The Essentials of Finance and Accounting for Nonfinancial Managers

Contents......Page 4
Introduction......Page 6
Organization of the Book......Page 8
Additional Background......Page 13
Accounting Defined......Page 14
Generally Accepted Accounting Principles......Page 15
Financial Analysis......Page 16
Some Additional Perspectives on the Planning Process......Page 18
Part 1: Understanding Financial Information......Page 22
1. The Balance Sheet......Page 24
Expenses and Expenditures......Page 27
Assets......Page 28
Important Accounting Concepts Affecting the Balance Sheet......Page 35
Liabilities......Page 41
Stockholders’ Equity......Page 42
Total Liabilities and Stockholders’ Equity......Page 45
Additional Balance Sheet Information......Page 46
Analysis of the Balance Sheet......Page 49
2. The Income Statement......Page 60
Analysis of the Income Statement......Page 65
3. The Statement of Cash Flows......Page 69
Sources of Funds......Page 70
Uses of Funds......Page 73
Analyzing the Statement of Cash Flows......Page 76
4. Generally Accepted Accounting Principles: A Review and Update......Page 80
Historical Monetary Unit......Page 81
Quantifiable Items or Transactions......Page 82
Significant Accounting Issues......Page 83
5. The Annual Report and Other Sources of Incredibly Valuable Information......Page 88
The Annual Report......Page 89
Modern-Day Activists......Page 108
The 10-K Report......Page 109
The Proxy Statement......Page 111
Other Sources of Information......Page 112
The Securities and Exchange Commission......Page 113
Part 2: Analysis of Financial Statements......Page 116
Statistical Indicators......Page 118
Financial Ratios......Page 119
Liquidity Ratios......Page 121
Ratios of Working Capital Management......Page 124
Measures of Profitability......Page 133
Financial Leverage Ratios......Page 140
7. Using Return on Assets to Measure Profit Centers......Page 147
Assets......Page 148
Revenue......Page 150
Return on Assets: Its Components......Page 151
Problems That Arise from Cost Allocation......Page 158
Effect on Profits of Different Cost Allocation Issues......Page 161
Part 3: Decision Making for Improved Profitability......Page 170
9. Analysis of Business Profitability......Page 172
Fixed Costs......Page 174
Development of Variable-Cost Estimates......Page 175
Breakeven Calculation......Page 177
Variance Analysis......Page 186
What Is Analyzed?......Page 194
Why Are These Opportunities Analyzed So Extensively?......Page 195
Discounted Cash Flow......Page 197
Present Value......Page 200
Discounted Cash Flow Measures......Page 202
Risk......Page 207
Capital Expenditure Defined......Page 209
Characteristics of a Quality Forecast......Page 210
Establishing the ROI Target......Page 214
Analytical Simulations......Page 217
Comprehensive Case Study......Page 220
Part 4: Additional Financial Information......Page 226
11. Financing the Business......Page 228
Debt......Page 229
Equity......Page 238
Some Guidance on Borrowing Money......Page 240
12. Business Planning and the Budget......Page 245
S.W.O.T. Analysis......Page 246
Planning......Page 247
Significant Planning Guidelines and Policies......Page 250
Some Additional Issues......Page 252
A Guide to Better Budgets......Page 253
Preparation of the Budget......Page 255
13. Selected Business Readings......Page 258
Profitability During Tough Times......Page 259
Do the Right Thing......Page 262
Appendixes......Page 265
A......Page 294
B......Page 296
C......Page 298
D......Page 302
E......Page 303
F......Page 304
G......Page 305
I......Page 306
L......Page 307
O......Page 308
P......Page 309
R......Page 310
S......Page 311
V......Page 312
Z......Page 313
B......Page 314
C......Page 315
E......Page 316
G......Page 317
M......Page 318
P......Page 319
S......Page 320
Z......Page 321