PART I: Financial Thinking

Financial analysis doesn't win competitions. Financial insight does.

Video: Financial Analysis in Cases: Situation Review, Modelling, and Sensitivity

Case competitors sometimes approach finance as a separate part of the case: analyse the strategy first, then add numbers to prove the recommendation works. Strong financial thinking starts much earlier. The numbers can help you understand what is happening, why it is happening, how significant the problem is, and whether the organisation can afford to do something about it. They can reveal problems that are not obvious from the narrative and challenge assumptions that initially seem reasonable.

Financial statements provide the foundation for that thinking. But reading the statements is only the beginning. The real skill is connecting the numbers to the business:

What is changing?
What is driving the change?
Why does it matter?
What does it tell us about the problem?
What decision should it influence?

Throughout this manual, resist the temptation to calculate simply because you can. Every calculation should help you understand the organisation or make a better decision.