18. The Trend is your Friend
May 01, 2026 03:45
· 4:33
· English
· Whisper Turbo
· 1 speakers
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0:05
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Speaker 1 (18. The Trend is your Friend)
Have you ever put together a jigsaw puzzle? The first thing you do after you dump out all the pieces is probably find the four corners. Your next step will probably be to turn it all right side up so that you can see the colors and the patterns. Then you might find all the straight edges and then you might start organizing the pieces by colors or patterns to match the picture on the box.
0:33
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Speaker 1 (18. The Trend is your Friend)
Your strategy is to arrange the pieces in such a way that you can solve the puzzle with the least amount of brain damage. Take a look at the most recent income statement you received from your accountant or bookkeeper. There's one column of numbers, right?
0:53
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Speaker 1 (18. The Trend is your Friend)
Revenue, cost of goods sold, gross profit, rent, payroll, marketing expenses, employee benefits, website hosting, etc., etc. And finally, there's profits. You have an income statement. So what? One column of numbers does absolutely no good if you don't have anything to compare it to.
1:14
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Speaker 1 (18. The Trend is your Friend)
With no frame of reference, what good is it to know that your profits were $17,600 or that your revenue was $147,200? Think about the last time you made a significant purchase, like a house or a car. Before you made the decision, you shopped around and looked at a number of different houses and cars, right?
1:38
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Speaker 1 (18. The Trend is your Friend)
You didn't just walk into the first house with a for sale sign and say, yep, this is it, I'll take it. In order to make an informed decision, you had to compare and contrast. Same thing with a car. You don't buy one until you've test driven on a bunch. It's why people looking for a relationship go on lots of dates. They're comparing and contrasting potential partners.
2:05
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Speaker 1 (18. The Trend is your Friend)
Most business owners don't receive their financial information in a format that allows them to compare and contrast. They typically get one column of numbers, the current month or the current quarter or the current year. A few of you might get a second column of year-to-date numbers. This is woefully inadequate.
2:30
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Speaker 1 (18. The Trend is your Friend)
Business and financial intelligence starts with multiple points of comparison over numerous time periods. These comparisons must be on a single piece of paper or a single spreadsheet to be meaningful. Comparing this month to last month is a pretty good comparison.
2:50
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Speaker 1 (18. The Trend is your Friend)
But an even better comparison would be to compare this month to last month to the month before. And an even better one than that would be to compare this month to last month to each of the prior six months. If you have 8, 10, 12 columns of numbers instead of just one, you now have multiple points of comparison and the ability to spot trends.
3:18
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Speaker 1 (18. The Trend is your Friend)
In CFO School Board, we solve this problem for you by giving you great optics to spot the trends and make the comparisons. If you have multiple points of comparison, you can easily see how you're currently doing in comparison to how you previously did. That's the only way to know whether you're getting better or you're getting worse.
3:45
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Speaker 1 (18. The Trend is your Friend)
If your income statement is detailed enough in terms of the various expenses, you can start zeroing in on where specific issues and problems are hiding. This is called trend analysis. Without having something to compare the numbers to, financial statements are largely meaningless. Your balance sheet, income statement, and statement of cash flow
4:12
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Speaker 1 (18. The Trend is your Friend)
All must display multiple time periods side by side to be meaningful. Trend analysis is a major component of business intelligence and financial optics. The trend is your friend.
This transcript was generated by AI (automatic speech recognition). May contain errors — verify against the original audio for critical use. AI policy
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