This week was a whirlwind week. I started with Monday and Tuesday in New York training NBCU for their talent lab. The city was cold but the food was great. I talked my 21 year old daughter into joining me for the New York leg of the trip and we did Union Square Grill on the first night in the city and then Thai Select the next night. Jessica is studying culinary arts in college and these restaurants were both great examples of excellence. I think she was impressed. We also hit the Broadway show Beautiful, about the life and music of Carol King. The show was great, good music and a good story, a little cliché but the music made up for that.
The training in New York was great. NBCU is focused on cash flow. They call it OCF (operating cash flow). In fact they do something interesting with OCF, they take that number for a period and divide it by total revenue to get a cash margin against revenue. It’s a unique way to look at cash flow and the income statement but it seems to work. In this class we focus on the income statement and cash flow and how they connect. The NBCU team is always very organized and on top of their game. This visit was great.
After the New York visit it was on to Burbank for the California leg of the NBCU talent lab finance class. I trained there for one day the weather was much nicer in Burbank, no surprise there. It was a beautiful day for finance. In the Burbank office NBCU has its own talent lab suite. The training room is awesome overlooking the Universal Studios Park and the whole San Fernando Valley. What a great place for a finance class.
This group was great. We had lots of questions and discussion. One attendee said ‘I have been at NBCU for several years and I have been part of the organization through 4 different owners. Every time a new owner bought us the key metrics we focus on change. We went from operating margin to EBITDA and now OCF. Why all the changes?
I thought that was a very interesting and great question. Every business owner looks at a business differently. Certainly this is true for the transitions NBCU has been through. On the other hand I have seen shifts in the way all companies look at their numbers over the years I have been training. In the last 5 years everything is about cash flow. So NBCU is not alone in the cash focus. Before that it was all about EBITDA. That was especially true during the big dot com boom. It seems Wall Street and investors like to find a key number to focus on.
What I have learned over the years is there is not one number that tells it all…not even two or three. To really understand the financial situation of a business one needs to look at several metrics and all three of the statements. Namely the income statement, balance sheet, and statement of cash flow. That is the only way to get a true financial picture of a business.
We looked at all three of these statements for NBCU and Comcast its parent company. Right now things look pretty good for this business. It was a pleasure to train and work with these NBCU leaders.