Larry White discusses the importance of operational versus financial metrics. Initially, it may seem that both are equally important, but he explores this further. In manufacturing, traditional methods of inventory valuation and product costing have led to distorted information, which operations personnel have often disregarded. Despite this, manufacturing efficiency, quality, and performance have dramatically improved due to a focus on operational metrics rather than financial data. These operational improvements have led to better financial outcomes, not the other way around. From Larry's experience, only a small percentage of manufacturing professionals find accounting and finance information useful. To address this, the PACE model ensures that operational models form the basis for financial modeling, emphasizing causality and a broader view of costs, including customer and sales-related expenses. Effective decision-making should consider various costing dimensions and focus on long-term success. So, which metrics do you think are more important: operational or financial? To find out more about this topic, visit www.profitability-analytics.org