The path to financial clarity
Looking for immediate working knowledge of your organization's finance, accounting and performance management systems? You'll want to study these 12 steps to integral operations finance and accounting.
Developed by the people behind the Financial Scoreboard and the Financial Dashboard, it's a graphic depiction of the journey taken by, among others, Lou Mobley.
In 1959, Mobley discovered that by placing the beginning and ending balance sheets on the left and right edges of the page, one can put the accounts on the income statement next to the balance-sheet accounts to which they connect. "This placement," writes Jahn Ballard of the Performance Management Institute, "allows the cash equivalent for each balance sheet account to be easily deduced and summed up to the change in cash. This compilation creates a mathematical matrix, or 'magic square,' that automatically trial-balances the statements and shows the common sense linking the statements, both visually and mathematically." This eventually became known at IBM as the "Mobley Matrix."
In most cases, a team will need to cycle through the steps at least two or three times to experience shared command and unleash unhindered creativity, and the path works best when actual financial statements are used. But the results can be revolutionary.
Familiar with the Mobley Matrix? What do you think? Let us know what works for you and your organization.