Henry Kaufman Quotes

What fascinated me about Drucker, and still does, is how he infuses his broad perspective on business issues with philosophical and historical considerations.

[G]ood bankers understand the shortcomings of accounting and know how to correct for them.

[A] profit and loss statement is not simply a collection of figures, but rather—for the perceptive banker—a window into the nuts and bolts of the business, from its method of operation to its management philosophy.

[A] balance sheet is a snapshot of one moment in time, and thus presents a very limited view... To be a good banker, therefore, a business is much more than its balance sheet.

The credit approval process began with the analysis of balance sheets and profit and loss statements. For those who know how to unlock their secrets, these documents can contain hidden traps, as I soon discovered—and was later reminded by some of the more spectacular credit problems of recent decades. Balance sheets tend to overstate assets and understate liabilities. Inventories commonly are assigned a large cash value after they have become obsolete, while receivables that are ostensibly current are quite often in arrears. Inadequate reserves constitute yet another common weakness that is poorly reflected... A receivable is a current asset, but it could be a slow asset.

I take great pride in being an American. Consequently, when financial excess threatens our economic moorings, and thus our extraordinary dynamic and pluralistic nation, I have often spoken out for saner behavior and more effective policies.

Often the real value of management decisions does not become apparent until many years later.
Perhaps what we should do is try to analyze the impact of decisions in any one period on longer-term performance. In the political arena, for example, why should we emphasize the skill and acumen of national policy-makers only on the new initiatives they introduce and legislate? Sometimes the events that do not materialize are more important than those that do. We should try to ascertain what decisions political leaders are undertaking that will benefit their nations subsequent to their terms in office.

Judgements on the performance of our economy require a clearly defined objective. Too often... there are multiple and contradictory objectives. Unless we are clear on our... objectives, we are not able to evaluate performance as good or bad...

The current plethora of instant interpretations tends to emphasize the near-term without adequate regard for longer-term objectives. The problem is compounded by the compressed time scales within which business and government function.

The proliferation of credit instruments, financing techniques, and vast matrices of trading and investing opportunities requires highly objective evaluations of risks and rewards, and a sense of historical perspective, if excessive risk taking is to be avoided.