Kevin Koharki: Why Every Employee Should Think Like a CEO: Are You Reading Financial Statements Wrong?

Find me on Substack: https://bogumilbaranowski.substack.com/ Kevin Koharki is an MBA, PhD, founder of CAE Consulting, and associate professor who has spent 20 years analyzing hundreds of firms and uniquely advocates that every employee—not just executives—should understand how their daily decisions impact capital allocation and long-term value creation. 3:00 - Childhood influence: Depression-era grandmother shaped Kevin's views on hard work, discipline, and saving money through close relationship and shared activities 6:00 - Career origin story: 1999 discovery of "Rich Dad, Poor Dad" led to Peter Lynch's "One Up on Wall Street" - describes it as "getting hit by lightning," sparking lifelong investing passion 9:00 - Teaching philosophy: Drops real 10Ks on students' desks, believes in learning by doing rather than textbooks - "if you want to learn how to hit a curveball, you have to step in the batter's box" 12:00 - Personal finance reality check: Most people don't budget despite it being "second, third grade math" - grandmother's "got cable?" test for true money problems 15:00 - Capital allocation breakthrough: 2022 Vegas flight rereading Buffett letters when everything "clicked" - realized employees need training on how their roles impact CEO decisions 18:00 - Fortune 100 company story: 71 years of collective family experience, never understood job's true financial impact until Kevin's training 21:00 - Common misconception: Analysts focus only on dividends, debt paydown, buybacks - "it doesn't start there, it starts with revenue" 25:00 - Concentration philosophy: Charlie Munger's "three investments in your lifetime" - finding businesses that can reinvest at high rates indefinitely 30:00 - Financial statement analysis: Shocking number of investors not making proper adjustments for leases, pensions, stock-based compensation 35:00 - Stock-based compensation deep dive: Spent three years figuring out what Buffett/Munger meant by "true cost" - most CFOs don't understand until receiving it themselves 40:00 - Double-hit problem: Stock-based comp hits earnings twice (expense + dilution) while actual cash impact appears in financing, not operations 45:00 - Tech sector impact: Free cash flow can be 30-40% lower than reported due to improper stock-based comp accounting 50:00 - Cultural change requirement: Capital allocation mindset shifts take years, require constant reinforcement like diet changes 55:00 - Employee education gap: HR can't explain stock plans due to licensing restrictions, employees receive lawyer-written documents they can't understand 60:00 - Success definition: Making people better investors or employees who understand their financial impact - "help them understand the why" Podcast Program – Disclosure Statement Blue Infinitas Capital, LLC is a registered investment adviser and the opinions expressed by the Firm’s employees and podcast guests on this show are their own and do not reflect the opinions of Blue Infinitas Capital, LLC. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives, and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.