A unique way to convert unreadable financial statements into a Treasure Map. Use the map to tell a story and go on a Treasure Hunt to find hidden riches within your business

1. Turn Your Financial
Statements into a
Treasure Map
Mick Holly & Andre Gien
Turn Your Financial
Statements into a
Treasure Map
Mick Holly & Andre Gien

2. To most people, reading
financial statements is like
trying to decipher ancient
hieroglyphics before the
discovery of the Rosetta Stone

3. Yet business performance and
individual careers depend on
making sound financial
decisions

4. Financial statements are not black
and white
They are multi color –there is a
huge difference whether you are
in the red or you are in the black
Help, I’m color blind!

5. Do you sit in endless budget
meetings where an array of
spreadsheets are shown?
The presenter takes you through
every line, every calculation.
Yet when the meeting is over
you are even more confused!

6. Of course there is always the
toady looking to please the
boss using fancy terms they
don’t really understand - like
EBITDA

7. Don’t worry.
You can become a Financial Jedi
by learning how to Turn
Financial Statements into a
Story complete with a Treasure
Map!
(and yes, you can advance your
career too)
CONVERT DRY SPREADSHEET
NUMBERS into an EXCITING STORY
The STORY has 3 AMAZING
CHARACTERS engaged in eternal
conflict
Boil down the statements into
2 BUILDING BLOCKS
Reveal the STORY in
5 EASY CHAPTERS
Create a TREASURE MAP
Embark on a TREASURE HUNT to
reveal HIDDEN RICHES

8. Once Upon A Time…
There were 3 characters:
Vanity, Sanity & King
“Revenue is Vanity, Profit is
Sanity and Cash is King”
All you need is observe the
behaviors of the 3 characters in
your own organizations.
Their choreography mimics the
relationships between the Income
Statement, Balance Sheet &
Statement of Cash flows.
An effervescent chap.
Tries to sell his way
out of problems.
All about the bottom
line. Sees black and
white and hates being in
the red!
Lovingly counts the cash.
Dislikes surprises.

9. Two things successful businesses
must do:
• Make Money
• Generate Cash $$$$
Sadly, most people don’t know
the difference between the two.
A business has to make money or
“profit.”
But you can’t spend profit—it is an
accounting concept.
Profits are used in the balance
sheet to create cash and we know
we can both spend and invest cash!
Let’s give you two building blocks
-- a simple way to look at these two
ideas…

10. The Money Making Machine
The purpose of the Income
Statement (aka The Money making
Machine) is:
• Convert Vanity’s sales into
Gross Profit
• Sanity manages our costs (both
Cost of Goods Sold and
Operating Expenses)
• To deliver Gross & Operating
Profits
• After tax and distributions
• We’re left with Retained
Earnings
Retained Earnings is the Equity
Fuel we inject into our Wealth
Creation Engine

11. The Wealth Creation Engine
(Aka The Balance Sheet)
We have to fund our business. The
funds come in only two forms:
• Use Our Own Money (Equity)
• Borrow Other Peoples Money
(Interest bearing Debt)
We use these funds to make
investments in things like:
• Cash in our bank account
• Non cash items like
• Buildings, equipment
• Working capital
NB Because the Balance Sheet has
to—well, balance, Funding always
equals Investments

12. The Wealth Creation Engine
(Aka The Balance Sheet)
Retained Earnings
is our Equity Fuel
Our Investments help
support Vanity’s sales in the
Money Making Machine
The trick to managing wealth
creation and cash generation is to
operate the engine as efficiently
as possible.
We don’t want to consume our
precious equity fuel with
unnecessary working capital or
other bloated non-cash assets.
We want to generate as much
cash as we can to keep the King
happy and let him make the
investments to support Vanity and
Sanity

13. How Our Two Building Blocks Work Together
The investments
help Vanity
make Sales
Sanity watches
price and costs
The Money Making
Machine spits out
Retained Earnings
Retained Earnings is the
fuel for our engine
The King
manages
the cash

