3 ms·

I just finished an MBA in June. A few thoughts outside of what’s been mentioned here already: If your company is publicly traded, learn about the variety of SE

I just finished an MBA in June. A few thoughts outside of what’s been mentioned here already: If your company is publicly traded, learn about the variety of SEC filings that most C-level executives are responsible for. In particular, learn how to parse the footnotes of 10K/S1 filings — an income statement might be 1-2 pages but the footnotes are often 30+ pages. The interesting choices a company makes are often in the footnotes. For example, the related party transaction for WeWork’s “We” trademark that everyone was up in arms about appears on page 199 of the filing. Finance is about cashflows. GAAP accounting is about subjectively spreading costs across periods. The two are often at odds. Learning to navigate both and knowing which your audience cares about is critical. You often need years of context about a business to be able to make contributions on this front.

Havoc 6y ago
Just don't call them footnotes if anyone finance-y is around ;)
- pottertheotter 6y ago
  Why do you say that?
  - vmurthy 6y ago
    Not OP but presumably because footnotes are a hack to hide away things you don't want many people to look at [0]. Enron was famous for this and I suspect many fraudulent companies do the same. [0] https://www.bloomberg.com/news/articles/2002-02-03/the-fine-print-how-to-read-those-key-footnotes https://www.bloomberg.com/news/articles/2002-02-03/the-fine-...
  - Havoc 6y ago
    Nobody calls them that in practice so I'd avoid it if trying to sound knowledgable. They're just called notes. Its also quite common for FS to have actual footnotes (ie in bottom margin of page) in addition to notes.
    - pottertheotter 6y ago
      In my experience, I hear and see "notes" and "footnotes" used interchangeably when referring to financial statement notes. I've also not heard anyone react negatively to someone using footnotes instead of notes. Have you run into many people who insist on using only "notes"? For reference, I've worked in finance for several years (investment banking and as a professional public markets investor [hedge fund]), and I also have a PhD with a focus on capital markets disclosure. A quick search finds many examples where "footnotes" is used by the SEC [1], the FASB [2, 3, 4], the CFA Institute [5, 6], KPMG [7], and Investopedia [8], to name a few. I also saw several papers in both The Journal of Finance and The Accounting Review that use the term "footnotes". [1] https://www.sec.gov/reportspubs/investor-publications/investorpubsbegfinstmtguidehtm.html https://www.sec.gov/reportspubs/investor-publications/invest... [2] https://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176168589034 https://www.fasb.org/jsp/FASB/Page/SectionPage&cid=117616858... [3] https://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176163728733 https://www.fasb.org/jsp/FASB/Page/SectionPage&cid=117616372... [4] https://www.fasb.org/resources/ccurl/599/128/ASU%202014-15.pdf https://www.fasb.org/resources/ccurl/599/128/ASU%202014-15.p... [5] https://www.cfainstitute.org/en/membership/professional-development/refresher-readings/2020/introduction-financial-statement-analysis https://www.cfainstitute.org/en/membership/professional-deve... [6] https://www.cfainstitute.org/-/media/documents/support/programs/cfa/2019-L1V3R26-footnotes.pdf https://www.cfainstitute.org/-/media/documents/support/progr... [7] https://www.scribd.com/document/335028195/Disclosure-Overload-Complexity https://www.scribd.com/document/335028195/Disclosure-Overloa... [8] https://www.investopedia.com/articles/02/050102.asp https://www.investopedia.com/articles/02/050102.asp
inopinatus 6y ago
People rag on MBAs but a smart and thoughtful person will take away three superpowers from a typical core curriculum: 1. Understanding the domain language and key processes of all the business units that you didn’t already, which is by the way all of them. The heightened ability to engage in their own domain terms with everyone in a standard company is a social and cognitive upgrade. 2. Finding actionable insights (sometimes dramatically so) within your customers, partners, and competitors financial statements. 3. Recognising your own decision biases. (Whether you bother correcting for them is another matter) Interestingly I feel the most under-rated of these is #1, to the extent that many of us in tech carry the mistaken assumption that we already know all the machinery of firms, having learned it “on the job” or by deriving the existence of tax accounting from first principles. Unless you’ve been a general manager or founder already this is almost certainly a self-delusion. I can say it was for me, I am a mathematics major who appended the MBA twenty years later and despite directing many successful enterprise-scale projects and lurking around Day 1 startups for aeons still had scales removed from my eyes. Never under-rate the value of understanding other people better; there is no diminishing return, quite the opposite, it is compounding.

