What the ceo wants you to know
...ween what he sell and buy Account receivable Money customers owe the vendor Account payable Money vendor owe their suppliers etc. It is very important for me as a manager to know how to explain business terms to my staffs. It is easier for them to understand if I can bring problems to the familiar environment. Fruit street vendor which is common in Indonesia is the best example to simplify CEO big words. I can motivate them easier if staffs understand the word that I use. Before I read the book, I thought that a company’s profit equal to the difference between what we sell and buy for certain of time. There is more to it than percentage of profit that can make the company survive the market. It is how we can rotate the inventory, stock and turn the stock over. We can use the word velocity to describe the turn over, speed or movement of the stock. The faster we can buy stock and sell end product, the better number ROA we can get. We can put all the requirements in one of the basic financial formulas which is Return of Asset (R) = Margin (M) * Velocity (V). In my experience, when we sell the product, the profit that we can get is less than 3% of cost of goods sold. I learned that it is not a problem anymore. I need to make the speed of inventory turn over faster. It with give more benefit to the company. Another interesting idea that I can get from the book is customer focused. F...