14. The Story
Told in 5 easy chapters
Once the chapter structure is
mastered you can tell the story
of any business in just a few
minutes.
The story gives you clues to
treasure within your business
that is hiding as costs or
wasted capital
….let’s review what each
chapter is about…
Chapter1: Quality of Revenue
Growth
Chapter 2: Superior
Profitability
Chapter 3: The Hunger
Measure
Chapter 4: Cash
Chapter 5: Return on Capital
Employed

15. Chapter 1:
Quality of Revenue Growth
A focus on how sales revenues are
growing (or shrinking perhaps) over
time
Key Insight: Not all growth is
good growth!
Example: Vanity wins a big order
but discounted price and agreed the
customer could pay in 60 days not
30 days
WARNING: This growth upsets
Sanity as profit is lower and worries
the King as more cash is tied up in
working capital
Mostly the
domain of Vanity
Key Areas a great Vanity will
consider:
• Rate of growth
• Do the new sales have the right
margin?
• What is the impact of
discounting?
• What does this new revenue do to
the King’s cash?

16. Chapter 2:
Superior Profitability
Sanity is the lead character for
this element of story
Vanity grew sales 20%! Well
done!
Sanity’s key imperative is to
manage our cost base well such
that:
Profitability (EBIT)% grows faster
than our revenue growth %
So in this case—if our EBIT grew
more than 20%, then we define
that as superior profitability
He is keenly focused on keeping
cost growth lower than sales
growth
Sanity keeps a
weather eye on
price and discounts.

17. Chapter 3:
The Hunger Measure
“There is a huge difference between
the business that grows and requires
lots of capital and the business that
grows and doesn’t require capital.”
Warren Buffett
Chapter 3 is a team effort
Describes how hungry our Wealth
Creation Engine is for Working
Capital
Working Capital is a fancy name for
the cash consumed by the engine:
• Accounts Receivable (money we
owe our customers)
• Inventory (that we need to service
them)
• Accounts Payable (money our
suppliers owe us)
So as we grow we want to ensure:
• Our new customers pay us as
promptly as our old ones
• Vanity & Sanity work with
customers and suppliers to keep
our inventories down
• We get friendly terms with our
suppliers

18. Chapter 4: Cash
This chapter is the
domain of the King!
A lack of cash or unpredictable cash
flows can be the slayer of any
business.
When companies are struggling to
find cash to pay suppliers or make
investments they chase cash in this
chapter
NB: Chapter 3 Cash is the
OUTCOME of what our 3
characters do in Chapters 1, 2 & 3!
So if lack of cash is an issue you must
go and search for the answer in those
first three chapters
Cash is the lifeblood of any business.
Companies are valued on the quality
of their future cash flows
The more cash the King has the
greater his flexibility. If he is awash
with cash he does not need to borrow
money from the bank for example if
he wishes to pay out dividends or
fund additional investments

19. Chapter 5: ROCE
Return On Capital Employed
ROCE is a measure of the value
creation ability of a business
For example,
ROCE of 20%
simply means for every dollar
invested in the business, it generates
20c
Chapter 5 is a product of the first 4
chapters
You don’t need to know the
equation. Practically, it is:
the profitability of the Money
Making Machine times
the efficiency of the Wealth Creation
Engine
X
= ROCE

20. Creating The Treasure Map
Now the fun can begin. Use a
whiteboard or large sheet of paper
and draw up boxes for:
• Money Making Machine
• Wealth Creation Engine
• The Financial Story
Use post it notes to enter key data-
you don’t need the endless numbers
in the statements—just a few like
revenue growth, profitability etc.
We like to add two extra boxes on
the bottom:
• Clues
• Treasure
Play the roles of Vanity, Sanity &
the King and go on your Treasure
Hunt!
You will become Financial
Wizards and never have to sit
in a boring budget meeting
again!

21. We combine The Characters, Story & Building Blocks into a Treasure Map

22. If you enjoyed this brief on The
Treasure Map Methodology please
visit us at
Mick Holly
Chief Treasure Hunter
Andre Gien
Chief Evidence Wizard
Click here to
download a
portfolio of
Treasure Maps
that will give you
ideas how to find
hidden treasure
within your
business