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Finance Basics (HBR 20-Minute Manager Series) by Harvard Business Review

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Tracking Performance

When you prepare a budget or decide on an investment, you can be certain of one thing: The numbers will not be exactly as you predicted. That’s why you need to monitor your results. If they differ significantly from your projections, you can take corrective action. If they are more or less on track, you can be confident that you are in control of the situation.

Performance of an investment

When you evaluate a new investment, you’re planning for the long term—typically a year or more. But if you track your projections monthly, you’ll spot variations early.

Consider Amalgamated’s new Coatrack Division. The senior team ended up using Theodore Bullmoose’s optimistic cash flow projection of $75,000 a year (or $6,250 a month) as ...

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