How to Understand Business Finance (Creating Success)

Contents......Page 5
Acknowledgements......Page 9
Introduction......Page 11
1 So why do you want to know more about finance?......Page 13
A tale of two languages......Page 15
Setting up a company......Page 19
The Moving Balance Sheet®......Page 21
Raw materials......Page 26
Creating value......Page 27
Cash and profit......Page 30
Setting up and running the business – the opening month......Page 34
Profit and loss (P&L) account......Page 39
The balance sheet......Page 42
Month 2 business cycle......Page 43
Going to the bank......Page 48
Doing the books......Page 49
3 The books and double-entry bookkeeping......Page 53
Double-entry bookkeeping......Page 55
Taxation......Page 58
Sales......Page 61
Marketing......Page 65
Manufacturing......Page 66
Human resources......Page 67
IT, maintenance and engineering......Page 68
Research and development......Page 69
Finance......Page 70
Budgeting......Page 71
Cash flow forecast......Page 72
Avoiding bankruptcy: how to generate cash......Page 73
6 Measuring business performance – financial ratios......Page 77
P&L account (income statement) analysis......Page 79
Balance sheet analysis......Page 82
What accounts do our investors want to see?......Page 88
Shares......Page 89
8 Valuing a company......Page 93
Asset value......Page 94
Multipliers......Page 95
Balanced Scorecard......Page 96
Cash flows......Page 97
Earnings before interest, tax, depreciation and amortisation (EBITDA)......Page 99
Economic profit......Page 100
Total shareholder return (TSR)......Page 101
10 The hidden costs – depreciation and amortisation......Page 103
Depreciation......Page 104
Goodwill......Page 107
Capitalising costs......Page 108
Variable costs......Page 110
Fixed costs......Page 112
Break-even point......Page 113
12 Tools for evaluating projects......Page 117
Discounted cash flow (DCF)......Page 118
Internal rate of return (IRR)......Page 119
Economic profit......Page 120
Other factors......Page 121
13 Where is all our cash? Managing working capital......Page 122
Stock (inventories)......Page 123
Debtors......Page 124
Creditors......Page 125
Write-offs......Page 126
Cash flow implications of working capital......Page 127
Glossary of financial terms......Page 129
Other titles in the Kogan Page Creating Success series......Page 153
Further reading from Kogan Page......Page 154