Accounting is not a core skill for most product managers. Yet, basic financial literacy is critical when presenting the impact a product can have on customer revenues, expenses, profits, and cash flows. It is also important when building business cases for new product investments. Deciphering competitor finances, even privately-held competitors, can lead to more effective decisions about product evolution. Product managers should develop basic financial literacy skills.
ash Flow Statements are probably the hardest type of financial statement for product managers, but potentially the most useful. They strip away the complexity of accrual-based accounting. They show how cash moves into and out of a business. Product managers should care about the cash flow of existing customers, prospective customers, and competitors.
Balance sheets are an esoteric topic for product managers. Product managers do not need a degree in accounting to be effective in their jobs. They need to understand a few basic things about assets, liabilities, and stockholders’ equity. Product managers should care about Balance Sheets.
Product managers need to be able to locate, read, and interpret basic financial filings like Annual Reports (10-Ks), quarterly filings (10-Qs) and Proxy Statements (Def 14As). There is a ton of information that customers and competitors who are public companies must disclose.