hello everybody its I’m very happy to be
here and let me start with one very
simple but a very very important
question how do you think who has a best
marketing Apple coca-cola any other
ideas Facebook okay great so my point is
that marketing itself has a best
marketing and it should be very logical
and understandable like top-rated big
four audit companies should have their
financial reports in the best possible
shape yes like IT companies should have
the fewest problems for their internal
networks yes like sales consultants
should sell their product in the best
possible way and so many other examples
and what about finance actually as you
know we have three main directions in
business education finance marketing and
management yes and we did research and
our main question to our sample group
was the following how do you think what
is your perception which one from these
three directions which one is the most
creative one which one is the most
charismatic one and which one needs to
think outside the box most of all most
of all yes and to exclude some kind of
biases in our sample group we did not
have any person related to these three
directions and here we are what kind of
results we received eighty-eight percent
of our sample group saw that this is a
marketing sort that marketing itself is
the most creative one you know and 12
percent believes this is management you
can already guess for finance we have
remained only zero percent can you
imagine it zero percent actually to
clarify it does not mean that nobody
considered the finance but number of
this kind of answers was so small that
mathematically it is equal to zero
and first time when I saw these results
my first impression my first finding was
that for sure
finest needs just more marketing yeah
today I will illustrate several
comparisons between marketing and
finance while marketing has such a good
level of marketing and what’s the
problem with finance I will start my
discussion with comparison of markup and
margin and let me give you one precise
example company has something which wars
for 100 euros okay and company’s solved
it for 125 euros what was the profit
easy to find out just 25 euros yes but
in terms of percentage what was the
profit there’s a question and here we
are marketing and Finance will compare
the situation from completely different
perspectives so marketers will generally
calculate how much this 25 percent was
computing to 100 euros yes and this is
25 percent because marketers will assume
that because of good marketing it was
possible to sell something for 125 euros
when it cost just 100 euros yeah so 25
percent will be the profit but what
about finance finance will be more
conservative and we’ll calculate that
the most important issue is that we sold
it for 125 euros and from this 125 euros
what was our profit again 25 euros yes
but if we calculate 25 euros comparing
to 125 euros and this is gross margin of
course the result will be 20% yes so for
exactly the same situation marketing
told us that our profit is 25 percent
and Finance told us that our profit is
20 percent for exactly the same
situation unbelievable yeah next example
is computing some kind of expenses let’s
say general speaking whenever marketing
department has some kind of expenses
generally these expenses are estimated
like net amounts yes but if we have to
pay some
maybe taxes on these net amounts of
course this taxes matter very much yes
and finest people will for sure consider
all including taxes or gross amount for
expenses again for the same situation
completely different understandings from
these two perspectives and my final
comparison today will be let’s say what
kind of terminologies to behave in
marketing a lot of them but here are
just several examples like for P like
CRM like b2c b2b and a lot of others yes
and when I thought about this kind of
terminologies I found it out in myself
that these terminologies are like very
good brands for themselves yes like very
very sexy brands but on the other hand
what do we have in finance in finance we
have something like a seed test a cheap
test unbelievable yeah okay at the same
time I was very curious what kind of
jokes do we have about marketing and
what kind of jokes do we have about
finance and here we are this is 10 funny
jokes only marketers will get and even
the name has very good marketing yes and
one of the jokes we had in this article
was following one marketer is telling to
another one you know my accountant asked
me how much salary do I have and I
answered her you know two cents per one
click very cute
yes and and what about finance here is
the one from my book from financial
analysis in practice and the joke is the
following there was one very successful
company and in this successful company
there was one chief accountant and she
was like considered as a very good
employee and worked for this company for
several years so was very successful
management appreciated her but had just
one very very strange habit and the
habit was that each and every morning
this person went to a secret
screwdrivers opened it looked in it did
not take anything or did not put
anything aside just looked in it and
only after that started to work so for
sure everybody was so curious what’s
happening what’s the issue and after
some years they found it out the issue
is that there’s just one paper the big
paper in this sacred screwdriver and
it’s indicated deputies on the left side
and creditors on the right side so even
