Understanding Finance

by Harvard Business School Publishing

• ISBN13: 9781422118832
• ISBN10: 1422118835
• Format: Paperback
• Copyright: 2007-10-01
• Publisher: Harvard Business School Pr

Summary

Assessing the financial health of a business is an important part of any managerial position. This guide explains the essential concepts of finance in a way that nonfinancial managers can quickly grasp. Learn to: Understand basic financial statements, Develop and track a budget, Assess investment opportunities. Book jacket.

Table of Contents

Mentors' Message: Why Understand Finance?	p. ix
Understanding Finance: The Basics	p. 1
Understanding Financial Statements	p. 3
Accounting methods	p. 5
The income statement	p. 6
The balance sheet	p. 9
The cash flow statement	p. 12
Using Financial Statements to Measure Financial Health	p. 15
Profitability ratios	p. 17
Operating ratios	p. 18
Liquidity ratios	p. 19
Leverage ratios	p. 20
Other ways to measure financial health	p. 21
The Budget Process	p. 25
Understanding top-down and bottom-up budgeting	p. 27
Preparing a budget	p. 29
Articulating your assumptions	p. 31
Quantifying your assumptions	p. 34
What Is Cost/Benefit Analysis?	p. 39
Steps of cost/benefit analysis	p. 41
Net return and payback period	p. 43
Net present value and internal rate of return	p. 45
Breakeven analysis	p. 49
Sensitivity analysis	p. 51
Estimating unquantifiable benefits and costs	p. 53
Tracking Performance	p. 55
Tracking the performance of an investment	p. 56
Tracking your budget	p. 58
Tips and Tools	p. 61
Tools for Understanding Finance	p. 63
Test Yourself	p. 67
Answers to test questions	p. 70
Key Terms	p. 73
To Learn More	p. 89
Sources for Understanding Finance	p. 93
Notes	p. 95
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