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The Essentials of Finance and Accounting for Nonfinancial Managers, 3rd Edition

Book Description

Frustrated by financial statements? Dread the budget process? The Essentials of Finance and Accounting for Nonfinancial Managers is here to help.

This new edition of a business classic demystifies finance and accounting and gives managers the tools they need make better decisions. Packed with fresh insights and the latest information on accounting regulations, international accounting practices, and global business trends, the book reveals how to:

    • Understand the fundamentals of financial analysis, budgeting, and forecasting
    • Interpret balance sheets, income/cash flow statements, and annual reports
    • Sift through conflicting data to find the most relevant figures
    • Locate key information about competitors and suppliers
    • Analyze variances and calculate break-even points and other vital measures
    • And much more

    Expanded case studies and practice exercises reinforce the lessons and let you strengthen your skills. Imagine the impact when you grasp not only what the numbers mean—but how you can use that intelligence to drive your business forward.

Table of Contents

  1. Cover
  2. Title
  3. Contents
  4. Introduction
    1. Organization of the Book
    2. Additional Background
    3. Accounting Defined
    4. Generally Accepted Accounting Principles
    5. Financial Analysis
    6. Some Additional Perspectives on the Planning Process
  5. Part 1: Understanding Financial Information
    1. 1. The Balance Sheet
      1. Expenses and Expenditures
      2. Assets
      3. Important Accounting Concepts Affecting the Balance Sheet
      4. Liabilities
      5. Stockholders' Equity
      6. Total Liabilities and Stockholders' Equity
      7. Additional Balance Sheet Information
      8. Analysis of the Balance Sheet
      9. A Point to Ponder
    2. 2. The Income Statement
      1. Analysis of the Income Statement
    3. 3. The Statement of Cash Flows
      1. Sources of Funds
      2. Uses of Funds
      3. Statement of Cash Flows
      4. Analyzing the Statement of Cash Flows
    4. 4. Generally Accepted Accounting Principles: A Review and Update
      1. The Fiscal Period
      2. The Going Concern Concept
      3. Historical Monetary Unit
      4. Conservatism
      5. Quantifiable Items or Transactions
      6. Consistency
      7. Full Disclosure
      8. Materiality
      9. Significant Accounting Issues
    5. 5. The Annual Report and Other Sources of Incredibly Valuable Information
      1. The Annual Report
      2. The Gilbert Brothers: The Original Shareholder Activists
      3. Modern-Day Activists
      4. The 10-K Report
      5. The Proxy Statement
      6. Other Sources of Information
      7. The Securities and Exchange Commission
  6. Part 2: Analysis of Financial Statements
    1. 6. Key Financial Ratios
      1. Statistical Indicators
      2. Financial Ratios
      3. Liquidity Ratios
      4. Ratios of Working Capital Management
      5. Measures of Profitability
      6. Financial Leverage Ratios
      7. Revenue per Employee
      8. Ratios: Quick and Dirty
    2. 7. Using Return on Assets to Measure Profit Centers
      1. Assets
      2. Revenue
      3. After-Tax Cash Flow (ATCF)
      4. Return on Assets: Its Components
      5. A Business with No “Assets”168
    3. 8. Overhead Allocations
      1. Problems That Arise from Cost Allocation
      2. What About the IRS and GAAP?
      3. Effect on Profits of Different Cost Allocation Issues
  7. Part 3: Decision Making for Improved Profitability
    1. 9. Analysis of Business Profitability
      1. Chart of Accounts
      2. Breakeven Calculation
      3. Variance Analysis
    2. 10. Return on Investment
      1. What Is Analyzed?
      2. Why Are These Opportunities Analyzed So Extensively?
      3. Discounted Cash Flow
      4. Present Value
      5. Discounted Cash Flow Measures
      6. Risk
      7. Capital Expenditure Defined
      8. The Cash Flow Forecast
      9. Characteristics of a Quality Forecast
      10. Establishing the ROI Target
      11. Analytical Simulations
  8. Part 4: Additional Financial Information
    1. 11. Financing the Business
      1. Debt
      2. Equity
      3. Some Guidance on Borrowing Money
    2. 12. Business Planning and the Budget
      1. S.W.O.T. Analysis
      2. Planning
      3. Significant Planning Guidelines and Policies
      4. Some Additional Issues
      5. A Guide to Better Budgets
      6. Preparation of the Budget
    3. 13. Final Thoughts
      1. Profitability During Tough Times
      2. Do the Right Thing
  9. Appendix A. Financial Statement Practice
  10. Appendix B. Finance and Accounting Terms
  11. Appendix C. Comprehensive Case Study: Paley Products, Inc.
  12. Appendix D. Ratio Matching Challenge
  13. Appendix E. Comprehensive Case Study: Woodbridge Manufacturing
  14. Appendix F. Comprehensive Case Study: Bensonhurst Brewery
  15. Glossary
  16. Index
  17. About the Author
  18. Free Sample from The First-Time Manager by Loren B. Belker, Jim McCormick, and Gary S. Topchik
  19. Copyright