To fully appreciate the numbers in a company's financial report, it helps to understand the people behind them. Knowing how a chief financial officer, or CFO, contributes to a company's success can give you a better handle on how businesses work. And since CFOs sometimes move up to become CEOs -- as PepsiCo's (NYSE:PEP) Indra Nooyi did -- it often pays to keep an eye on them.

CFOs determine what a company's financial needs are and will be, and how best to finance those needs. They inform all stakeholders -- investors, creditors, analysts, employees, and management -- of the company's condition. They are focused on creating and maintaining the best mix of internal cash, debt financing, and equity financing, also known as the company's "capital structure." They also oversee the forecasting and budgeting process, and maintain relationships with funding sources such as commercial and investment banks. Since they often operate under conditions of economic uncertainty, they frequently seek to cut costs and improve profitability.

Ch-ch-changes...
The job of a CFO has evolved greatly over the past few decades, to meet the growing complexity of corporate regulations. CFOs now must oversee compliance with the Sarbanes-Oxley Act of 2002 ("Sarbox" to those in the know). Among other things, it mandates greater financial disclosures, aims to reduce corporate and accounting fraud, and requires oversight of auditors. As Corning (NYSE:GLW) CFO James Flaws recently put it:

Now with Sarbox the CFO has personal liability for the accuracy of the financial statements. You have to disclose far more about compensation practices. You have [regulations] limiting what you can say when, and to whom.

Other new challenges many CFOs face include dealing with various international accounting standards, balancing costs globally, managing foreign currency effects and foreign workforces, and operating in an environment of rapid communication. They are also involved in merger-and-acquisition dealings and corporate strategic planning. (At some point, presumably, they also find the time to sleep.)

The best and the brightest
The folks at Institutional Investor surveyed a host of analysts to suss out which CFOs had the best reputations. Here are the top dogs from several industries, according to "buy-side" analysts who advise mutual funds and pension funds. I've included the companies' ratings from our Motley Fool CAPS community as well:

Company

CFO

CAPS Rating (out of 5)

Freeport McMoRan Copper & Gold (NYSE:FCX)

Kathleen Quirk

****

Activision Blizzard (NASDAQ:ATVI)

Thomas Tippl

*****

First Horizon (NYSE:FHN)

William Losch III

*

IBM (NYSE:IBM)

Mark Loughridge

*****

Source: Institutional Investor, Motley Fool CAPS.

It's easy to overlook CFOs, since they often sit in the shadow of prominent chief executive officers. But good CFOs can keep great companies great -- which means they more than merit your Foolish respect.

Is there a CFO you greatly admire -- or one that has let you down? Let us know in the comment box below?

Longtime Fool contributor Selena Maranjian owns shares of PepsiCo, Activision Blizzard, and Corning. PepsiCo is a Motley Fool Income Investor selection. Motley Fool Options has recommended a synthetic long position on Activision Blizzard, which is a Motley Fool Stock Advisor pick. The Fool also owns shares of Activision Blizzard. Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.