Sample frameDay 168·Finance · Oversight

Morning. You'll never out-model the person who owns your numbers. You can out-question them, and it takes about ten minutes a month.

Finance.

The CFO Questions

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The question

When your accountant, bookkeeper or CFO last walked you through a month, did you ask a single question that could have produced an uncomfortable answer — or did you nod at the profit line, thank them, and leave holding precisely the picture they'd already decided to hand you?

The idea

Ram Charan has advised chief executives and boards for four decades, and he learned the fundamentals long before any of them, in his family's shoe shop in northern India. What the CEO Wants You to Know (2001) is built on what that shop taught him: the trader who has never seen a balance sheet runs on the same handful of fundamentals a listed company does. Cash generation, meaning whether the business produces more money than it swallows, and how quickly. Margin, meaning what is left of each dollar of sales once everything it took to earn that dollar has been paid. Velocity, meaning how many times the stock turns in a year, because a thin margin turned eight times beats a fat one turned once. The return on the money tied up, which is those two multiplied together. Growth, and whether it is being funded or merely bought. And whether customers come back, the one item a trader reads off the faces at the counter rather than off a page. Charan's argument is that business acumen isn't technical at all; it's the habit of asking about those six in ordinary language and declining to be answered in jargon. The trap is the review that runs on the reviewer's material: you're handed a pack, you ask about what is in it, and the questions that were never asked become the picture you leave with. You won't out-model your CFO, your accountant or your bookkeeper, and you don't need to. You need about ten questions, asked in the same order every month, that a managed number can't survive.

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