Financial Intelligence for Entrepreneurs: What You Really Need to Know About the Numbers

Table of contents

1. Title Page
2. Copyright Page
3. Dedication
4. Table of Contents
5. PREFACE
6. Part One - The Art of Finance (and Why It Matters)
   1. 1 - What Is Financial Intelligence?
      1. UNDERSTANDING THE FOUNDATION
      2. UNDERSTANDING THE ART OF FINANCE
      3. UNDERSTANDING FINANCIAL ANALYSIS
      4. ROADBLOCKS TO FINANCIAL INTELLIGENCE
   2. 2 - A Primer on the Art of Finance
      1. DISCRETION ABOUT DEPRECIATION
      2. THE MANY METHODS OF VALUATION
   3. Part One - TOOLBOX
      1. FINANCING YOUR BUSINESS
      2. BUILDING A FINANCIAL STAFF
7. Part Two - The (Many) Peculiarities of the Income Statement
   1. 3 - Profit Is an Estimate
      1. A (VERY) LITTLE ACCOUNTING
      2. THE PURPOSE OF THE INCOME STATEMENT
   2. 4 - Cracking the Code of the Income Statement
      1. READING AN INCOME STATEMENT
      2. ONE BIG RULE
   3. 5 - Revenue
      1. MURKY GUIDELINES
      2. POSSIBILITIES FOR MANIPULATION
   4. 6 - Costs and Expenses
      1. COST OF GOODS SOLD OR COST OF SERVICES
      2. OPERATING EXPENSES: WHAT’S NECESSARY?
      3. THE POWER OF DEPRECIATION AND AMORTIZATION
      4. ONE-TIME CHARGES: A YELLOW FLAG
   5. 7 - The Many Forms of Profit
      1. GROSS PROFIT: HOW MUCH IS ENOUGH?
      2. OPERATING PROFIT IS A KEY TO HEALTH
      3. NET PROFIT AND HOW TO FIX IT
   6. Part Two - TOOLBOX
      1. UNDERSTANDING VARIANCE
      2. CALCULATING PERCENT OF AND PERCENT CHANGE
8. Part Three - The Balance Sheet Reveals the Most
   1. 8 - Understanding Balance Sheet Basics
      1. SHOWING WHERE THINGS STAND RIGHT NOW
      2. INDIVIDUALS AND BUSINESSES
      3. READING A BALANCE SHEET
   2. 9 - Assets
      1. TYPES OF ASSETS
   3. 10 - On the Other Side
      1. TYPES OF LIABILITIES
      2. OWNERS’ EQUITY
   4. 11 - Why the Balance Sheet Balances
      1. REASONS FOR BALANCE
   5. 12 - The Income Statement Affects the Balance Sheet
      1. THE EFFECT OF PROFIT ON EQUITY
      2. AND MANY OTHER EFFECTS
      3. ASSESSING YOUR COMPANY’S HEALTH
   6. Part Three - TOOLBOX
      1. “EMPLOYEES ARE OUR MOST VALUABLE ASSET” (OR ARE THEY?)
      2. EXPENSE? OR CAPITAL EXPENDITURE?
9. Part Four - Cash Is King
   1. 13 - Cash Is a Reality Check
      1. WHY CASH IS KING
   2. 14 - Profit ≠ Cash (and You Need Both)
      1. PROFIT WITHOUT CASH
      2. CASH WITHOUT PROFIT
   3. 15 - The Language of Cash Flow
      1. TYPES OF CASH FLOW
   4. 16 - How Cash Connects with Everything Else
      1. RECONCILING PROFIT AND CASH
      2. A START-UP COMPANY
      3. A REALISTIC COMPANY
   5. 17 - Why Cash Matters
      1. THE POWER OF UNDERSTANDING CASH FLOW
   6. Part Four - TOOLBOX
      1. CASH ACCOUNTING
      2. FREE CASH FLOW
10. Part Five - Ratios: Learning What the Numbers Are Really Telling You
    1. 18 - The Power of Ratios
       1. ACCOUNTING TRICKS
       2. ANALYZING RATIOS
    2. 19 - Profitability Ratios
       1. GROSS PROFIT MARGIN PERCENTAGE
       2. OPERATING PROFIT MARGIN PERCENTAGE
       3. NET PROFIT MARGIN PERCENTAGE
       4. RETURN ON ASSETS
       5. RETURN ON EQUITY
    3. 20 - Leverage Ratios
       1. DEBT-TO-EQUITY
       2. INTEREST COVERAGE
    4. 21 - Liquidity Ratios
       1. CURRENT RATIO
       2. QUICK RATIO
    5. 22 - Efficiency Ratios
       1. INVENTORY DAYS AND INVENTORY TURNOVER
       2. DAYS SALES OUTSTANDING
       3. DAYS PAYABLE OUTSTANDING
       4. PROPERTY, PLANT, AND EQUIPMENT TURNOVER
       5. TOTAL ASSET TURNOVER
    6. Part Five - TOOLBOX
       1. WHICH RATIOS ARE MOST IMPORTANT TO YOUR BUSINESS?
       2. THE POWER OF PERCENT OF SALES
       3. SUSTAINABLE GROWTH RATE
11. Part Six - How to Calculate (and Really Understand) Return on Investment
    1. 23 - The Building Blocks of ROI
       1. FUTURE VALUE AND PRESENT VALUE
    2. 24 - Figuring ROI
       1. ANALYZING CAPITAL EXPENDITURES
       2. LEARNING THE THREE METHODS
       3. COMPARING THE THREE METHODS
    3. Part Six - TOOLBOX
       1. A STEP-BY-STEP GUIDE TO ANALYZING CAPITAL EXPENDITURES
12. Part Seven - Applied Financial Intelligence: Working Capital Management
    1. 25 - The Magic of Managing the Balance Sheet
       1. THE ELEMENTS OF WORKING CAPITAL
    2. 26 - Your Balance Sheet Levers
       1. MANAGING DSO
       2. MANAGING INVENTORY
    3. 27 - Homing In on Cash Conversion
       1. THE CASH CONVERSION CYCLE
    4. Part Seven - TOOLBOX
       1. WORKING WITH YOUR BANKER
       2. ACCOUNTS RECEIVABLE AGING
13. Part Eight - Creating a Financially Intelligent Company
    1. 28 - Financial Literacy, Transparency, and Your Business’s Performance
       1. BETTER COMPANIES
       2. TAKING IT TO THE TROOPS
    2. 29 - Financial Literacy Strategies
       1. TOOLS AND TECHNIQUES
    3. 30 - Putting Financial Intelligence to Work
       1. PATHS TO GROWTH
       2. GOING PUBLIC
    4. Part Eight - TOOLBOX
       1. OPEN-BOOK MANAGEMENT
       2. UNDERSTANDING SARBANES-OXLEY
14. APPENDIX A - Sample Financials
15. APPENDIX B - Exercises to Build Your Financial Intelligence
16. APPENDIX C - Under Armour and eBay Financial Statements
17. NOTES
18. ACKNOWLEDGMENTS
19. INDEX
20. ABOUT THE AUTHORS