to have much inventory, increasing inventory is not problem.

I also talked about various ways to reduce accounts receivable.

There is also a story saying “The short-term loan is ・ ・ ・ actually …” as for the debt. In Japan, many CEO invest his private money to company temporarily and it is booked as the short-term loan. And in many cases, this money will not be returned to CEO for ever.

I also explained In addition to the essentials to understand the settlement statement variously.

And next is about “reading financial statements”.

“Since it is a record of the past, it can not be helped to analyze an account statement …”

This opinion is a totally misunderstanding. “Reading a settlement statement” is “to know the future from the past.”

And entrance of financial analysis which does not use numbers. Meaning of standardized financial indicators and procedures of analysis etc.

On the second day I explained the meaning of many values from financial analysis and asked the group to discuss the three business cases. Members gathered at the training are coincidence, but for the first time ever. I took up as much discussion time as possible with the feeling that I wanted to communicate firmly.

Analysis and suggestions using the company’s financial statements on the last day. I asked all students to make an A4 size improvement proposal sheet.

During making sheet, many students gave me questions to solve their problems in their own companies.

And just before the last end. I talked about “Why do we need profits?” and “What is education for?”

I think that we need profits for being happy.

And

Education … for the development of the company … It is a lie. That is the second. Education is for themselves to enjoy life. The next is the development of the company.

I ended up with such a story.