Havoc 6y ago

Just don't call them footnotes if anyone finance-y is around ;)

pottertheotter 6y ago
Why do you say that?
- vmurthy 6y ago
  Not OP but presumably because footnotes are a hack to hide away things you don't want many people to look at [0]. Enron was famous for this and I suspect many fraudulent companies do the same. [0] https://www.bloomberg.com/news/articles/2002-02-03/the-fine-print-how-to-read-those-key-footnotes https://www.bloomberg.com/news/articles/2002-02-03/the-fine-...
- Havoc 6y ago
  Nobody calls them that in practice so I'd avoid it if trying to sound knowledgable. They're just called notes. Its also quite common for FS to have actual footnotes (ie in bottom margin of page) in addition to notes.
  - pottertheotter 6y ago
    In my experience, I hear and see "notes" and "footnotes" used interchangeably when referring to financial statement notes. I've also not heard anyone react negatively to someone using footnotes instead of notes. Have you run into many people who insist on using only "notes"? For reference, I've worked in finance for several years (investment banking and as a professional public markets investor [hedge fund]), and I also have a PhD with a focus on capital markets disclosure. A quick search finds many examples where "footnotes" is used by the SEC [1], the FASB [2, 3, 4], the CFA Institute [5, 6], KPMG [7], and Investopedia [8], to name a few. I also saw several papers in both The Journal of Finance and The Accounting Review that use the term "footnotes". [1] https://www.sec.gov/reportspubs/investor-publications/investorpubsbegfinstmtguidehtm.html https://www.sec.gov/reportspubs/investor-publications/invest... [2] https://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176168589034 https://www.fasb.org/jsp/FASB/Page/SectionPage&cid=117616858... [3] https://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176163728733 https://www.fasb.org/jsp/FASB/Page/SectionPage&cid=117616372... [4] https://www.fasb.org/resources/ccurl/599/128/ASU%202014-15.pdf https://www.fasb.org/resources/ccurl/599/128/ASU%202014-15.p... [5] https://www.cfainstitute.org/en/membership/professional-development/refresher-readings/2020/introduction-financial-statement-analysis https://www.cfainstitute.org/en/membership/professional-deve... [6] https://www.cfainstitute.org/-/media/documents/support/programs/cfa/2019-L1V3R26-footnotes.pdf https://www.cfainstitute.org/-/media/documents/support/progr... [7] https://www.scribd.com/document/335028195/Disclosure-Overload-Complexity https://www.scribd.com/document/335028195/Disclosure-Overloa... [8] https://www.investopedia.com/articles/02/050102.asp https://www.investopedia.com/articles/02/050102.asp

inopinatus 6y ago

People rag on MBAs but a smart and thoughtful person will take away three superpowers from a typical core curriculum: 1. Understanding the domain language and key processes of all the business units that you didn’t already, which is by the way all of them. The heightened ability to engage in their own domain terms with everyone in a standard company is a social and cognitive upgrade. 2. Finding actionable insights (sometimes dramatically so) within your customers, partners, and competitors financial statements. 3. Recognising your own decision biases. (Whether you bother correcting for them is another matter) Interestingly I feel the most under-rated of these is #1, to the extent that many of us in tech carry the mistaken assumption that we already know all the machinery of firms, having learned it “on the job” or by deriving the existence of tax accounting from first principles. Unless you’ve been a general manager or founder already this is almost certainly a self-delusion. I can say it was for me, I am a mathematics major who appended the MBA twenty years later and despite directing many successful enterprise-scale projects and lurking around Day 1 startups for aeons still had scales removed from my eyes. Never under-rate the value of understanding other people better; there is no diminishing return, quite the opposite, it is compounding.