in terms of jobs if you compare even
jokes about these two disciplines even
in jokes we have unbelievable big
differences yes
so finance definitely needs just more
marketing according our research
people’s perception was that finance is
very straightforward
very boring you don’t need thinking
outside the box and I want to illustrate
why finance is not straightforward it’s
very important for me as a finance
person is for sure so first comparison
will be corporate finance and financial
reporting corporate finance you will
agree with me is one of the most
important directions in finance and
corporate finance gives us the rule that
you cannot make the sum of two or more
different amounts if they are not at the
same timeline yes and this is very
important rule but on the other hand
financial reporting is telling us that
for example if you are preparing the
financial report let’s say profit and
loss statement you have to make the Sam
for each and every month for each and
every expenses for the whole year yes so
again different perspectives is the
computer financial and tax reporting
they can be completely different and in
terms of both of them you have to make a
lot of decisions you have a lot of
flexibility and it’s not at all
straightforward yes it depends on many
issues and many general reports this is
my favorite example because you don’t
have any kind of regulations any kind of
rules or principles whenever you are
preparing the managerial report and you
have to be very creative to develop the
one which will be very helpful for
better decision making process you have
to think outside the box you have to
consider what in
how to include and what exclude from the
calculations so without any kind of
limitations you have to be very creative
of course it’s not a straightforward
okay but just finance needs better
marketing at the same time I will give
you one example
why fineness definitely needs thinking
outside the box and I will illustrate
this important question for me just on
based on one formal which is very
important in finals and maybe a lot of
you know about it this is return on
equity and this is net income divided to
equity which means if we want to know
how much net net income company
generated in computing – its equity at
the one hand it seems to be very simple
yes because we have just one number in
the numerator and one number is the
denominator how it can be more simple
yeah
just one number and one number but on
the other hand you have to consider a
lot of different issues to analyze this
simple formula you have to be sinker
outside the box to consider many many
issues to find out what’s that really
cents real economic understanding behind
the formula and let me tell you why
because for example which equity do we
have here in the formula is it the one
which company had at the beginning of
the period or is it the one which
company had at the end of the period or
maybe the average of this choice yes at
the same time what kind of financial
standards company is using we never
prepared the financial reports is it
international financial reporting
standards IFRS is it generally accepted
accounting principles or maybe it’s it
is international financial reporting
standards for small and medium
enterprises and lots of different yeah
and it makes a big difference because
many many issues can be differently and
can affect net income and equity both of
them at the same time for example what
kind of decisions
management of the company made related
to inventory methods related to
depreciation methods related to reserves
how reserves are estimated and
calculated related to leasing decisions
and a lot of others so many many
decisions can huge effect on net income
and inequity on this simple formula yes
at the same time for example what kind
of policy company has four dividends
let’s assume that we have compare we are
comparing two companies and want to
understand which is more attractive in
terms of return on equity if we want to
consider both of them a computer both of
them we have to consider very very
important issue about dividend policy
let me give an example if one company
just before the end of the period
declared and paid out the dividends what
happened a net income remains the same
but equity decreased yes because return
ending decreased it means that in this
formula if equity is the same and if net
income is the same and equity has
decreased it means that return on equity
of course got it more attractive yes
just because of dividend payment maybe
another company’s more attractive but
but because of this just one decision
the first one seems like to be more
attractive and a lot of other
perspectives so you have to very very
creative you have to consider a lot of
issues even for this one simple formula
at the same time don’t be afraid we will
not discuss in details just very briefly
maybe some of you know this is coupon
analysis which is very important tool
for understanding return on equity
structure of return on equity what
derived return on equity was it return
on assets or was it just financial
leverage so just to give you an idea we
have to consider everything we have here
on this diagram to understand this where
is the formula we started to discuss
Roy okay I tried and probably and
hopefully it was trade it Y finance
definitely needs thinking outside the
box and why it’s not the straightforward
discipline but at the same time I want
to show you what can happen whenever
finance finds some tricky marketing and
