How does the board of directors typically use financial data?

The board of directors typically uses financial data primarily to hold management accountable for the company's performance. This involves reviewing key financial metrics such as revenue, expenses, profits, and cash flow to assess how effectively management is executing the company's strategy and achieving its financial goals. By analyzing financial data, the board can identify trends, evaluate the return on investment for various projects, and determine if management is adhering to the budget and achieving operational efficiency. This oversight helps ensure that company resources are utilized effectively and aligns with shareholder interests, creating a mechanism for governance and accountability.

In contrast, while financial data can inform decisions related to employee salaries, hiring practices, or day-to-day operations, these activities are typically more operational or administrative in nature, and not the primary focus of the board's responsibilities.