Profit And Loss Statement Quotes

They asked forty-two experienced investors in the firm to estimate the fair value of a stock (the price at which the investors would be indifferent to buying or selling). The investors based their analysis on a one-page description of the business; the data included simplified profit and loss, balance sheet, and cash flow statements for the past three years and projections for the next two. Median noise, measured in the same way as in the insurance company, was 41%. Such large differences among investors in the same firm, using the same valuation methods, cannot be good news.

As people come to understand the environmental damages being caused by carbon and industry pollutants, there is a call for "full-cost accounting." This is an effort to include the adverse environmental costs of manufacturing and other production in the price of producing those items--from the cost of cleanup to the health impacts of carbon pollution. Currently, companies' profit-and-loss statements don't account for these and other costs, which are paid for by us all, and disproportionately by the poor and vulnerable. By failing to pay for the real cost of production, by misrepresenting or ignoring the vast consequences of some of their work, certain businesses and corporations have pursued paths that are at odds with the interests of society. A greater movement toward full-cost accounting is critical if we are going to align business decisions with what is in the best interests of future generations...

When the day of the meeting arrived, Anna opened by acknowledging ABC’s biggest gripes. “We understand that we brought you on board with the shared goal of having you lead this work,” she said. “You may feel like we have treated you unfairly, and that we changed the deal significantly since then. We acknowledge that you believe you were promised this work.” This received an emphatic nod from the ABC representatives, so Anna continued by outlining the situation in a way that encouraged the ABC reps to see the firms as teammates, peppering her statements with open-ended questions that showed she was listening: “What else is there you feel is important to add to this?” By labeling the fears and asking for input, Anna was able to elicit an important fact about ABC’s fears, namely that ABC was expecting this to be a high-profit contract because it thought Anna’s firm was doing quite well from the deal. This provided an entry point for Mark, who explained that the client’s new demands had turned his firm’s profits into losses, meaning that he and Anna needed to cut ABC’s pay further, to three people. Angela, one of ABC’s representatives, gasped. “It sounds like you think we are the big, bad prime contractor trying to push out the small business,” Anna said, heading off the accusation before it could be made. “No, no, we don’t think that,” Angela said, conditioned by the acknowledgment to look for common ground. With the negatives labeled and the worst accusations laid bare, Anna and Mark were able to turn the conversation to the contract. Watch what they do closely, as it’s brilliant: they acknowledge ABC’s situation while simultaneously shifting the onus of offering a solution to the smaller company. “It sounds like you have a great handle on how the government contract should work,” Anna said, labeling Angela’s expertise. “Yes—but I know that’s not how it always goes,” Angela answered, proud to have her experience acknowledged. Anna then asked Angela how she would amend the contract so that everyone made some money, which pushed Angela to admit that she saw no way to do so without cutting ABC’s worker count. Several weeks later, the contract was tweaked to cut ABC’s payout, which brought Anna’s company $1 million that put the contract into the black. But it was Angela’s reaction at the end of the meeting that most surprised Anna. After Anna had acknowledged that she had given Angela some bad news and that she understood how angry she must feel, Angela said:

GE’s Borch, for one, read the profit-and-loss statements of all his departments every year and told them to stop spending on paper clips. Budgeting and control were at least one part of leadership, but such immersion in detail has its obvious limitations.

If your needs are not attainable through safe instruments, the solution is not to increase the rate of return by upping the level of risk. Instead, goals may be revised, savings increased, or income boosted through added years of work. . . . Somebody has to care about the consequences if uncertainty is to be understood as risk. . . . As we’ve seen, the chances of loss do decline over time, but this hardly means that the odds are zero, or negligible, just because the horizon is long. . . . In fact, even though the odds of loss do fall over long periods, the size of potential losses gets larger, not smaller, over time. . . . The message to emerge from all this hype has been inescapable: In the long run, the stock market can only go up. Its ascent is inexorable and predictable. Long-term stock returns are seen as near certain while risks appear minimal, and only temporary. And the messaging has been effective: The familiar market propositions come across as bedrock fact. For the most part, the public views them as scientific truth, although this is hardly the case. It may surprise you, but all this confidence is rather new. Prevailing attitudes and behavior before the early 1980s were different. Fewer people owned stocks then, and the general popular attitude to buying stocks was wariness, not ebullience or complacency. . . . Unfortunately, the American public’s embrace of stocks is not at all related to the spread of sound knowledge. It’s useful to consider how the transition actually evolved—because the real story resists a triumphalist interpretation. . . . Excessive optimism helps explain the popularity of the stocks-for-the-long-run doctrine. The pseudo-factual statement that stocks always succeed in the long run provides an overconfident investor with more grist for the optimistic mill. . . . Speaking with the editors of Forbes.com in 2002, Kahneman explained: “When you are making a decision whether or not to go for something,” he said, “my guess is that knowing the odds won’t hurt you, if you’re brave. But when you are executing, not to be asking yourself at every moment in time whether you will succeed or not is certainly a good thing. . . . In many cases, what looks like risk-taking is not courage at all, it’s just unrealistic optimism. Courage is willingness to take the risk once you know the odds. Optimistic overconfidence means you are taking the risk because you don’t know the odds. It’s a big difference.” Optimism can be a great motivator. It helps especially when it comes to implementing plans. Although optimism is healthy, however, it’s not always appropriate. You would not want rose-colored glasses in a financial advisor, for instance. . . . Over the long haul, the more you are exposed to danger, the more likely it is to catch up with you. The odds don’t exactly add, but they do accumulate. . . . Yet, overriding this instinctive understanding, the prevailing investment dogma has argued just the reverse. The creed that stocks grow steadily safer over time has managed to trump our common-sense assumption by appealing to a different set of homespun precepts. Chief among these is a flawed surmise that, with the passage of time, downward fluctuations are balanced out by compensatory upward swings. Many people believe that each step backward will be offset by more than one step forward. The assumption is that you can own all the upside and none of the downside just by sticking around. . . . If you find yourself rejecting safe investments because they are not profitable enough, you are asking the wrong questions. If you spurn insurance simply because the premiums put a crimp in your returns, you may be destined for disappointment—and possibly loss.

