Business Finance for Managers: Essential Guide to Planning, Control and Decision Making

✍ Scribed by Ray Fitzgerald

• Publisher: Kogan Page
• Year: 2002
• Tongue: English
• Leaves: 457
• Edition: 3
• Category: Library

✦ Synopsis

A source of guidance for the business manager, this volume offers practical advice on all aspects of financial planning, control and decision-making. This third edition is written in an accessible style for the non-specialist and covers: the balance sheet; the profit and loss of a business; financial control; capital investment decisions; taxation and financial decisions; and mergers and take-overs. The work aims to show the reader how to interpret, control and utilise finances effectively while maintaining quality and service.

✦ Table of Contents

Copyright......Page 5
Contents......Page 6
Preface......Page 10
Acknowledgements......Page 13
Abbreviations......Page 14
1 Introduction......Page 18
CRUCIAL ERRORS IN FINANCE......Page 19
THE CONTENT AND SEQUENCE OF THE BOOK......Page 20
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES......Page 22
Part I The purpose and content of financial statements......Page 24
THE PROFIT AND LOSS ACCOUNT......Page 26
THE MEASUREMENT OF PROFIT OR LOSS......Page 27
THE NINE MAJOR TYPES OF INCOME......Page 29
EXPENDITURE......Page 37
STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES......Page 47
MISCONCEPTIONS ABOUT THE BALANCE SHEET......Page 53
KEY ITEMS IN THE BALANCE SHEET......Page 55
FINANCING THE ASSETS......Page 66
WHAT A BALANCE SHEET DOES NOT TELL YOU......Page 81
SUMMARY......Page 82
OTHER BALANCE SHEET ITEMS......Page 84
4 The cash flow statement......Page 95
THE EIGHT CATEGORIES OF CASH FLOWS......Page 103
RECONCILIATIONS......Page 107
STRATEGIC CASH FLOW PLANNING......Page 110
COMPLICATIONS IN PREPARING CASH FLOW STATEMENTS......Page 113
SUMMARY......Page 115
5 Cash forecasting......Page 116
A CASH FORECASTING EXAMPLE......Page 118
PRESENTING CASH FORECASTS IN FUNDING NEGOTIATIONS......Page 133
SUMMARY......Page 142
Part II Testing financial statements......Page 144
6 Ratio analysis......Page 146
FINANCIAL STABILITY RATIOS......Page 147
PROFITABILITY RATIOS......Page 158
TRENDS IN THE FINANCIAL STRUCTURE......Page 167
PRODUCTIVITY RATIOS......Page 170
COMPETITIVENESS RATIOS......Page 171
INVESTMENT RATIOS......Page 173
TYPES OF INVESTMENT STRATEGY......Page 184
SUMMARY......Page 185
7 Working capital......Page 186
THE REAL MEANING OF WORKING CAPITAL......Page 187
OVER-TRADING......Page 189
WORKING CAPITAL RATIOS......Page 195
EFFECTIVE MANAGEMENT OF WORKING CAPITAL......Page 205
SUMMARY......Page 216
Part III Financial planning and control......Page 218
THE PURPOSES OF BUDGETING......Page 220
LENGTH OF BUDGET PERIOD......Page 221
KEY ELEMENTS OF A GOOD BUDGETING PROCESS......Page 223
THE SEQUENCE OF BUDGETING......Page 226
THE PURCHASING AND PRODUCTION BUDGET......Page 231
ZERO-BASED BUDGETING......Page 236
COST REDUCTION......Page 238
THE FINAL ELEMENTS OF THE BUDGETING PROCESS......Page 244
SUMMARY......Page 245
9 Financial control......Page 246
VARIANCES......Page 247
DEPARTURES FROM BUDGET......Page 249
THE QUALITIES OF AN EFFECTIVE FINANCIAL CONTROL SYSTEM......Page 261
SUMMARY......Page 264
10 Total costing......Page 266
PRINCIPLES OF COST ATTRIBUTION WITH MORE THAN ONE PRODUCT OR SERVICE......Page 267
THE COST CENTRE APPROACH......Page 274
ACTIVITY-BASED COSTING......Page 281
TRANSFER PRICING......Page 287
SUMMARY......Page 293
11 Contribution costing......Page 294
USING THE FIXED AND VARIABLE COST CLASSIFICATION TO SET SALES TARGETS......Page 297
CAPACITY COSTS AND THEIR EFFECT ON A PROFIT FORECAST......Page 304
OPERATING LEVERAGE......Page 308
SUMMARY......Page 311
Part IV Finance techniques for developing the organization......Page 314
12 Capital investment decisions......Page 316
THE APPRAISAL TOOLS......Page 317
ERRORS IN FORECASTING PROJECT CASH FLOWS......Page 334
THE IMPACT OF FORECASTING ERRORS ON PROJECT VIABILITY......Page 339
THE WEIGHTED AVERAGE COST OF CAPITAL (WACC)......Page 343
PROFITABILITY INDEX......Page 346
ACCEPT/REJECT CRITERIA IN PROJECT EVALUATION......Page 347
THE 10 PRIORITIES OF AN EXCELLENT APPROACH TO CAPITAL INVESTMENT......Page 348
SUMMARY......Page 349
COMPETITIVE ADVANTAGE......Page 350
SHAREHOLDER VALUE......Page 353
THE STANDARD SHAREHOLDER VALUE MODEL......Page 357
THE REAL DRIVERS OF GROWTH......Page 361
STRATEGIC INITIATIVES THAT HELP TO ENHANCE SHAREHOLDER VALUE......Page 363
SUMMARY......Page 366
14 Foreign currency transactions and translations......Page 368
RISKS ASSOCIATED WITH FOREIGN CURRENCY TRANSACTIONS......Page 369
TYPES OF TRANSACTIONS......Page 371
RECORDING TRANSACTIONS......Page 372
EXCHANGE RISKS AND REWARDS......Page 384
SUMMARY......Page 399
15 Mergers and acquisitions......Page 400
REASONS FOR TAKE-OVER ACTIVITY: THE BUYER PERSPECTIVE......Page 401
THE VALUATION OF BUSINESSES IN TAKE-OVER NEGOTIATIONS......Page 404
EXCHANGE MECHANISMS......Page 406
GROUP ACCOUNTS......Page 413
SPECIAL CONSIDERATIONS IN MERGERS AND ACQUISITIONS......Page 421
‘UNBUNDLING’......Page 424
SUMMARY......Page 425
CORPORATION TAX......Page 426
GROUP ACCOUNTS......Page 427
DEFERRED TAX......Page 428
LEASED ASSETS......Page 434
PENSION FUNDS......Page 440
THE LIFE OF A BUSINESS......Page 441
SUMMARY OF OUR MEETING......Page 446
Appendix......Page 448
Index......Page 452