Important points when looking at financial statements in stock investment.

<If you increase costs even if sales increase, the company will collapse quickly> Important points when looking at financial statements in stock investment.

1. When I founded Kyocera, I (= Kazuo Inamori) had no experience or knowledge of management, nor did I know anything about corporate accounting.

2. Because of this, I was assigned to the accounting department in the company's accounting department, and at the end of the month, I held him up and asked, "How is your balance this month?" As an engineer, I couldn't understand accounting-related jargon.

3. (Then) I said, "The rest of the sales minus the cost is the profit, so I hope we maximize sales and minimize costs."

4. Maybe the accountant at the time was ridiculous (because it sounds so obvious), but since then, I have made 'maximum sales, minimum costs' the main principle of management.

5. It's a very simple principle (which everyone understands), but not many people continue to practice it. In particular, creativity and ideas must be mobilized to minimize costs while increasing sales as much as possible.

6. However, most people think it's okay to increase costs if sales increase. So, when orders increase from 100 to 150, generally the number of people increases by 50%, and the facilities increase by 50%, resulting in 150 production. However, this 'additional management' should not be done.

7. If orders increase to 150, we must find a way to increase productivity and increase the number of employees by only 20 to 30%. In this way, companies can have a 'high-yielding constitution'.

8. Most managers, however, tend to be "neglective management" during boom times (such as increasing orders). They respond with the plus formula: "When orders are doubled, people and facilities are doubled." If a situation changes rapidly and orders decrease and sales fall, the cost burden increases and it degenerates into a "deficit management."

9. (That's why it's cruel.) The joke is often talked about in Japan. "Small businesses and balloons go off when they get bigger." (People assume that as they grow and sales increase, the company will fare better, but most managers become complacent in that moment, so they're more likely to disappear after a flash of growth.)

10. (And it can be applied to creators, not just small businesses and start-ups. It's very common in this industry to be arrogant and complacent once you hit.)

- Let's go to Inamori during "Last Class"