A successful CFO has to:
- manage sources of finance to satisfy their requirements & to reduce WACC through adequate gearing
- manage cash & liquidity
- control investment in assets (CAPEX & working capital)
- manage profitability (ROE, ROA, margins)
- make sure that paper profit gets collected as cash
We can assess how well he or she is doing by looking at the three statements in the financial report:
- Balance Sheet
- Profit & Loss Statement (P&L)
- Cashflow Statement (sometimes we will also look at the Sources & Application of Funds)
On the basis of those statements, we then perform financial analysis by calculating a set of ratios.
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