Finance and Accounting for Nonfinancial Managers: All the Basics You Need to Know

by Droms, William G

• ISBN13: 9780201311396
• ISBN10: 0201311399
• Edition: 4th
• Format: Paperback
• Copyright: 1997-12-28
• Publisher: Perseus Books Group

Summary

Mastering the fundamentals of financial management is a must for all managers with a stake in their company's and their own professional future. Packed with step-by-step examples and illustrative case studies, and fully updated to reflect the latest changes in tax laws and accounting requirements,Finance and Accounting for Nonfinancial Managersis the resource for every professional or student eager to acquire a comprehensive understanding of managerial finance in action.WithFinance and Accounting for Nonfinancial Managersyou'll become an expert on all major aspects of financial management including: long-term investment decisions reading a balance sheet working capital management inventory-control policy breakeven analysis for profit planning mastering the accounting cycle corporate income taxes valuing closely held companies

Table of Contents

Preface	xi	(2)
I: Introduction	xiii
1. Contemporary Financial Management	1	(8)
Evolution of the Finance Function	1	(2)
Goals of Financial Management	3	(1)
Organization and Structure of the Book	4	(2)
Conclusion	6	(1)
Summary	6	(3)
2. The Tax Environment	9	(12)
Organizational Form and Taxes	9	(2)
Corporate Income Taxes	11	(5)
Personal Income Taxes	16	(3)
Subchapter S Corporations	19	(1)
Summary	19	(2)
II: Financial Accounting Fundamentals	21	(58)
3. Introduction to Financial Statements	23	(21)
Objectives of Financial Accounting	23	(3)
The Auditor's Opinion	26	(2)
The Balance Sheet	28	(7)
Book Value of Securities	35	(2)
The Income Statement	37	(3)
Statement of Cash Flows	40	(2)
Summary	42	(2)
4. Accounting--A Financial Information System	44	(17)
The Accounting Process	44	(1)
The Accrual Concept	44	(3)
Double-Entry Accounting	47	(8)
The Accounting Cycle	55	(5)
Summary	60	(1)
5: Special Topics in Accounting	61	(18)
Changes in the Equity Account	61	(2)
Depreciation Accounting	63	(6)
Inventory Accounting	69	(5)
Accounting for Leases	74	(1)
Intercorporate Investments	75	(1)
Summary	76	(3)
III: Financial Analysis and Control	79	(52)
6. Financial Statement Analysis	81	(19)
Objectives of Financial Statement Analysis	81	(1)
Ratio Analysis	82	(7)
Common-Size Statements	89	(1)
Sequence of Analysis	90	(1)
Case Study--Technosystems, Inc.	91	(6)
Summary	97	(3)
7. Financial Forecasting and Cash Budgeting	100	(18)
Objectives of Financial Forecasting	100	(1)
Short-Term Forecasts and Cash Budgeting	100	(1)
Financial Forecast for the Cutler Toy Company	101	(12)
Long-Term Financial Planning	113	(3)
Summary	116	(2)
8. Breakeven Analysis for Profit Planning	118	(13)
Assumptions of Breakeven Analysis	118	(1)
Breakeven Applications	119	(1)
The Breakeven Technique	120	(3)
Breakeven Charts	123	(4)
Nonlinear Breakeven Analysis	127	(2)
Summary	129	(2)
IV Working Capital Decisions	131	(34)
9. Working Capital Policy	133	(13)
Importance of Working Capital Management	133	(1)
Short-Term Versus Long-Term Financing	134	(5)
Relative Magnitude of Working Capital Investment	139	(2)
Inventory Control Policy	141	(1)
Credit Policy	142	(1)
Accounts Payable Payment Policy	143	(1)
Summary	144	(2)
10. Working Capital Management	146	(19)
Management of Cash and Marketable Securities	146	(4)
Accounts Receivable Management	150	(3)
Inventory Management	153	(4)
Sources of Short-Term Financing	157	(4)
Summary	161	(1)
Appendix 10.1: Economic Order Quantity Mathematical Derivation	162	(3)
V: Long-Term Investment Decisions	165	(44)
11. Mathematics of Compound Interest	167	(15)
Compound Interest	167	(5)
Present Value	172	(1)
Present Value of an Annuity	173	(3)
Compound Value of an Annuity	176	(2)
Application to Personal Decision Making	178	(2)
Summary	180	(2)
12. Capital Budgeting	182	(14)
Payback	182	(1)
Net Present Value	183	(2)
Internal Rate of Return	185	(3)
Profitability Index	188	(1)
Selection of Method	189	(3)
Dealing with Uncertainty	192	(1)
Case Study	192	(2)
Summary	194	(2)
13. Cost of Capital	196	(13)
Cost of Capital Defined	196	(2)
Marginal Cost and Capital Budgeting	198	(1)
Calculating the Average Cost of Capital	199	(4)
The Capital Asset Pricing Model	203	(1)
Capital Structure Management	204	(2)
Summary	206	(3)
VI: Long-Term Financing Decisions	209	(48)
14. Sources and Forms of Long-Term Financing	211	(17)
The Money and Capital Markets	211	(1)
Intermediate- and Long-Term Debt	212	(4)
Lease Financing	216	(2)
Preferred Stock	218	(1)
Common Stock	219	(2)
Dividend Policy	221	(4)
Summary	225	(3)
15. Valuation of Financial Assets	228	(15)
Capitalization-of-Income Method	228	(1)
Selecting Appropriate Capitalization Rates	228	(3)
Bond Valuation	231	(3)
Preferred-Stock Valuation	234	(1)
Common-Stock Valuation	235	(6)
Summary	241	(2)
16. Valuing Closely Held Businesses	243	(14)
Valuation Principles	243	(1)
Revenue Ruling 59-60	243	(3)
Case Analysis: Valuing Home Medical Care, Inc.	246	(8)
Summary	254	(3)
Index	257