The Numbers Tell A Story
A write-up by Danette Fenton-Menzies on the finance report reading and what it can tell us…
I have a not-so-secret, secret. Even though I am a Chartered Accountant and CPA I struggled with Maths at school, and I failed Accounting 1 at university. I preferred English at school. It was only after I learned that accounting has its own professional (technical) language, just like engineering and the medical profession that I realised that my struggle wasn’t with the numbers, per se, so much as understanding the technical language.
Surprisingly enough, I now teach people how to read their financial reports. What I love about this is that I combine my love of the English language with helping people ‘get’ their numbers. As someone who has previously struggled with this topic, it positions me we well to teach it as I’ve had to approach it from several angles over the years for my own benefit and from teaching it.
Over the years I have met many managers and leaders who have done their best to avoid their numbers because they didn’t get the language either. Some, like me, preferred English to Maths at school. The problem with avoidance is that we don’t grow and learn. Another thing I’ve learnt is that it takes a lot of energy to avoid things.
The purpose behind producing financial reports is to help people make decisions. If you don’t understand how to read them, that may impact on whether you make a good decision or not.
Have you ever travelled overseas and had to use a translation app or maybe even a book to translate the foreign language? This is like what you need to do with your financial reports. Just like the first time you translate a word, it is hard. Then, as you start to use that word regularly, it becomes easier for you to understand it. Learning the finance language is the same.
The first time you read a financial report it might look like gobbledygook. With practice, and sometimes support, eventually it becomes another skill that you are confident in. There are stories in the numbers. The more you learn to read your numbers the less likely that the story you are reading looks like a horror story.
Start by learning the major terms and relate them to what they mean to you at home. This is often way easier than starting at work.
For example, there are five accounting elements to learn: assets, liabilities, equity, income and expenses (yes, I can see your eyes starting to glaze over. These five elements make up two of the key financial statements. They also have two formulas that don’t change (even if the financial statements’ name does).
Over the next few weeks, I will share with you some ways to learn to read the stories your numbers are telling you.
I would also love to answer any questions you have around this topic. Feel free to ask questions via email learn@magicallearning.com or get in touch with us on LinkedIn or Instagram