I will give you an example as a real one
which happened in 2013 in Georgia where
I am from and it was some new loan one
bank introduced at the market and the
loan was very very successful it was
very successful
and down payment was 8% it was not
ordinary annuity but it was it had
promotion like it’s 48 percent and
comparing to the market on average it
was something like 13 percent during
this year on the market in Georgia so it
seemed to be very attractive and the
issue was that for example if we wanted
to take twelve thousand euros for this
twelve thousand years you had to make
the payment as a down payment eight
percent which is 960 euros and the
remaining amount you could take and etc
if the product is for one year it means
that for 12 months you had to pay the
same amount which is 4000 euros divided
into twelve one thousand two rules and
they stated that they did not have any
other Commission no penalties no
commissions and on the market there were
a lot of different commissions and a lot
of different penalties for any kind of
loan so the product was something
different and it was very very popular
but what is the issue the issue is that
if we can calculate what is the
effective rate for this particular loan
and it’s very simple if we calculate
this is almost sixty percent even more
than average market rate we have on the
market but it had good marketing and
because of good marketing it was very
directive very popular and a lot of
customers he was alone yeah
why the effective rate was so different
because in the product we had the
initial payment yes and it was not
ordinary annuity and more interesting
thing about this product is that they
stated that you know if you make any
kind of prepayment it’s okay for us we
will not penalize you yeah
on the one hand it seems also very
interesting because for other products
if you made some kind of pre payments it
was some 2% penalty in this case no but
if we understand the product it was only
for their benefit if we made the
prepayment because all the interest
expense was already paid yes even in the
best case scenario if I take the loan
today
I’ve made all the 8% payment out and
I’ve with prepayment just cover the
whole loan tomorrow it will be the best
scenario yes for sure okay
my point is that here accordingly the
promotion of course this marketing did
not share the whole information to the
market yes it was not the whole picture
it was not 100% true but personally I
believe that this is very often when we
are discussing something about marketing
yes okay
my next point is that not only for
finance but finest financial people also
need better marketing and to be
perfectly honest that’s why I am here
today
so failing tank
[Applause]
[Music]
[Applause]
here and let me start with one very
simple but a very very important
question how do you think who has a best
marketing Apple coca-cola any other
ideas Facebook okay great so my point is
that marketing itself has a best
marketing and it should be very logical
and understandable like top-rated big
four audit companies should have their
financial reports in the best possible
shape yes like IT companies should have
the fewest problems for their internal
networks yes like sales consultants
should sell their product in the best
possible way and so many other examples
and what about finance actually as you
know we have three main directions in
business education finance marketing and
management yes and we did research and
our main question to our sample group
was the following how do you think what
is your perception which one from these
three directions which one is the most
creative one which one is the most
charismatic one and which one needs to
think outside the box most of all most
of all yes and to exclude some kind of
biases in our sample group we did not
have any person related to these three
directions and here we are what kind of
results we received eighty-eight percent
of our sample group saw that this is a
marketing sort that marketing itself is
the most creative one you know and 12
percent believes this is management you
can already guess for finance we have
remained only zero percent can you
imagine it zero percent actually to
clarify it does not mean that nobody
considered the finance but number of
this kind of answers was so small that
mathematically it is equal to zero
and first time when I saw these results
my first impression my first finding was
that for sure
finest needs just more marketing yeah
today I will illustrate several
comparisons between marketing and
finance while marketing has such a good
level of marketing and what’s the
problem with finance I will start my
discussion with comparison of markup and
margin and let me give you one precise
example company has something which wars
for 100 euros okay and company’s solved
it for 125 euros what was the profit
easy to find out just 25 euros yes but
in terms of percentage what was the
profit there’s a question and here we
are marketing and Finance will compare
the situation from completely different
perspectives so marketers will generally
calculate how much this 25 percent was
computing to 100 euros yes and this is
25 percent because marketers will assume
that because of good marketing it was
possible to sell something for 125 euros
when it cost just 100 euros yeah so 25
percent will be the profit but what
about finance finance will be more
conservative and we’ll calculate that
the most important issue is that we sold
it for 125 euros and from this 125 euros
