Communicating financial information within the company by means of computer modelling

Abstract

More and more it is becoming accepted that the most important training exercise to be carried out within the company or the organisation is that of improving the economic performance of the whole firm working as a fully‐integrated unit. This is a continuing responsibility of management: it is never completed. This policy of continuously improving performance has to involve all employees at all levels and for it to work properly responsibility for improving performance has to be accepted throughout the firm. This implies that all employees need to be kept fully informed about current levels of performance and how they compare with commercial rivals and how they compare with the firm's own performance at earlier stages. How to prepare relevant information quickly enough to be of use in improving performance and how to communicate performance details to employees is one huge topic which is going to dominate in‐plant training in the immediate future. Speed suggests the use of some computerised system. Here is one early approach to this problem which will serve to introduce readers to this new topic. The model used in this example is that contained in the training package MONEY FLOWS. Now read on. Editor The package MONEY FLOWS was reviewed by John Wellens in ICT October 1977 …: ‘A first class pack which I shall be using myself and which I unreservedly recommend. JW’ Based on original ideas by ICI Ltd., the pack had been developed by the Chemical and Allied Products Industry Training Board (CAPITB) and issued as a build‐up chart and tape presentation for passing financial information to employees. The mythical company Chemcap was used as the model for demonstrating how the holding and movement of money in an organisation can be likened to the flows and storage in a water system. Figure 1 depicts the Working Capital and Fixed Capital as compartments in a storage tank which has a scrap (depreciation) leak in the bottom. The subsequent nine charts, in flip arrangement, build‐up to show the money flows in and out of the tank. The final build‐up of overlays is shown here as figure 2. Those familiar with energy calculations and demonstrations will detect that a Sankey diagram (a heat balance done graphically) style has been used to display the money flows. A feature of the Sankey layout is that everything can be drawn to scale and must add up — most important where money is concerned!

Citation

BOWKER, G. (1982), "Communicating financial information within the company by means of computer modelling", Industrial and Commercial Training, Vol. 14 No. 7, pp. 232-236. https://doi.org/10.1108/eb003894