Thoughts, Ideas, and Theories rooted in reality

Keeping things simple.

Friday, October 14, 2005

R = M * V

What the CEO wants you to know...
This is the current book on my reading list and I have to say my experience thus far has been enjoyable. The book is short, to the point and avoids the long winded theoretical rhetoric of most books of this nature. My one beef so far has been the constant mentioning of Jac Nassar, the oft distraught former CEO of Ford Motor Company. I realize the book came out some years ago, but this guy is spoken of like the second coming for Ford. Hmm. Judging by their stock price, my guess is that his abilities were far from the glorious praise that he was given.

Outside of that the central theme for the book is that of a simple equation:
R (rate) = M (margin) x V (velocity)
It turns out that with this simple equation (which he calls a foundation equation) can be used to figure out all kinds of good financial information about the company. I like that. Math makes things simple!



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