what was our profit again 25 euros yes
but if we calculate 25 euros comparing
to 125 euros and this is gross margin of
course the result will be 20% yes so for
exactly the same situation marketing
told us that our profit is 25 percent
and Finance told us that our profit is
20 percent for exactly the same
situation unbelievable yeah next example
is computing some kind of expenses let’s
say general speaking whenever marketing
department has some kind of expenses
generally these expenses are estimated
like net amounts yes but if we have to
pay some
maybe taxes on these net amounts of
course this taxes matter very much yes
and finest people will for sure consider
all including taxes or gross amount for
expenses again for the same situation
completely different understandings from
these two perspectives and my final
comparison today will be let’s say what
kind of terminologies to behave in
marketing a lot of them but here are
just several examples like for P like
CRM like b2c b2b and a lot of others yes
and when I thought about this kind of
terminologies I found it out in myself
that these terminologies are like very
good brands for themselves yes like very
very sexy brands but on the other hand
what do we have in finance in finance we
have something like a seed test a cheap
test unbelievable yeah okay at the same
time I was very curious what kind of
jokes do we have about marketing and
what kind of jokes do we have about
finance and here we are this is 10 funny
jokes only marketers will get and even
the name has very good marketing yes and
one of the jokes we had in this article
was following one marketer is telling to
another one you know my accountant asked
me how much salary do I have and I
answered her you know two cents per one
click very cute
yes and and what about finance here is
the one from my book from financial
analysis in practice and the joke is the
following there was one very successful
company and in this successful company
there was one chief accountant and she
was like considered as a very good
employee and worked for this company for
several years so was very successful
management appreciated her but had just
one very very strange habit and the
habit was that each and every morning
this person went to a secret
screwdrivers opened it looked in it did
not take anything or did not put
anything aside just looked in it and
only after that started to work so for
sure everybody was so curious what’s
happening what’s the issue and after
some years they found it out the issue
is that there’s just one paper the big
paper in this sacred screwdriver and
it’s indicated deputies on the left side
and creditors on the right side so even
in terms of jobs if you compare even
jokes about these two disciplines even
in jokes we have unbelievable big
differences yes
so finance definitely needs just more
marketing according our research
people’s perception was that finance is
very straightforward
very boring you don’t need thinking
outside the box and I want to illustrate
why finance is not straightforward it’s
very important for me as a finance
person is for sure so first comparison
will be corporate finance and financial
reporting corporate finance you will
agree with me is one of the most
important directions in finance and
corporate finance gives us the rule that
you cannot make the sum of two or more
different amounts if they are not at the
same timeline yes and this is very
important rule but on the other hand
financial reporting is telling us that
for example if you are preparing the
financial report let’s say profit and
loss statement you have to make the Sam
for each and every month for each and
every expenses for the whole year yes so
again different perspectives is the
computer financial and tax reporting
they can be completely different and in
terms of both of them you have to make a
lot of decisions you have a lot of
flexibility and it’s not at all
straightforward yes it depends on many
issues and many general reports this is
my favorite example because you don’t
have any kind of regulations any kind of
rules or principles whenever you are
preparing the managerial report and you
have to be very creative to develop the
one which will be very helpful for
better decision making process you have
to think outside the box you have to
consider what in
how to include and what exclude from the
calculations so without any kind of
limitations you have to be very creative
of course it’s not a straightforward
okay but just finance needs better
marketing at the same time I will give
you one example
why fineness definitely needs thinking
outside the box and I will illustrate
this important question for me just on
based on one formal which is very
important in finals and maybe a lot of
you know about it this is return on
equity and this is net income divided to
equity which means if we want to know
how much net net income company
generated in computing – its equity at
the one hand it seems to be very simple
yes because we have just one number in
the numerator and one number is the
denominator how it can be more simple
yeah
just one number and one number but on
the other hand you have to consider a
lot of different issues to analyze this
simple formula you have to be sinker
outside the box to consider many many
issues to find out what’s that really
cents real economic understanding behind
the formula and let me tell you why
because for example which equity do we
have here in the formula is it the one
