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  • Ed Patton

New Financial Reporting Category

Updated: Mar 22, 2021

Financial Fundamentals are a new “category” or “space”


What is meant by this is that they, financial fundamentals, have not historically been provided to anyone, especially those who need them the most…the decision makers of small to mid-sized businesses (SMB).


I developed this new category as I have spent a lot of years working in the accounting and financial arena with SMB decision makers. It is a common experience that the decision makers do not comprehend their company’s basic financial fundamentals.

DMs do not grasp their business’s financial fundamentals because they were not being provided by their traditional accounting, financial or business advisors, including me.


Financial fundamentals are often perceived as mysterious concepts. Decision makers instinctively know they are important. It usually becomes a futile process when the decision makers seek clarity of these matters. They often stop seeking this information and proceed to run the business without having this insight.


Without financial fundamentals, decision makers have an incomplete financial grasp of their businesses. By using this new category, which includes financial fundamental’s current status, drivers, and trends, the decision makers significantly enhance their financial sophistication. This new category fills an important and empty financial information hole.


Realizing this basic weakness, I worked through a process of defining, calculating, and conveying financial fundamentals in a succinct manner. After this was accomplished, they were then designed to be updatable with SMBs’ existing balance sheets and P&Ls. This means SMBs do not have to create additional reports.


This updatable process has also been accomplished resulting in financial fundamentals being available to SMB’s via the Trender® Platform (re, Trenders).



Definition of Fundamentals


We all intuitively know what fundamentals are. For the sake of refreshment, a definition of fundamentals from the Internet is… “Fundamental is defined as something that is basic or essential. The definition of fundamental is a basic truth or law.”

The absence of fundamentals, in any of life’s endeavors, including running a business, will impede the chances of success.



The Trenders


The Trenders provide decision makers with financial fundamentals each month. These fundamentals are as follows and are called the 5 Elements® of Financial Fundamentals:

  1. Operating earnings

  2. Cash flow

  3. Financial health (re, liquidity)

  4. Shareholder values

  5. Borrowing capacity

The Trender package includes the following:

  • Financial Report Card (each of the 5 Elements receives an A – F grade…1 page)

  • Summary of the 5 Elements with brief comments of highlights (2 pages)

  • Supporting, condensed graphs and financial statements with up to three years of activities (12 pages)

  • More specifics can then be gleaned by drilling down into the SMB's existing financial reports and accounting records.


This succinct financial fundamental method is effective, efficient, different, and, therefore, a “new category” or “new space” in the financial reporting world.



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