Key Management Ratios: The 100+ Ratios Every Manager Needs To Know(Financial Times Series)

✍ Scribed by Ciaran Walsh

• Publisher: Financial Times/ Prentice Hall
• Year: 2008
• Tongue: English
• Leaves: 409
• Edition: 4
• Category: Library

✦ Synopsis

With over 33,000 copies sold, Key Management Ratios is a market “classic”. This new edition is re-packaged with a new jacket design to revitalise the Key Management brand and new two-colour internals make it more readable and visually appealing.

 

Key Management Ratiosis an antidote to any fear of finance. Drawing data from 200 companies worldwide, the book brings clarity and simplicity to its explanation of every measure and shows how they all link together to drive your business.

 

From cash flow and profit to ROI and ROTA, its unique approach remains as classic as ever, bringing a simple and visual understanding to a complex subject.

 

✦ Table of Contents

Cover
Key management ratios
Contents
Foreword
Acknowlegements
Key for symbols
Part One Foundations
Background
Why do you need this book?
The form and logic
Method
The philosophy
Excitement
Data that make sense
Financial statements
Introduction
The balance sheet
Balance sheet structure – fixed assets
Balance sheet structure – liabilities
Summary
Balance sheet terms
Introduction
The terms used
Profit and loss account
Introduction
Working data
Part Two Operating performance
Measures of performance
Relationships between the balance sheet and profit and loss account
The ratios ‘return on total assets’ and ‘return on equity’
Balance sheet layouts
Operating performance
Return on investment (ROI)
Return on equity (ROE)
Return on total assets (ROTA)
Standards of operating performance
Performance drivers
Operating performance
Operating profit model
Part Three Corporate liquidity
Cash flow cycle
Corporate liquidity
The cash cycle
Measures of liquidity – long and short analysis
Liquidity
Short-term liquidity measures
Current ratio
Quick ratio
Working capital to sales ratio
Working capital days
Financial strength
Interest cover
‘Debt to equity’ ratio (D/E)
Leverage
Summary
Cash flow
The cash flow statement
Sources and uses of funds – method
Opening and closing cash reconciliation
Long and short analysis
Financial reporting standards
Part Four Determinants of corporate value
Corporate valuation
Introduction
Share values
Financial leverage and corporate valuation
Introduction
Financial leverage
V chart
Market to book ratio
Growth
Growth
Analysis
Growth equilibrium
Application to acquisitions
Part Five Management decision-making
Cost, volume and price relationships
Introduction
Costing illustration
Contribution
Break-even (B/E)
Contribution to sales percentage (CPS)
Summary
Investment ratios
Introduction
Project appraisal – the problem
Project appraisal – steps to a solution (1)
Project appraisal – steps to a solution (2)
Project appraisal – present value (PV)
Project appraisal – internal rate of return (IRR)
Project appraisal – summary
Shareholder value added (SVA)
Introduction
Description
Approach to valuation (1)
Approach to valuation (2)
Value for the equity shareholders
Discount factor
Terminal (continuing) value
Complete model
Acquisition analysis
Introduction
Financial profile of Alpha Inc.
Financial profile of Beta Inc.
Acquisition – first offer
Acquisition impact on EPS
Shareholder effects – generalized
Summary of effects on shareholders
Revised offer
Relative versus absolute values
SVA models – Alpha Inc. and Beta Inc.
Addendum
Integrity of accounting statements
Introduction
Where we focus attention
Operating revenue enhancement
Methods of revenue enhancement – fictitious sales
Revenue enhancement – clues for detection
Operating cost
The balance sheet
The cash flow statement
Appendix 1: Special items
Appendix 2: Companies used in the sample
Appendix 3: Full set of ratio charts from sample companies
Appendix 4: Discounting and compounding tables
Glossary
Index