Three Bottom Line Performance® at GE & Bryn Awl

Three-Bottom-Line Financial Results:

• in 1991, during a period of stagnant stock prices, General Electric used Three Bottom Line Performance to emphasize the importance of Operating Cash Flow (OCF), not just Net Profit, in the training of operating plant, sales, production, and engineering management for 6 of its 13 divisions; and in the senior executive and financial conversation. Incentives were changed to reward improvements in asset management. Operating managers found ways to reduce inventories, speed deliveries, collect faster, and pay less and later. A year later, aggregate GE Net Profit was up 10% (as usual), but OCF was up 33%. The share price rose 30% as investors saw that GE had learned how to turn profits to cash. 

Bryn Awl Asphalt Paving in the D.C. area survived a 70% industry downturn within nine months in the early ‘90s using Three Bottom Line software. They had just replaced their fleet of trucks and built a new cement plant.  By using the three-bottom-line approach and a direct cashflow statement to mine its contract receivables, the CFO was able to engage and enroll equipment operators to change their work behavior in the field to consistently reduce receivable days. It was able service its debt by keeping cashflow ahead of shrinking equity, as profits disappeared, for thirty months. After those two and a half years, Bryn Awl was the only survivor in the state of Maryland. 

Return to Accounting 3.0 ® Case Studies

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