Finance & Measurements, as Taught by Eli Goldratt
Eight lessons that follow Eli Goldratt's case against cost accounting and his alternative. You join Helen, a CFO who is asked to justify a machine, a make-or-buy deal and a product range, and discovers that every answer depends on one question she was never taught to ask.
- 8 lessons, about 152 minutes in all
- Free, no sign-up. Your progress is saved in this browser
- Certificate of completion when you pass all eight quizzes
- 1 Finance, the score-keeperFinance does two jobs: it monitors the money, and it provides the judgments that steer every big decision. Goldratt's question is whether the trouble lies in late, inaccurate data, or in the judgments themselves. A cautionary tale of a CEO rewarded for driving his company towards bankruptcy. 15 min
- 2 Inventory, asset or liability?Everyone now agrees that inventory hurts a company's ability to compete, yet the financial statements count it as an asset. Follow a division that does exactly what corporate asked, halves its finished goods, and is punished for it. 15 min
- 3 Justifying the machineA $100,000 machine passes through five desks and comes out with a one-year payback. Follow each step of the standard calculation, then see what really happens if the machine is a non-bottleneck, and what the same calculation does to a machine that is the bottleneck. 18 min
- 4 Make or buy?A part that “costs” $17.50 to make and $10 to buy. Outsource it, and costs go up. Keep making another part that uses the bottleneck, and the company leaves $125,000 a year on the table. Goldratt's make-or-buy reasoning, told as Helen and Ruth's conversation. 18 min
- 5 The sacred cow of product costWhy transfer prices punish improvement, and why “product cost” is the most cherished and most damaging concept in industry. Then Goldratt's simplest proof: a plant with two products, accurate data and no excuses, where following product cost loses money. 22 min
- 6 The cost world and the throughput worldWhy do companies keep a cumbersome mechanism that gives distorted answers? Because of a conflict between controlling cost and protecting throughput. Meet T, I and OE, then Goldratt's chain: weight adds up, strength doesn't, and the assumption that holds the cost world together. 20 min
- 7 The five steps as the judgeIf the strength of the chain is set by its weakest link, judge every decision by what it does to that link. Goldratt's five focusing steps, then two judgments rebuilt on them: which product to promote (throughput per constraint unit), and whether an investment pays (ΔT, ΔOE, ΔI), tested on five scenarios. 24 min
- 8 Changing the scorecardMake-or-buy rebuilt on the constraint, why sub-contracting the middle of a process invites Murphy, the one-line fix for artificial inventory profits (and who to warn before you apply it), how to measure the people who execute the plan, and the three initiatives that start it all. 20 min
- ✓Your certificateUnlocks when all eight quizzes are passed.
This course complements the two Throughput Accounting courses: here the argument is told the way Goldratt told it. The ideas belong to Dr. Eliyahu M. Goldratt and Avraham (Rami) Goldratt, who taught them in their TOC Insights programme and the Goldratt Satellite Program broadcasts. The story, the characters and the wording are mine; this is an independent course, not a product of the Goldratt organisation.