According to John Witt, CEO of Witt Plastics in Greenville, Ohio, “So many companies just concentrate on the P&L statement, but that’s not enough. You can make a lot of money in a given quarter, but have no money in the bank or very low margins. I want my employees to understand our balance sheet along with the P&L.”
While Witt’s 115 employees appreciate these issues, the hundreds of thousands of workers at General Motors may wonder what’s going on. When they hear that GM earned a record $6.7 billion in 1997, they understandably demand higher pay and better benefits. But that $6.7 billion produced a paltry net margin of only 3.9% (by contrast, Ford earned $6.9 billion in profits with $25 billion less in revenues).