by Jack Alexander, CPA
301 pages with CD-ROM; hardcover
John Wiley & Sons; Hoboken, N.J.; 2007
Like the proverbial elephant described by blind men, company performance and value are parts of the same beast but feel vastly different to managers and investors. In Performance Dashboards and Analysis for Value Creation, former public-company CFO Jack Alexander, now head of Value Advisory Group LLC, shows how they fit together. While the dashboard metaphor of the title may be familiar to many readers, the book goes beyond management assessment to demystify finance and link it to business operations, with an emphasis on long-term sustainable growth.
The first section covers metrics of business fundamentals—many of them basic but some, like economic value added and return on invested capital, especially useful in building what Alexander in the middle section expounds as a “value performance framework.” He then describes tools to promote performance and value simultaneously. Often in many companies, obvious factors such as sales growth are overemphasized at the expense of operating and capital efficiency, cost of capital and intangibles, all of which can be crucial in contracting markets.
Alexander strives to bridge what often is a chasm between finance and performance management. Where other books might dwell on the accounting niceties of a capital assets pricing model, for example, he offers a common-sense explanation of how cost of capital affects value.
An accompanying CD-ROM contains more than 30 Microsoft Excel workbook models and exercises in which readers can plug in their own financial data to put the book’s concepts into practice.