Finance for Non-Financial Managers

Finance for
 Non-Financial 
Managers......Page 4
Copyright......Page 5
Contents......Page 6
Preface......Page 10
Managing a Company in Today’s Business Environment......Page 20
The Role of the Finance Department......Page 24
GAAP: The ¡° Rules¡± of Financial Reporting......Page 26
The Relationship of Finance and Accounting to the Other Departments......Page 28
Manager¡¯s Checklist for Chapter 1......Page 30
2. The Structure and Interrelationship of Financial
 Statements......Page 31
Tracking the Life Cycle of a Company......Page 33
Accounting Is Like a Football Game on Videotape......Page 35
The Chart of Accounts ¡ª A Collection of Buckets......Page 39
The General Ledger ¡ª Balancing the Buckets......Page 42
Accrual Accounting ¡ª Say What?......Page 44
The Principal Financial Statements Defined......Page 46
Manager¡¯s Checklist for Chapter 2......Page 49
Assets and Ownership ¡ª They Really Do Balance!......Page 50
Fixed Assets ¡ª Property and Possessions......Page 58
Current Liabilities ¡ª Repayment Is Key......Page 60
Long- Term Liabilities ¡ª Borrowed Capital......Page 64
Ownership Comes in Various Forms......Page 65
Manager¡¯s Checklist for Chapter 3......Page 68
They Say Timing Is Everything ¡ª And They¡¯re Right!......Page 70
Sales: The Grease for the Engine......Page 73
Cost of Sales: What It Takes to Earn the Sale......Page 74
Gross Profit: The First Measure of Profitability......Page 75
Operating Expenses: Running the Business......Page 76
Operating Income: The Basic Business Bottom Line......Page 79
Other Income and Expenses ¡ª Not Just Odds and Ends......Page 80
Income Before Taxes, Income Taxes, and Net Income......Page 81
Earnings per Share, Before and After Dilution ¡ª What?......Page 82
Using This Report Effectively......Page 84
Manager¡¯s Checklist for Chapter 4......Page 85
5. A Profit vs. Cash Flow: What’s the Difference—
and Who Cares?......Page 86
The Cash Flow Cycle......Page 87
Cash Basis vs. Accrual Basis......Page 93
Net Profit vs. Net Cash Flow in Your Financial Reports......Page 95
Manager¡¯s Checklist for Chapter 5......Page 100
6. The Cash Flow Statement: Tracking the King......Page 102
Beginning Where the Income Statement Ends......Page 104
Cash from Operations ¡ª Running the Business......Page 106
Cash for Investing ¡ª Building the Business......Page 112
Cash from Financing ¡ª Capitalizing the Business......Page 114
Using This Report Effectively......Page 116
Manager¡¯s Checklist for Chapter 6......Page 117
7. Critical Performance Factors: Finding the
“Hidden” Information......Page 118
What Are CPFs? Do They Mix with Water?......Page 119
Measures of Financial Condition and Net Worth......Page 120
Measures of Profitability......Page 124
Measures of Financial Leverage......Page 127
Measures of Productivity......Page 131
Trend Reporting: Using History to Predict the Future......Page 134
Manager¡¯s Checklist for Chapter 7......Page 138
8. Cost Accounting: A Really Short Course in 
Manufacturing Productivity......Page 140
The Purpose of Cost Accounting ¡ª Strictly for Insiders......Page 141
Fixed and Variable Expenses in the Factory......Page 147
Controllable and Uncontrollable Expenses......Page 149
Standard Costs ¡ª Little Things Mean a Lot......Page 151
Manufacturing Cost Variances ¡ª Analysis for Action......Page 153
Manager¡¯s Checklist for Chapter 8......Page 155
Why Take Time to Plan?......Page 157
Strategic Planning vs. Operational Planning......Page 160
Vision and Mission ¡ª The Starting Point......Page 162
Long- Term Goals ¡ª The Path to the Mission......Page 164
Short-Term Goals and Milestones—The Operating Plan......Page 166
Manager¡¯s Checklist for Chapter 9......Page 172
10. The Annual Budget: Financing Your Plans......Page 174
Tools for Telling the Future: Budgets, Forecasts,Projections, and Tea Leaves......Page 175
How to Budget for Revenues—The “Unpredictable” 
Starting Point......Page 176
Budgeting Costs—Understanding Relationships 
That Affect Costs......Page 179
The Budgeting Process ¡ª Trial and Error......Page 181
Flexible Budgets—Whatever Happens, We’ve Got 
a Budget for It......Page 185
Variance Reporting and Taking Action......Page 188
Manager¡¯s Checklist for Chapter 10......Page 190
How a Business Gets Financed—In the Beginning
and Over Time......Page 192
Short- Term Debt ¡ª Balancing Working Capital Needs......Page 194
Long-Term Debt—Semi-Permanent Capital or 
Asset Acquisition Financing......Page 200
Convertible Debt ¡ª The Transition from Debt to Equity......Page 204
Capital Stock ¡ª Types and Uses......Page 205
Manager¡¯s Checklist for Chapter 11......Page 210
12. Attracting Outside Investors: The
 Entrepreneur’s Path......Page 212
The Start- up Company: Seed Money and Its Sources......Page 213
Professional Investors: Angels on a Mission......Page 214
Venture Capitalists: What You Need to Know to Attract Them......Page 217
The Initial Public Offering ¡ª Heaven or Hell?......Page 222
Strategic Investors: The Path to a Different Party......Page 223
Acquisition: The Strategic Exit......Page 225
Manager¡¯s Checklist for Chapter 12......Page 227
Index......Page 228