How does one employ corporate governance to improve internal management? How does one allocate (or re-allocate) finance to improve earnings? As per Edward’s earlier blog, it depends…This is one of many things we learned from Financial Reporting. When reading balance sheets, income statements and deriving cash flows, it all depends…

Who would have thought that Financial Reporting could be so philosophical? After enduring the mock exam during Lecture 6, we were further reminded by Paolo Quattronne that Financial Reporting is driven by greater motivations than numbers and figures… that it is furthermore our responsibility, as students of an institution that has been educating leaders for more than 800 years, to question these motivations and institutions…

From a more technical aspect, we learned that whilst some parts of the balance sheet reveal insights into the effectiveness of internal management, others provide a way to measure the management of external, market-facing resources i.e. finance and capital.

So a firm can improve its enterprise value by considering internal aspects – operational efficiencies and the value of the services launched to a market…

Alternatively or in combination, re-allocation of finance and capital can have an equally compelling impact on enterprise value.

Considering this on a personal level, it occurred to me that the same methodology can apply to any individual embarking on the Oxford Executive MBA. To complete this journey, which is not an easy one by any measure, you need to effectively manage your own internal resources whilst simultaneously managing your external social i.e. market capital… this being the relationships and energy which nurture your internal resources.

It seems that the rules which apply to a firm are the very same which apply to an individual… You need to know who you are (organisational structure and branding), where you’re going (strategy), how you’re going to get there (operations), why you want to get there in the first place (marketing and corporate social responsibility), and how you’re going to tell the world (financial reporting)…

And if you’ve done your homework, your earnings – whether or not you choose to pay them out as dividends (roof terrace party?!? See my earlier blog), together with capital appreciation… will sum up to a greater return on your own fixed and current assets…