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Understanding Financial Statements: A Primer of Useful Information

Book Description

The late James O. Gill worked as Division Manager and Projects Manager with the Naval Weapons Support Center in Crane, Indiana. He was the author of Financial Basics of Small Business Success, Financial Analysis, and the first edition of Understanding Financial Statements, all published by Crisp Publications, Inc. Jim enjoyed great success teaching financial basics to people with limited financial backgrounds. The new author selected to revise Understanding Financial Statements is Moira E. Chatton. She earned a degree in biochemistry from the University of California, Berkeley, and an M.B.A. from the University of Georgia.

Coverage includes—

  • To describe how the three primary financial statements are prepared and what each means to a business.

  • To explain the differences between cash and profit from an accrual prospective.

  • To introduce ratios and proportions and show how easily they are developed and used

  • To explain how to examine and get better productivity from your expenses

  • To provide tested techniques for gaining better control over your business finances

  • Table of Contents

    1. Learning Objectives For: Understanding Financial Statements
    2. About the Authors
    3. Preface
    5. The Basics of Financial Statements
      1. What Are Financial Statements and Who Uses Them?
      2. The Balance Sheet
        1. Why is it called a “Balance Sheet”?
        2. Glossary of Balance Sheet Terms
        3. Sample Balance Sheets
        4. Why Net Worth Is Not Always the Same as Market Value
      3. The Income Statement
        1. Sample Income Statement
        2. Glossary of Income Statement Terms
        3. Why Income Does Not Always Equal Cash
      4. The Cash Flow Statement
        1. Sample Cash Flow Statement
        2. Glossary of Cash Flow Statement Terms
      5. Summary of Part 1
    6. Understanding Ratios and Percentages
      1. Using Ratios Without Fear
        1. Why Ratio Analysis?
      2. How Ratios Are Developed
        1. What Ratios Measure
        2. Trend Analysis
        3. The 10% Paradox
      3. Five Basic Rules for Ratios
      4. Summary of Part 2
    7. Four Types of Ratios
      1. Introduction to Ratios
        1. How to Use This Section
      2. Glossary for Ratio Analysis
      3. Liquidity Ratios
        1. Current Ratio
        2. Turnover of Cash Ratio
        3. Debt to Equity Ratio
        4. Summary of Liquidity Ratios
      4. Profitability Ratios
        1. Rate of Return on Sales Ratio
        2. Rate of Return on Assets Ratio (ROA)
        3. Rate of Return on Investment Ratio (ROI)
        4. Summary of Profitability Ratios
      5. Efficiency Ratios
        1. Average Collection Period Ratio
        2. Inventory Turnover Ratio
        3. Fixed Asset Turnover Ratio (also called Net Sales to Fixed Assets Ratio)
        4. Summary of Efficiency Ratios
      6. Market Ratios
        1. Earnings Per Share
        2. Price/Earnings Ratio (P/E)
        3. Dividend Yield
    8. How to Perform a Ratio Analysis
      1. Introduction
        1. Data Collection Charts
      2. What Is Significant?
        1. Data Gathering Form
        2. Comparison Chart
        3. Data Gathering Form
        4. Comparison Chart
      3. Ratio Review Chart
        1. Ratio Review Chart
      4. Afterword
      5. Summary of Part 4
    9. How to Perform an Expense Analysis
      1. Is Anything Good About Expenses?
      2. Examining Your Expenses
        1. The Sales Line
        2. The Cost Of Goods Sold
        3. Credits And Collections
        4. Fixed Expenses (Expenses whether or not a sale is made)
        5. Variable Expenses (Tied to sales volume)
      3. Increase the Return on Expenses
      4. Summary of Part 5
    10. How to Control Your Business
      1. How To Proceed
        1. Trend Analysis
        2. Cash Position Charting
        3. Development of a Target Statement
        4. Accounts Receivable Aging Schedule
      2. Summary of Part 6
        1. Check those That You Intend to Use:
      3. Appendix
        1. Interpretation of Statement Studies Figures
      4. NOTES