Event Recap: Reading the Story Behind the Financial Numbers | HBA

Event Recap: Reading the Story Behind the Financial Numbers

On 15 July 2020, HBA Central New Jersey (CNJ) hosted an educational webinar sponsored by KPMG. This was the third event of the 2020 HBA CNJ six-part series “Accelerating Your Game: From Personal and Corporate Finance to the Boardroom”.  It built upon the previous sessions, "Upping Your Financial Savvy – Maximizing Your Company Benefits" and "Investing in Life, Career and Organizational Success". There were more than 150 registered attendees from around the world, eager to learn from our financial experts. 

The Opening and Keynote


Jennifer Core, partner, KPMG Accounting Advisory Services opened the session and led the group through a review of the key financial statements. 

  • The income statement is the key measure of company profitability. Jennifer explained how to evaluate a company’s performance by looking at financial ratios including gross margin, operating margin and after-tax profit margin. She stressed the importance of trend analysis, which compares the current period to previous periods to see if the company performance is improving or deteriorating. 
  • The balance sheet is a “snapshot” of the company’s financial position (assets, liabilities and shareholder’s equity) at a point in time. Jennifer explained how the balance sheet is used to measure growth, operating efficiency (how efficiently a company is using its assets), profitability and valuation. 
  • The cash flow statement shows how much cash was generated by the company and how it was used for operating, investing and financing activities. Jennifer stressed that it’s important to look at all of the financial statements together to get a complete picture. To learn more about the company strategy, Jennifer recommended looking at the MD&A (for management’s insights) and the 10-K which can be found on any public company’s website and listening to the earnings call. Jennifer closed this informative presentation by touching on the impact of COVID-19 on the healthcare industry. The diverse impacts include short-term revenue increases for certain consumer products, medical and pharmaceutical supply shortages, business uncertainty affecting workplace management and clinical trial delays.

Jennifer fielded several questions from the audience and advised on what to look at if you are:

  • considering employment or board membership (company culture, historical financials, future earnings projections)
  • assuming P&L responsibility (review historical actuals vs. budget for orientation)
  • want to learn more about a private company (check their website and look at peer companies and be empowered to ask about their financials if you are interviewing)

The Panel Discussion

The panel discussion included the following panelists:

  • Lisa M. DeFrancesco, head of investor relations, Intercept Pharmaceuticals
  • Sue Hohenleitner, VP finance, J&J Innovation
  • Katharina Russo, head of finance, CV franchise, Novartis Pharmaceuticals
  • Moderated by Kathleen M. Fitzpatrick, chief financial officer, Management Planning Inc.

The discussion covered a broad range of financial and career topics. Here are some of the key take-aways:

Financial Acumen – Why is it Important?
Financial statements are the language of the company. If you have responsibility for a cost center, business operation, or project where there are cost impacts, you need to be able to put your ideas into a financial context. In order to sell your project to management, be prepared to communicate the key business drivers: NPV, rate of return and portfolio fit (is it contributing revenue at a time when the company needs it). 

Building Financial Acumen
Most importantly, don’t be intimidated. You don’t need a finance degree to build your knowledge. Don’t say “This might be a stupid question…..”, instead be confident in what you already do know. Investopedia is a great basic resource to learn more about financial statements. Attend a company earnings call or read the business section of the latest 10K. Look at the company’s external investor site. Find a friend in the field and ask questions – most people are happy to share their knowledge. Through the polling questions, we found that over 75 percent of the audience had listened to an earnings call or reviewed their company’s financial statements. You probably know more than you think you do.

Financial Statement Highlights
The cash flow statement is critical – it shows what the company is doing with its money. Is it providing stable dividends and investing in business building activities? Also, pay attention to sales and earnings trends – can the company consistently deliver on growth and profit. 

Red Flags
Trend breaks (vs. prior quarter or year), changes in future earnings projections (need to understand the “why”). Breaking news that’s not yet in the financial statements.  

What does “Good” look like? 

  • Biotechs: It depends on the life cycle. For an early-stage company with no marketed products, efficient management of expenses and cash is important. For a mid-stage company with one or two newly marketed products, sales and Rx growth are key metrics. For an established biotech, are they adequately funding the pipeline for new products? The company may still not be profitable at this point.
  • Diversified companies (Pharma, Med Device): Historical performance and pipelines are public information. What is the source of their revenue (internal product line, collaborations, royalties)? Many companies have narrow portfolios with only a handful of blockbuster products. Benchmarking to peers and understanding the competitive landscape is important.

COVID-19 Impact
Join the company earnings call to learn more about this topic. This is where management will address these concerns. The potential impact will be based on forward indicators, not the historical financial statements.


Stephanie Stevens took post-session Q&A and thanked KPMG for sponsoring this event.
Next up: “Understanding Your Net Worth”, coming in September

Author: Phyllis Feeney
Contributor: Lisa Yates