The Kaplan Group Awards 2015 Annual $1,000 Scholarship

The Kaplan Group, Inc. is pleased to announce that the 2015 Kaplan Group Annual $1,000 Scholarship has been awarded to Pedro A. Rodriguez, a junior Business Management major at Miami Dade College.

TKG-2nd-Annual-ScholarshipThe scholarship was introduced in 2014 and was designed to promote career opportunities in commercial debt collections and credit management to young adults pursuing their studies at the college and graduate level.  We know that our industry offers many exciting career opportunities which require excellent analytical and communication skills.  The challenge is to attract the best candidates for these jobs and our hope is that by exposing college students to our industry and its opportunities they will pursue careers in credit management.

The Kaplan Group has a been giving to youth programs and supporting education for credit and debt collection professionals through seminarsarticles, and ebooks for many years.  The annual scholarship program is one more way for our company to give back to the community and industry.

Students at accredited colleges and graduate schools with programs in Finance, Accounting, Law, Management, Entrepreneurship, Economics and Business Administration were invited to apply for the scholarship.  Applicants were required to write a short essay in response to one of two prompts:  Financial Statements & Business Models or “Should You Sue Your Customer?”

Mr. Rodriguez was very excited to receive the scholarship and said, ““Thank you so much!  I am so excited and honored to win this year’s scholarship! You have no idea how much help scholarships like The Kaplan Group’s provides. Deciding to return to college after 10 years is a huge commitment. I constantly hear people say how difficult it is to go back to school after a long hiatus, but I keep reminding myself that it’s not impossible. Thank you for providing help to those of us who are attempting to better ourselves through education.”

Pedro’s essay, reprinted below, was in response to the following prompt:

“Understanding how to view and analyze a financial statement is one of the most fundamental skills necessary to succeed in business.  In 600 words, please tell us about a past business you have worked for and which financial statement you think is the most important to their business and why.  Feel free to refer to our Introduction to Financial Statement Analysis modules if you need to learn more or brush up on your financial statement basics.”


The financial statement is, universally, one of the most fundamental guides to navigating and understanding the viability of a business. The financial statement also serves as a tool to dissect a company’s functionality or lack thereof. There are four basic parts to a financial statement, Balance Sheet, Income Statement, Statement of Retained Earnings and Statement of Cash Flow. While the information contained in these various statements may overlap, appear repetitive, or exhibit similarities, the information is analyzed in a different manner for better transparency of a business. For example, a company can have a strong Income Statement (or Profit and Loss statement) but if the majority of the revenue generated is from accounts receivable, the business can still fail to meet its debt obligation. This statement has the power to gauge if a business has enough capital for its day-to-day operations, as well as liquidity, equity and net profit margin among other information.

The answer as to the importance of a particular financial statement is two-fold: (1) who is viewing the financial statement; and (2) for what purpose. For example, if an individual or company wanted to file a lawsuit against a company, it would be in their best interest to review the Balance Sheet to determine whether there are sufficient assets to collect on a judgment if the litigation is successful. A potential investor, however, would be mostly interested in share value and that information is largely based in the Cash Flow Statement. From a managerial standpoint, the Income Statement would provide the most feedback for operating margins and profit margins, which would make adjustments easier to identify. An auditor would most likely want to see the total assets. The investments, earnings and equity is evaluated completely in the Balance Sheet.

During the better part of 2000, I worked in the media industry – specifically for Nowhere Galaxy Media. While working for Nowhere Galaxy Media I witnessed a transformation in the industry. Between technological advances and traditional methods of receiving news – such as physical newspaper subscriptions – began dwindling, and online news began to take off significantly. The online trend was clearly on its way, requiring significant alterations to making continuous up to date news available.

The major, traditional media outlets, however, were not prepared for this sudden shift in the landscape. Undoubtedly, many of these traditional media outlets failed to meet the demand from consumers and create innovative ways to continue to appeal to customers. When advertising dollars began to dwindle because the cost of business did not justify the return on investment and sales went down consistently, companies behaved as expected by the traditional financial statement guidelines. Print news media began to cut employees, cut back the cost of business (significantly smaller papers), and raise sales quotas for advertising sales persons. All this was done until these media companies were able to catch up with the times and technology.

As a result of my experience in this industry, the Cash Flow Statement is the most important. This statement reveals how a company spends its money (cash outflow) and how it earns it (cash inflow). Most importantly, it allows for an analysis of how promptly a business can meet its interest and debt payments. A company can be profitable but still not meet its obligations (i.e. bills, loans, overhead). This statement provides the bottom dollar line for a business, as well as provides a look into how it plans to make money for its investors.

Cash Flow statement is divided into three basic areas:

Operating activities. These amount to the revenue generating activities of a business. Examples of these are, payroll, commissions, lawsuits, cash received and distributed for product sales, supplier and lender invoices.

Financing activities. These account for activities that can change the equity or borrowing of a company. Examples include the sale of company shares and dividend payouts.

Investing activities. These are payments made to acquire long term assets, as well as cash received from their sale. Examples would be the purchase of property and equipment or the repayment of a loan.

This is an example of a traditionally stable business that became inferior because the product became outdated. This fact could have been identified and forecasted by reviewing not only their own financial statement, but that of other similar players in the industry. While the exact solution was not provided in the financial statement, there was certainly evidence of the downward trend of the current business plan. Let us not underestimate how imperative of a tool the financial statement is for maintaining the viability of a business.

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