The Core of Business Management

Everyone involved in business mangement should have a good knowlegde of what is at its core. These are profitability, liquidity and stability. Some of the fields around them are shown in this diagramme.

Some become politicians, while others are suddenly elected to the supervisory board of a large company or group. A large proportion of students drop out of their business management course after a few months.

Even those with little knowledge of business management should be aware that profitability, liquidity and stability are the three most important concepts. Instructors should therefore provide an overview similar to the diagramme in the very first lessons.

Regarding liquidity in the diagramme, the horizontal arrows at the top indicate the 'direct method' for determining 'cash flows from operating activities', which can be tracked throughout the year. Once the annual financial statements for a given year have been finalised, the 'indirect method' via ordinary profit can also be used.