Call it Westhusing’s Theorem: In a democracy, the health of the military professional ethic is inversely proportional to the presence of hired auxiliaries on the battlefield. The pursuit of mammon and the values to which military professionals profess devotion are fundamentally incompatible and irreconcilable. Where profit-and-loss statements govern, devotion to duty, honor, and country inevitably takes a hit.

As ever, the chicanery was justified by its practitioners with the excuse that mere financial statements could not capture the brilliance of their enterprises. Talking to a Swedish diplomat, the Match King spoke for con men everywhere: We’ve chosen some new high priests and called them accountants. They too have a holy day—the 31st of December—on which we’re supposed to confess. In olden times, the princes and everyone would go to confession because it was the thing to do, whether they believed or not. Today the world demands balance sheets, profit-and-loss statements once a year. But if you’re really working on great ideas, you can’t supply those on schedule. . . . The December ceremony isn’t really a law of the gods—it’s just something we’ve invented. All right, let’s conform, but don’t let’s do it in a way that will spoil our plans. And someday people will realize that every balance sheet is wrong because it doesn’t contain anything but figures. The real strengths and weaknesses of an enterprise lie in the plans. The banks and investors who

A payoff of loan principal reduces the liability section of the balance sheet, and a payment of interest increases the expense section of the profit and loss (P&L) statement.

KNOW YOUR PEOPLE AND KNOW YOUR BUSINESS. In Execution we stress the need for domain knowledge, the kind of granular understanding of how the business makes money that goes beyond profit and loss statements.

INCOME: The money that is received as a result of the normal business activities of an individual or business. INCOME STATEMENT, OR PROFIT-AND-LOSS STATEMENT: It measures income and expenses: money in and money out. LIABILITY: Something that takes money “out of your pocket.” MUTUAL FUND: A variety of stocks, bonds, or securities grouped together, managed by a professional investment company and purchased by individual investors through shares. The shares possess no direct ownership value in the various companies.

A profit and loss statement is a trailing indicator. Its data comes after the fact, and you can’t change the past. With a Scorecard, however, you can change the future.

When Jobs had returned in 1997, he had put the entire company under a single profit-and-loss statement and created an organization whose senior vice presidents managed the various areas of the business.

two most important financial statements are prepared, the Profit & Loss Account and the Balance Sheet.

Therefore all transactions that take place get recorded, and whatever gets recorded, periodically gets compressed. A compressed version of accounts is presented in the form of two financial statements. One is called Profit & Loss Account and the other Balance Sheet.

Inverting the Problem: Think about problems in reverse. It is not enough to think about them one way. You need to think about problems forward and backward, which forces you to uncover hidden beliefs about the problem you are trying to solve. For instance, instead of thinking about what would make a good life, think about what would make your life miserable, and then avoid those things. Or here’s another example. Do you want to be a good leader? If so, then think about all of the bad leaders you’ve met in your life and list the reasons why they were bad. Think about the ways you don’t want to be like those bad leaders, and you’ll be more likely to succeed at being a good leader. Second- and Subsequent-Order Thinking: Ask yourself, “And then what?” First-order thinkers stay on the surface. They tend to look for things that are easy and simple. Second-order thinkers don’t accept the first conclusion. They go deeper and push harder. Have you ever been in a meeting where a good idea is suggested, everyone agrees on it, and then that’s the end of the discussion? No one asks deeper questions. No one goes to the next level. No one asks what will happen if new problems arise. Second-order thinking is hard work. The Map Is Not the Territory: Our minds create maps of our world in order to understand it, because the only way we can process the complexity of everything is to simplify it in our minds. Businesses use maps all the time. These are the strategic plans, the budgets, even profit and loss statements. And we can’t avoid them. We need to use maps in order to pass information around in an easily digestible way. Sometimes, in fact, we are so reliant on simplification that we will frequently use an incorrect model because we feel any model is preferable to no model.