Tag Archives: Consultant

Looking Good. . . . and the Power of #Reputation

8 Jan

Times Higher Education

During a quiz, two students start whispering in the back and lose points for cheating. Later, “Teacher, please don’t take away our points! We weren’t cheating. We promise. You should trust us!” 

To be honest, maybe 75% of the time, the students AREN’T cheating – just bored.  But it LOOKS bad. 

The problem is a matter of REPUTATION. People trust their eyes. If it looks like you do questionable things (behaviors that look bad), people will not trust you when you say you are innocent. They will trust what their eyes tell them.  

Example: You do not always follow the rules and make a note of the money you spend at the company. Suddenly, some goes missing while you were in charge. No matter what excuses you make, even if you are very honest, people will often see missing money and a careless worker and be suspicious that you stole it. 

Example 2: You take things from the company without permission. Small things — stuff no one really cares about. Pens. Paper. Staples. Toilet Paper. Coffee Pot. $1 or $2 from the register to buy a soda here or there. Maybe you take a meal without paying. Sneak an extra bread roll off the shelf. Then one day, $300 goes missing from the register you have access to. Suspicion turns on you.  What exactly is your defense?  “Guys! You know me! I wouldn’t do something like that!” . . . . Yeah, we do know you. You take small stuff, why would we believe that there is some magic limit on the big stuff?  Even if you are completely 100% innocent, it’s harder to prove your case. 

Real World Example: A teacher frequently talks to students alone in his office with the door closed. He hangs out with several of the female students. He goes out to dinner with one of them (a lot). He gives her presents (Christmas, her birthday). He helps her study for classes. He invites her to the faculty Christmas party as a student friend.  Students start asking questions . . . . Then the teachers start asking questions.  Even though the guy was never ACTUALLY caught having a relationship with this student, it sure looked bad. So when students complained to the administration, he was fired. It simply was too questionable. Whether or not something bad REALLY happened, no one knows. But he put himself in a situation where it was questionable. People weren’t sure. MAYBE he could have done it. 

Don’t be that person. 

One of the lessons I hope my students remember in the future is that it is not enough to “be a good person” — you must also LOOK like a good person. It’s simple risk management.  Never put yourself in a situation where there can be any QUESTION as to your morality. Be the person where, when someone says “They say he stole money from the company!” the people around you respond “Him? Never! He’s not that kind of person. I’ve seen him at work and he is a good man.” 

Corporate Finance – What is the Balance Sheet?

27 Apr

**As always, my work is designed with Chinese ESL student in mind. Please consider this when reading.

Corporate Finance has 3 main types of Financial Documents:

  • Balance Sheet ~ Value of the Company (How it is divided between Debt and Equity)
  • Income Statement ~ Specific Use of Assets and Liabilities
  • Cash Flow Statement ~ How Cash is Handled from the moment it enters the company until it leaves.

Balance Sheet

We all know that Revenue has to be bigger than Costs/Expenses if the company is going to be successful (Revenue – Cost = Profit). And if you are a financial manager, your legal responsibility is to increase profits for the Shareholders (earn a profit). 

However, for years all that companies worked with were Income Statements. Unfortunately many of them quickly realized they could hide money away in methods not put on the Income Statement. Not only that, but the Income Statement didn’t really outline all of the important factors used in looking at Profit.  So now we have the Balance Sheet -a financial document intended to make everything more honest and clear.

The Balance Sheet summarizes the Assets, Liabilities, and Equity at a certain date.

  •    It is an overall summary of what the company looks like. 
  •   It explains to the Business how well the company is functioning
  •   It explains to Owners how well their Equity is doing
  •   In general, it tells us if the company will be profitable or not.

For example, how much is the company worth July 2016?

General Equation (Assets = Equity – Liabilities)

  • Assets = Everything owned by the company.  Obtained by either creating capital or obtaining debts (borrowing money)
    • Current Assets –Assets that will be turned into cash within 1 Year
    • Long-Term (Fixed) Assets – Assets that will be turned into cash within more than 1 Year
    • Intangible Assets – Assets that you cannot see, but that still exist
  • Liabilities = All the debt the company has to pay
    • Current Liabilities—Debts to be paid this year.
    • Long-Term Liabilities—Debts to be paid in more than 1 year.
  • Equity (Net Worth) = Assets – Liabilities (The Company’s Value for the owners)
    • Owner’s Equity (Owner’s Investment – Owner’s Withdrawals from the Company +/- Net Income/Loss)
    • Retained Earnings
    • Net Profits or Losses


The Balance Sheet will be organized according to the “Liquidity” of the category (meaning how quickly that category of assets, liabilities, or equity can be changed into cash). The farther down the list we go, the less liquid the categories become.



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