In some businesses, adding units of measure to the reporting in the income statement and supplemental departmental reports can make the reporting package so much more meaningful.

For example, I had a client in the food processing industry.  What we did there was add columns to the right of the numbers to show the results per pound.  That made the numbers much more relevant between periods.

One reason why this is so powerful is that it can take out the impact of fluctuation in prices.  In this particular case, the client primarily processed beef, chicken and other meat products.  The prices on these products would swing very significantly from quarter to quarter.  As a result, for example, revenue numbers could change significantly just based on the changes in commodity prices.  The company had the ability with their customers to be able to pass through those prices increases.

So, without showing per pound information on the income statement, it could look like sales were really growing or falling.  When in reality, it was just a shift in pricing.  True, the sale would be changing, but not on a pound basis, the total pounds sold might still be about the same.

By showing the per pound information, the client could focus on the growth margin level and see whether margins per pound were going up or going down.  That was a much more relevant number than just looking at total sales dollars or total margin dollars.  Having per pound information put it all in perspective.
It also was very useful for costs below the margin line to show how those were doing on a per pound basis.

So, take a look at your business.  Could unit of information be relevant to add to your income statement and departmental expense reporting?  For example, if you are a professional services firm, per hour could be a very meaningful number.  If unit of information metrics could fit, put them on your financial reporting package.  It can make your results pop up in a whole new light.


Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value