financial-management - LearnEnglish Professionals FINANCIAL...

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Unformatted text preview: LearnEnglish Professionals FINANCIAL MANAGEMENT AUDIOSCRIPT A radio interview with Richard Manors, a chief financial officer, Optional exercise Listen and decide if the following statements are True or False. 1. 2. 3. 4. 5. 6. 7. 8. Richard used to measure business perf ormance mainly by using profit indicators. He learnt about cash flow return on investment on the business course. Richard says that the course taught him that it is important to reduce production costs. North London Concrete’s bonus system depends on improving cash f low. Richard’s first target was to reduce payables. Richard discovered that the average collection period was 35 days. The sales department had to try to sell to customers who paid on time. Only the finance department were able to meet Richard’s first target. Presenter: Now to continue our look at executive education, and its role in financial management, we hav e with us today Richard Manors, Chief financial officer of North London Concrete. Richard, you went on a financial management course a couple of years ago. W hat effect has that had on your approach to management of the company? Richard: It completely changed the way I looked at measuring business perf ormance. Bef ore I went on the course I, like many people in finance, saw profit indicators as the most important measures of perf ormance. The course opened my eyes to a different way of looking at a company’s financial health, by looking at cash flow return on investment. Presenter: How does that work in practice? Richard: You hav e to look at how the company’s cash is deployed. If you don’t know the cost of a product, you’re not really in control of your company. And you need to know what’s happening to cash flow in the company. W hen you’v e analysed all this you can take action to improve perf ormance. At North London Concrete we launched a whole new integrated management system aimed at improving cash f low. W e decided to tie the company’s bonus system, which all our f ull­time employees are entitled to, to f reeing up cash f low. W hen we analysed company cash f low, we discov ered that a lot of our cash was tied up in outstanding receivables, so the first target I set was to reduce receivables collection. W e decided that the average collection period was way too long, and set a goal of reducing it to 35 days. To achieve this both the finance and sales departments had to work towards the goal, finance working on collections and the sales department targeting customers who paid on time. W hen they reached the goal, both teams got their bonuses. Now we hav e less company cash tied up in receivables and payables, and the company’s cash flow situation is much healthier. Presenter: company. So you would say that attending that course has had a very positiv e eff ect on both you and your Richard: Yes, I f eel that I’m really in the driver’s seat now. I know how the company is doing and can see how to improve perf ormance (f ade out). Answers: 1 T, 2 T, 3 F, 4 T, 5 F, 6 F, 7 T, 8 F itishc ouncil.or g/pr of essionals.htm © The British Council, 2007 The United Kingdom’s in ternational orga nisation for educational opportunities and cu ltural relations. W e are registered in England as a charity. ...
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This note was uploaded on 01/10/2011 for the course FSD 201 taught by Professor Huong during the Spring '10 term at Beacon FL.

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