which company had at the beginning of
the period or is it the one which
company had at the end of the period or
maybe the average of this choice yes at
the same time what kind of financial
standards company is using we never
prepared the financial reports is it
international financial reporting
standards IFRS is it generally accepted
accounting principles or maybe it’s it
is international financial reporting
standards for small and medium
enterprises and lots of different yeah
and it makes a big difference because
many many issues can be differently and
can affect net income and equity both of
them at the same time for example what
kind of decisions
management of the company made related
to inventory methods related to
depreciation methods related to reserves
how reserves are estimated and
calculated related to leasing decisions
and a lot of others so many many
decisions can huge effect on net income
and inequity on this simple formula yes
at the same time for example what kind
of policy company has four dividends
let’s assume that we have compare we are
comparing two companies and want to
understand which is more attractive in
terms of return on equity if we want to
consider both of them a computer both of
them we have to consider very very
important issue about dividend policy
let me give an example if one company
just before the end of the period
declared and paid out the dividends what
happened a net income remains the same
but equity decreased yes because return
ending decreased it means that in this
formula if equity is the same and if net
income is the same and equity has
decreased it means that return on equity
of course got it more attractive yes
just because of dividend payment maybe
another company’s more attractive but
but because of this just one decision
the first one seems like to be more
attractive and a lot of other
perspectives so you have to very very
creative you have to consider a lot of
issues even for this one simple formula
at the same time don’t be afraid we will
not discuss in details just very briefly
maybe some of you know this is coupon
analysis which is very important tool
for understanding return on equity
structure of return on equity what
derived return on equity was it return
on assets or was it just financial
leverage so just to give you an idea we
have to consider everything we have here
on this diagram to understand this where
is the formula we started to discuss
Roy okay I tried and probably and
hopefully it was trade it Y finance
definitely needs thinking outside the
box and why it’s not the straightforward
discipline but at the same time I want
to show you what can happen whenever
finance finds some tricky marketing and
I will give you an example as a real one
which happened in 2013 in Georgia where
I am from and it was some new loan one
bank introduced at the market and the
loan was very very successful it was
very successful
and down payment was 8% it was not
ordinary annuity but it was it had
promotion like it’s 48 percent and
comparing to the market on average it
was something like 13 percent during
this year on the market in Georgia so it
seemed to be very attractive and the
issue was that for example if we wanted
to take twelve thousand euros for this
twelve thousand years you had to make
the payment as a down payment eight
percent which is 960 euros and the
remaining amount you could take and etc
if the product is for one year it means
that for 12 months you had to pay the
same amount which is 4000 euros divided
into twelve one thousand two rules and
they stated that they did not have any
other Commission no penalties no
commissions and on the market there were
a lot of different commissions and a lot
of different penalties for any kind of
loan so the product was something
different and it was very very popular
but what is the issue the issue is that
if we can calculate what is the
effective rate for this particular loan
and it’s very simple if we calculate
this is almost sixty percent even more
than average market rate we have on the
market but it had good marketing and
because of good marketing it was very
directive very popular and a lot of
customers he was alone yeah
why the effective rate was so different
because in the product we had the
initial payment yes and it was not
ordinary annuity and more interesting
thing about this product is that they
stated that you know if you make any
kind of prepayment it’s okay for us we
will not penalize you yeah
on the one hand it seems also very
interesting because for other products
if you made some kind of pre payments it
was some 2% penalty in this case no but
if we understand the product it was only
for their benefit if we made the
prepayment because all the interest
expense was already paid yes even in the
best case scenario if I take the loan
today
I’ve made all the 8% payment out and
I’ve with prepayment just cover the
whole loan tomorrow it will be the best
scenario yes for sure okay
my point is that here accordingly the
promotion of course this marketing did
not share the whole information to the
market yes it was not the whole picture
it was not 100% true but personally I
believe that this is very often when we
are discussing something about marketing
yes okay
my next point is that not only for
finance but finest financial people also
need better marketing and to be
perfectly honest that’s why I am here
today
so failing tank
[Applause]
[Music]
[Applause]
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